Decision No. 477-C-A-2010
November 18, 2010
COMPLAINT by Gábor Lukács against WestJet.
File No. M4120-3/09-06749
INTRODUCTION
[1] Gábor Lukács filed a complaint with the Canadian Transportation Agency (Agency) asking for an interim order suspending and a final order disallowing a provision respecting baggage liability appearing in Rule 17(a)(1) of WestJet's international/transborder scheduled services tariff CTA (A) No. 4 (Tariff). Mr. Lukács submits that the provision in question is contrary to the Montreal Convention (Convention). Rule 17(a)(1) of the Tariff states:
All baggage must be suitably externally identified and packed in suitcases or in similar containers in order to ensure safe and convenient carriage with ordinary care and handling. Fragile or perishable articles, money, jewelry, silverware, negotiable papers, securities or other valuables, samples of business documents shall not be accepted as checked baggage. The carrier shall not be liable for loss, damage or delay in the delivery of such articles when they are included in the checked baggage. (Emphasis added to denote the provision about which the complaint has been filed.)
[2] In its answer to the complaint, WestJet proposed the following revised tariff provision to address the Agency's jurisprudence:
All baggage must be suitably externally identified and packed in suitcases or in similar containers in order to ensure safe and convenient carriage with ordinary care and handling. Certain items, because they are fragile, perishable or of high value, are not suitable or appropriate for carriage as checked baggage. Among high value articles are money, jewelry, silverware, negotiable papers, securities, and samples of business documents. Collectively, all such high value, fragile, and perishable items are referred to in this tariff as "excluded items". WestJet prohibits the inclusion of excluded items in checked baggage. By tendering your baggage to WestJet you represent to WestJet that no excluded items are included in your baggage and WestJet accordingly agrees to carry your baggage. (Emphasis added to denote the proposed revision.)
[3] In its Decision No. LET-C-A-26-2010, the Agency noted that in its answer to the complaint, WestJet provided a proposed amendment to Rule 17(a)(1) of the Tariff, but did not address the substance of Mr. Lukács' complaint.
[4] Further, in Decision No. LET-C-A-26-2010, the Agency advised that further pleadings respecting the revised wording of Rule 17(a)(1) would assist the Agency in the determination of this matter and, accordingly, WestJet and Mr. Lukács were provided with the opportunity to file an answer and a reply, respectively. WestJet filed its answer on February 24, 2010 and Mr. Lukács filed his reply on March 5, 2010.
[5] The Convention and relevant statutory extracts are set out in the Appendix.
ISSUES
- Does existing Rule 17(a)(1) of the Tariff relieve or tend to relieve WestJet from liability in a way which is contrary to Articles 17(2) and 19 of the Convention and, if so, what is the effect of that contravention?
- With respect to the revision to Rule 17(a)(1) of the Tariff proposed by WestJet:
- Is the reference to items of "high value" unclear, and therefore contrary to paragraph 122(c) of the Air Transportation Regulations, SOR/88‑58, as amended (ATR)?
- Do freedom of contract between WestJet and its passengers and the doctrine of estoppel take precedence over the provisions of the Convention?
- If the answer to issue 2(ii) is no, does WestJet's proposed amendment of Rule 17(a)(1) of the Tariff relieve or tend to relieve WestJet from liability in a way which is contrary to Articles 17(2) and 19 of the Convention and, if so, what is the effect of that contravention?
[6] As indicated in the reasons that follow, the Agency finds that:
- Existing Rule 17(a)(1) relieves WestJet from liability in a way which is contrary to Articles 17(2) and 19 of the Convention. Accordingly, Rule 17(a)(1) is null and void and, further, is not just and reasonable, which is contrary to subsection 111(1) of the ATR.
- The proposed revision to Rule 17(a)(1) of the Tariff as it relates to items of "high value" is clear.
- With respect to the proposed revision to Rule 17(a)(1) of the Tariff, freedom of contract and estoppel do not take precedence over the provisions of the Convention.
[7] In addition, notwithstanding that the specific proposed revision to Rule 17(a)(1) is clear as it relates to items of "high value", the Agency is of the opinion, based on the information on file, that WestJet's proposed amendment to Rule 17(a)(1) tends to relieve WestJet from liability which is contrary to Articles 17(2) and 19 of the Convention. Accordingly, the Agency is of the opinion that the proposed amended Rule 17(a)(1) would be considered to be null and void if filed by WestJet with the Agency.
