Decision No. 36-C-A-2020

SUMMARY

[1] The applicant filed an application with the Canadian Transportation Agency (Agency) against Delta, in which the applicant seeks compensation for damage to two pieces of checked baggage and the alleged theft