PRELIMINARY MATTER
[8] In its submission, WestJet argues that it has a common law right to restrict the items it carries unless it declares a willingness to accept any tendered traffic and thereby becomes a common carrier.
[9] Mr. Lukács has questioned the relevance of common carrier status with respect to the substance of his claim. However, whether relevant or not, Mr. Lukács submits that WestJet is a common carrier.
[10] Mr. Lukács notes that there appears to be no direct Canadian legislation or case law on point, so he refers to American regulatory documents and case law.
[11] In particular, Mr. Lukács refers to the United States Federal Aviation Administration (FAA) Advisory Circulars 120-12 and 120-12A concerning Private Carriage versus Common Carriage of Persons or Property, which state, in part:
A carrier becomes a common carrier when it "holds itself out" to the public, or to a segment of the public, as willing to furnish transportation within the limits of its facilities to any person who wants it. Absence of tariffs or rate schedules, transportation only pursuant to separately negotiated contracts, or occasional refusals to transport, are not conclusive proof that the carrier is not a common carrier. There are four elements in defining a common carrier; (1) a holding out of a willingness to (2) transport persons or property (3) from place to place (4) for compensation. This "holding out" which makes a person a common carrier can be done in many ways and it does not matter how it is done.
[12] Mr. Lukács also refers to Woolsey v. National Transportation Safety Board, 993 F.2d 516 in which the majority of the appellate court held that the FAA statement of "common carrier" is "in relevant respect the same as that found at common law", and that:
The Advisory Circular correctly points out that the crucial determination in assessing the status of a carrier is whether the carrier has held itself out to the public or to a definable segment of the public as being willing to transport for hire, indiscriminately.
Analysis and finding
[13] WestJet's submission on the issue of its status as a common carrier is limited and, therefore, it is unclear whether WestJet not being a "common carrier" would, in WestJet's view, afford it any relief against the complaint filed by Mr. Lukács.
[14] WestJet's position implies that if it is not a "common carrier", it has an unrestricted right, notwithstanding the Convention, to set the terms on which it will accept baggage for carriage, including the limitations on its liability and the principles of contractual and equitable law it can rely on as defenses to any claim for liability.
[15] However, it should be noted that the substance of Mr. Lukács' complaint relates to WestJet's alleged non-compliance with certain provisions of the Convention.
[16] In looking at the Convention, Article 1(1) – Scope of application clearly states that the "Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward." There is no distinction between being a common carrier or not.
[17] Accordingly, the Agency finds that WestJet's apparent submission that it is not a common carrier is not relevant to, and does not provide any relief with respect to, the substance of Mr. Lukács' complaint.
[18] Given the above finding, the question of whether WestJet is a common carrier does not require a determination.
EXISTING TARIFF PROVISION
Issue 1: Does existing Rule 17(a)(1) of the Tariff relieve or tend to relieve WestJet from liability in a way which is contrary to Articles 17(2) and 19 of the Convention and, if so, what is the effect of that contravention?
[19] In assessing this issue, there are three components of Rule 17(a)(1) to be considered, namely loss of, delay in the delivery of and damage to articles in checked baggage.
Submissions
[20] By way of a general submission on all three components, Mr. Lukács submits that WestJet's existing Rule 17(a)(1) of the Tariff is inconsistent with the obligations and liabilities of an air carrier set out in Articles 17(2) and 19 of the Convention. He further submits that existing Rule 17(a)(1) has the effect of relieving carriers from liability or setting a lower limit of liability for carriers than required by Articles 17(2) and 19 of the Convention.
[21] Mr. Lukács refers to Decision No. 227-C-A-2008, McCabe v. Air Canada, in which the Agency found similar provisions in Air Canada's tariff to be invalid.
[22] Mr. Lukács also refers to a United States Department of Transportation (DOT) Advisory (74 Fed. Reg. 14837-38), which addresses tariff provisions pertaining to "certain specific items, including: antiques, documents, electronic equipment, film, jewelry, keys, manuscripts, medication, money, paintings and photographs." The Advisory states, in part, that:
[...] Such exclusions, while not prohibited in domestic contracts of carriage, are in contravention of Articles 17 and 19 of the Convention. Although carriers may wish to have tariff terms that prohibit passengers from including certain items in checked baggage, once a carrier accepts checked baggage, whatever is contained in the checked baggage is protected.
[23] WestJet made no submissions in response to Mr. Lukács' arguments with respect to the existing Rule 17(a)(1) of the Tariff. Instead, WestJet proposed an amended version of the Tariff. As noted above, this was brought to the attention of WestJet in Decision No. LET-C-A-26-2010 and a request was made by the Agency for further submissions. However, the subsequent further submissions from WestJet referred only to the proposed amended Tariff.
Analysis and findings
[24] As WestJet's Tariff deals with international carriage, the Convention, which is incorporated in the Carriage by Air Act, R.S.C., 1985, c. C-26 (Carriage by Air Act) and therefore is Canadian law, applies to the Tariff. Further, pursuant to Article 26 of the Convention, the Tariff must not conflict with the provisions of the Convention.
[25] In addition, section 111 of the ATR requires, in part, that tariffs be just and reasonable.
[26] With respect to the specific issue of loss of certain types of articles in checked baggage, Rule 17(a)(1) of the Tariff provides, in part, that WestJet shall not be liable for loss of such articles.
[27] Article 17(2) of the Convention provides, in part, that a carrier is liable for damage sustained for the loss of checked baggage if the loss took place during any period within which the checked baggage was in the charge of the carrier.
[28] As argued by Mr. Lukács, in Decision No. 227-C-A-2008, McCabe v. Air Canada, the Agency dealt with a similar issue and specifically the application of Article 17(2) of the Convention to a similar tariff provision. In that case, the Agency determined that "if a carrier accepts checked baggage for transportation and the checked baggage is under the care and control of the carrier, the carrier assumes liability for the baggage in the event of loss and damage, notwithstanding the carrier has not agreed to carry items". The Agency reached a similar determination in Decision No. 309-C-A-2010, Kipper v. WestJet, and Decision No. 208-C-A-2009, Lukács v. Air Canada.
[29] The Agency also notes, as mentioned in Mr. Lukács' submission, that DOT Advisory 74 Fed. Reg. 14837-38 is consistent with the decision of the Agency in Decision No. 227-C-A-2008, McCabe v. Air Canada.
[30] The Agency therefore finds that existing Rule 17(a)(1) as it relates to liability for loss of baggage, is not consistent with Article 17(2) of the Convention.
[31] With respect to the specific issue of delay in the delivery of certain types of articles in checked baggage, Rule 17(a)(1) provides, in part, that WestJet shall not be liable for such delay.
[32] Article 19 of the Convention provides, in part, that a carrier is liable for damage occasioned by delay in the carriage of baggage, except if the carrier proves that it took all reasonable measures to avoid the damage or that it was impossible to do so.
[33] Rule 17(a)(1) fails to correctly represent that WestJet's limitation with respect to liability only arises when WestJet proves that it and its servants and agents took all measures that could reasonably be required to avoid damage occasioned by any delay or that it was impossible for WestJet and its servants and agents to take such measures.
[34] It is clear that pursuant to Article 19 of the Convention, the liability of the carrier for damage occasioned by delay is not dependent on the contents of the luggage. The Agency therefore finds that existing Rule 17(a)(1), as it relates to liability for delay in delivery of certain types of articles in checked baggage, does not accurately reflect Article 19 of the Convention.
[35] With respect to the issue of damage to certain types of articles in checked baggage, Rule 17(a)(1) provides, in part, that WestJet shall not be liable for such damage.
[36] In Decision No. 208-C-A-2009, Lukács v. Air Canada, the Agency determined that to exempt a carrier from liability for damage to baggage under Article 17(2) of the Convention, there must be a causal relationship between the damage and an inherent defect, quality or vice of the baggage.
[37] In Order No. 2006-A-88, Charter Tariff CTA(A) No. 7-Kelowna Flightcraft Air Charter Ltd., the Agency agreed that it was reasonable for a carrier to limit its liability for damage resulting from the inherent defect, quality or vice of baggage. However, in order for such a limitation of liability to be reasonable, there must be a link between the damage of the baggage and its inherent defect, quality or vice.
[38] As existing Rule 17(a)(1) is not formulated in a manner that establishes this relationship, the Agency finds that Rule 17(a)(1) of the Tariff, as it relates to liability for damage to certain types of articles in baggage, is not consistent with Article 17(2) of the Convention.
[39] Considering that existing Rule 17(1)(a) of the Tariff is not consistent with or does not accurately reflect the Convention with respect to all three of the above components, the Agency finds that existing Rule 17(1)(a) of the Tariff relieves or tends to relieve WestJet from liability in a manner which is contrary to Articles 17(2) and 19 of the Convention.
[40] Article 26 of the Convention states, in part, that any provision (of a carrier's tariff) tending to relieve a carrier of liability or to fix a lower limit than that which is laid down in the Convention is null and void.
[41] Accordingly, the Agency finds, by application of Article 26 of the Convention, that existing Rule 17(a)(1) of the Tariff is null and void.
[42] The Agency's finding relates only to certain parts of existing Rule 17(a)(1) of the Tariff and only those parts are determined to be null and void, leaving a remaining balance of the Rule. When portions of a section of a contract are determined to be null and void, consideration has to be given as to whether the defective portions can be severed from the section and leave meaning to the remaining wording of the section. In this instance, the portions determined to be null and void go to the fundamental intent of that Rule, namely an exclusion of liability. Those portions constitute the substantive core of the Rule and, as a result, the Rule could not stand with those portions removed. Accordingly, for clarity, the Agency confirms that existing Rule 17(a)(1) of the Tariff is null and void in its entirety.
[43] In Decision No. 227-C-A-2008, McCabe v. Air Canada, the Agency found that when a provision of a tariff is null and void, the tariff provision cannot be just and reasonable as required by subsection 111(1) of the ATR.
[44] Accordingly, the Agency finds that existing Rule 17(a)(1) of the Tariff, being null and void, is not just and reasonable as required by subsection 111(1) of the ATR.
PROPOSED TARIFF PROVISION
Issue 2(i): With respect to the revision to Rule 17(a)(1) of the Tariff proposed by WestJet, is the reference to items of "high value" unclear, and therefore contrary to paragraph 122(c) of the ATR?
Submissions
[45] Mr. Lukács states that although WestJet proposes to exclude items from passengers' checked baggage based on their "high value", this term is not defined in the Rule. Mr. Lukács argues that it is unclear who determines if a particular item, with respect to which a claim is filed by a passenger, is of "high value" within the meaning of the proposed provision. Mr. Lukács submits that reference to items of "high value" with respect to WestJet's proposed tariff amendment is inconsistent with the clarity requirements of international tariffs as per paragraph 122(c) of the ATR.
[46] Mr. Lukács submits that WestJet's proposed amendment, by artificially declaring items of "high value" as excluded items, effectively sets a limit of liability lower than the entitlements set out in the Convention.
[47] WestJet made no submission on this issue.
Analysis and finding
[48] In Decision No. 116‑C-A-2005, Torres v. TACA International Airlines, S.A, the Agency applied a contextual approach in determining what constitutes "valuable" items. In this Decision, the Agency stated:
Rule 55(C)(9)(a) of TACA's international tariff makes reference to "money, jewelry, silverware, negotiable papers, securities, or other valuables [...]" The words that precede the expression "or other valuables" establish the context in which such an expression must be interpreted, and help the reader to determine the scope of the limitation of liability.
[49] WestJet's proposed tariff provision includes the following sentence: "Among high value articles are money, jewelry, silverware, negotiable papers, securities, and samples of business documents." The same contextual approach, as that used in Decision No. 116-C-A-2005, may be employed in the present case to ascertain what articles may be considered as being of "high value".
[50] Accordingly, the Agency finds that the proposed provision with respect to items of "high value" is clear, and that where there are issues as to whether an item is of "high value", determinations may be made on a case-by-case basis.
Issue 2(ii): With respect to the revision to Rule 17(a)(1) of the Tariff proposed by WestJet, do freedom of contract between WestJet and its passengers and the doctrine of estoppel take precedence over the provisions of the Convention?
Submissions
[51] WestJet submits that Article 33 of the Warsaw Convention and Article 27 of the Convention each recognize the right of a carrier to refuse to enter into a contract of carriage. Therefore, WestJet argues, unless a carrier declares a willingness to accept any traffic tendered, it has the common law right to restrict the items it is prepared to carry.
[52] WestJet refers to Decision No. LET-AT-A-319-2005, which states that a carrier's common law duty is limited to carrying passengers "who are prepared to pay the fare for the service and accept the carrier's terms of carriage". WestJet submits, therefore, through its contract or terms of carriage with the passenger, it can choose not to accept a certain class of goods.
[53] WestJet also argues that if Decision No. 227-C-A-2008, McCabe v. Air Canada, stands for the principle that an air carrier which has declined to carry particular items may nevertheless be found to have contracted to carry them, it would revolutionize the basic contractual doctrine of offer and acceptance and would be wrong in law. WestJet maintains that a passenger cannot unilaterally accept an offer which was not made in the first place.
[54] WestJet further argues that whether its proposed amendment has the practical effect of limiting a passenger's ability to recover damages against WestJet would depend both on the law of contract and the law of evidence. WestJet refers in particular to the principle of estoppel in which a person who has represented that one state of things exist will be prevented from introducing evidence contrary to that representation.
[55] WestJet submits that when the doctrine of estoppel does operate, it does not change the substantive law governing a relationship or transaction, but may prevent a party from establishing some element necessary to establish the applicability of the law. WestJet states that whether the proposed tariff amendment would have this effect in any particular case would depend upon whether all the elements of the doctrine of estoppel can be established in that case. WestJet submits that the Convention has no bearing on the question of whether the doctrine of estoppel should be applied in a particular case.
[56] Mr. Lukács submits that, in Canada, contracts of carriage between passengers and air carriers are subject to a number of pieces of legislation, which are superimposed on and alter the common law, namely the Convention, the Canada Transportation Act, S.C., 1996, c. 10, as amended and the ATR.
[57] Mr. Lukács disagrees with WestJet's submission regarding the applicability of Article 27 of the Convention. He submits that Article 26 of the Convention states that any provision tending to relieve the carrier of liability or to fix a lower limit renders the provision null and void. Mr. Lukács argues that the Convention allows freedom in the provisions of the contract of carriage only to the extent that they do not conflict with provisions of the Convention. He asserts that the Convention does not prevent a carrier from refusing to enter into a contract of carriage. He submits, however, that the Convention renders any contractual provision whose effect is to fix a lower limit of liability, null and void.
[58] Mr. Lukács further submits that Decision No. 287-C-A-2009, Griffiths v. Air Canada, recognizes that the right of an air carrier to refuse to enter into a contract of carriage is not absolute, but rather subject to the statutory requirement of reasonableness. Mr. Lukács asserts that in that Decision, the Agency held that all terms and conditions in a tariff, including those that concern non-acceptance of certain items or content for carriage, must be reasonable. Accordingly, Mr. Lukács submits that: 1) carriers cannot arbitrarily refuse to transport certain types of content; 2) in order for a carrier to exclude items from carriage in checked baggage, there must be a reason related to the carrier's statutory, commercial or operational obligations; 3) in order for a carrier to exclude items from carriage in checked baggage, the reason for excluding them must outweigh the rights of passengers; and 4) in order for a carrier to declare an item or a type of content as unsuitable or inappropriate for carriage in checked baggage, there must be a reason related to the carrier's statutory, commercial or operational obligations.
[59] Moreover, Mr. Lukács maintains that WestJet has misapprehended the essence of Decision No. 227-C-A-2008, McCabe v. Air Canada. Mr. Lukács states that the Decision had nothing to do with contract law as it was solely based on the Convention and that the Agency never made a finding in that Decision that Air Canada was contracted to carry the items. He argues that the Agency's finding was that Air Canada accepted a piece of checked baggage and its content was under Air Canada's care and control and, in such instance, a carrier is liable for baggage in the event of loss and damage.
[60] Mr. Lukács submits that the Agency's decision, in Decision No. 227-C-A-2008, McCabe v. Air Canada, is not exceptional in the realm of air law, and that foreign courts and regulatory bodies have interpreted the liability provisions of the Convention in a similar way to the Agency. In support of this position, Mr. Lukács refers to United States DOT Advisory (74 Fed. Reg. 14837-38), noted above, which he argues is intended to give guidance to U.S. and foreign air carriers with respect to tariff provisions that exclude liability for loss, damage, or delay of certain specific items.
[61] Mr. Lukács notes that the Advisory specifically states that such exclusions, while not prohibited in domestic contracts of carriage, are in contravention of Articles 17 and 19 of the Montreal Convention. Mr. Lukács submits that once a carrier accepts checked baggage, whatever is contained in the checked baggage is protected, subject to the terms of the Convention.
[62] Mr. Lukács also disagrees with WestJet's assertion that the Agency's findings in Decision No. 227-C-A-2008, McCabe v. Air Canada, revolutionize the basic contractual doctrine of offer and acceptance. Mr. Lukács states that the Convention governs the rights of passengers against airlines in matters that fall within the Convention's scope. He refers to Article 29 and submits that the Convention preempts all claims based on domestic law and in particular, claims based on contract law. Thus, he argues, contract law should bear little relevance in this instance.
[63] Mr. Lukács also states that according to Article 1(1) of the Convention, the scope of the Convention is wide and encompasses all international carriage by air. He submits, by Article 17(2), the liability of a carrier is triggered not by virtue of a contract or agreement, but by the baggage being "in the charge of the carrier". He states that in order to invoke Article 17(2), the owner of the goods only has to prove that the items were in the care and control of the carrier and does not have to prove the existence of a contract.
Analysis and findings
[64] The Warsaw and Montreal Conventions impose duties on carriers, but they also provide strict limitations as to the amount recoverable by a passenger when relief is sought. This "give and take" is part of the balancing of interests which both Conventions aim to achieve.
[65] As referred to earlier with respect to the Montreal Convention, the Warsaw and Montreal Conventions are incorporated into Canadian legislation through the Carriage by Air Act, which gives these Conventions force of law in Canada.
[66] Article 27 of the Convention states:
Nothing contained in this Convention shall prevent the carrier from refusing to enter into any contract of carriage, from waiving any defenses available under the Convention, or from laying down conditions which do not conflict with the provisions of this Convention. (emphasis added)
[67] Article 33 of the Warsaw Convention states:
Nothing contained in this Convention shall prevent the carrier from refusing to enter into any contract of carriage, or from making any regulations which do not conflict with the provisions of this Convention. (emphasis added)
[68] On a plain language interpretation of these Articles, it is clear that the conditions established by a carrier in its tariffs cannot conflict with the provisions of the respective Conventions. WestJet has relied on these Articles, but only with respect to entering into a contract of carriage. WestJet has taken those Articles out of context when they are read in full.
[69] Mr. Lukács' arguments are persuasive in that regard. He refers to the Convention, but his submissions are equally applicable to the Warsaw Convention. In particular, as Mr. Lukács has argued, the Convention allows freedom in the provisions of the contract of carriage only to the extent that they do not conflict with provisions of the Convention. As he noted, and the Agency agrees, the Convention does not prevent a carrier from refusing to enter into a contract of carriage. However, for example, once a carrier does agree to carry baggage, the carrier cannot impose contractual tariff conditions which are in conflict with the Convention, as any such conditions would be liable to be determined as null and void and, if so determined, the Convention would take precedence over the contractual relationship between the carrier and the passenger. Effectively, the Convention creates a regime that limits a carrier's freedom to contract. This has direct application in this case where compliance of Rule 17(a)(1) of the Tariff with the Convention is at issue.
[70] Likewise, if a tariff provides a common law or equitable defense in favour of a carrier, in this case estoppel in relation to claims for damage with respect to the carriage of baggage, which would have the effect of a passenger being denied a right under the Convention, the defense cannot be relied upon by the carrier. In particular, in this case, the defense of estoppel would be based on a representation in the proposed revision to Rule 17(a)(1) of the Tariff that excluded items are not contained in checked baggage. That provision, similar to any other contractual provision in the Tariff, would be liable to be determined null and void and, if so determined, the defense of estoppel would have no basis at law to be argued and relied upon by the carrier.
[71] Accordingly, the Agency finds that, with respect to the proposed revision to Rule 17(a)(1) of the Tariff, freedom of contract and estoppel do not take precedence over the provisions of the Convention.
Issue 2(iii): With respect to the revision to Rule 17(a)(1) of the Tariff proposed by WestJet, if the answer to issue 2(ii) is no, does WestJet's proposed amendment of Rule 17(a)(1) of the Tariff relieve or tend to relieve WestJet from liability in a way which is contrary to Articles 17(2) and 19 of the Convention and, if so, what is the effect of that contravention?
Submissions
[72] WestJet submits that its proposed tariff amendment responds to the Agency's jurisprudence on the issue of exclusion of liability for certain types of baggage, the carriage of which is subject to the Convention.
[73] Mr. Lukács submits that the proposed amendment to Rule 17(a)(1) is inconsistent with the Convention and the ATR.
[74] Mr. Lukács maintains that the amended wording is an attempt by WestJet to shift the liability from the carrier to the passenger. He argues that the onus is placed on the passenger to inform WestJet if he or she has excluded items in the baggage as identified in the Tariff. Mr. Lukács states that a passenger may be denied compensation if the baggage contains excluded items on the grounds that the passenger misrepresented the content of the baggage.
[75] Mr. Lukács submits that this provision relieves carriers from liability or sets a lower limit of liability for carriers than required by Articles 17(2) and 19 of the Convention, and is therefore contrary to Article 26 of the Convention.
[76] Mr. Lukács argues that to decide whether a provision is null and void according to Article 26, the effect of the provision is to be considered, not the form or the actual wording.
[77] To that end, and although the proposed amendment to Rule 17(a)(1) of the Tariff makes no direct reference to limitation of liability with respect to the loss of, delay in delivery of or damage to articles in checked baggage, Mr. Lukács makes specific submissions on those three components.
[78] With respect to loss, Mr. Lukács asserts that Article 17(2) of the Convention does not relieve a carrier from liability for the destruction or loss of baggage, and accordingly, the carrier cannot exonerate itself from that liability under any circumstances. Mr. Lukács adds that WestJet's proposed tariff provision is inconsistent with Article 17(2) as the provision contemplates the denial of a passenger's claim relating to the loss or destruction of baggage if such baggage is admitted or proven to have contained "excluded items".
[79] With respect to delay, Mr. Lukács maintains that Article 19 of the Convention creates a presumption of liability of the carrier, and places the burden of proof of extenuating circumstances on the carrier. He adds that, to avoid liability, the carrier must prove that it has taken all reasonable measures to avoid the delay, and whether the baggage at issue contains excluded items is not relevant to the matter of liability in the case of delay.
[80] Mr. Lukács submits that the fact that WestJet's tariff provision provides that a passenger's claim for delay may be denied on the basis that baggage contained "excluded items" is inconsistent with Article 19 of the Convention.
[81] With respect to damage, Mr. Lukács argues that a carrier that wishes to exonerate itself from liability in the case of damage to baggage must prove that it has an inherent defect, quality or vice and that the damage was a result of the defect, quality or vice. Mr. Lukács asserts that Article 17(2) of the Convention is not a blanket defense that can be applied to all types of baggage, but rather a case-by-case one, which can be invoked only after an analysis of the nature of the damage. Mr. Lukács states that WestJet's reference to "excluded items" in the proposed revision to Rule 17(a)(1) creates the illusion that the carrier can avoid the case-by-case analysis and limit its liability as the provision enables WestJet to deny claims for damage to checked baggage that contain "excluded items". As such, Mr. Lukács argues the provision is contrary to Article 17(2) of the Convention.
Analysis
[82] Having decided that compliance with the Convention restricts WestJet's freedom of contract and its ability to rely on the doctrine of estoppel with respect to the revision WestJet proposes to Rule 17(a)(1) of the Tariff, the key issue to be considered is whether the proposed revision to Rule 17(a)(1) of the Tariff relieves or tends to relieve WestJet from liability, which is contrary to Articles 17 and 19 of the Convention.
[83] As noted earlier, the revision, as worded, does not explicitly refer to any limitation of liability. However, Mr. Lukács' argument is very persuasive that it is not the form or actual wording of the revision which is the determining factor, but the effect of the amended tariff provision.
[84] In looking at that effect, it is clear from the submissions made by WestJet that its intention in submitting the proposed revision to Rule 17(a)(1) of the Tariff is to enable it to raise as a defense to any claim for loss, delay or damage to baggage that the carrier is not liable because "excluded items" were placed in the baggage. As set out extensively above in the Agency's review of existing Rule 17(a)(1), a limitation of liability cannot be based solely on the carriage of "excluded items". There are provisions set out in the Convention which define the limited situations, and no others, where a carrier can defend itself against claims related to liability for the carriage of baggage. The proposed revision to Rule 17(a)(1) go beyond that and tend to relieve WestJet from liability.
[85] Accordingly, the Agency is of the opinion that the proposed wording for the revision to Rule 17(a)(1) of the Tariff is contrary to Articles 17 and 19 of the Convention.
[86] As with the earlier finding, the Agency notes that Article 26 of the Convention provides, in part, that any provision (of a carrier's tariff) tending to relieve a carrier of liability or to fix a lower limit than that which is laid down in the Convention is null and void.
[87] Accordingly, the Agency is of the opinion, by application of Article 26 of the Convention, that the proposed revision to Rule 17(a)(1) of the Tariff would be considered to be null and void if filed by WestJet with the Agency.
CONCLUSION
[88] As noted in the following order, the Agency finds existing Rule 17(a)(1) of the Tariff null and void.
[89] Accordingly, existing Rule 17(a)(1) of the Tariff is of no force and effect as of the date of this decision and until such time as WestJet files an amended Rule 17(a)(1) of the Tariff, the rights of passengers with respect to damage sustained in case of destruction or loss of, or damage to checked baggage and occasioned by delay will be governed by the Convention, including Articles 17(2) and 19 of the Convention.
[90] Based on the information on file, the Agency is also of the opinion that WestJet's proposed amendment to Rule 17(a)(1) of the Tariff is contrary to Articles 17(2) and 19 of the Convention, and the Agency, therefore, is further of the opinion that amended Rule 17(a)(1) would be considered to be null and void pursuant to Article 26 of the Convention if filed by WestJet with the Agency.
ORDER
[91] Pursuant to Article 26 of the Convention, WestJet's existing Rule 17(a)(1) of the Tariff is determined to be null and void for being contrary to Articles 17(2) and 19 of the Convention. Further, pursuant to paragraph 113(a) of the ATR, the Agency disallows Rule 17(a)(1) of the Tariff for being unjust and unreasonable and contrary to subsection 111(1) of the ATR.
[92] The Agency directs WestJet, within 45 days from the date of this Decision, to file an amended Rule 17(a)(1) of the Tariff that is consistent with Articles 17(2) and 19 of the Convention.
Members
- John Scott
- Geoffrey C. Hare
RELEVANT STATUTORY EXTRACTS
The Montreal Convention
Article 1 – Scope of application
1. This Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.
Article 17 – Death and injury of passengers - damage to baggage
2. The carrier is liable for damage sustained in case of destruction or loss of, or of damage to, checked baggage upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier. However, the carrier is not liable if and to the extent that the damage resulted from the inherent defect, quality or vice of the baggage. In the case of unchecked baggage, including personal items, the carrier is liable if the damage resulted from its fault or that of its servants or agents.
Article 19 – Delay
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.
Article 26 – Invalidity of contractual provisions
Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention shall be null and void, but the nullity of any such provision does not involve the nullity of the whole contract, which shall remain subject to the provisions of this Convention.
Article 27 – Freedom to contract
Nothing contained in this Convention shall prevent the carrier from refusing to enter into any contract of carriage, from waiving any defences available under the Convention, or from laying down conditions which do not conflict with the provisions of this Convention.
Article 29 – Basis of claims
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.
The Warsaw Convention
Article 33
[...] Nothing in this Convention shall prevent the carrier either from refusing to enter into any contract of carriage or from making regulations which do not conflict with the provisions of this Convention.
Air Transportation Regulations, SOR/88-58, as amended
Subsection 111(1)
All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.
Paragraph 113(a)
The Agency may suspend any tariff or portion of a tariff that appears not to conform with subsections 110(3) to (5) or section 111 or 112, or disallow any tariff or portion of a tariff that does not conform with any of those provisions.
Paragraph 122(c)
Every tariff shall contain the terms and conditions of carriage, clearly stating the air carrier's policy in respect of at least the following matters, namely:
[...]
(x) limits of liability respecting passengers and goods,
[...]
Member(s)
- Date modified: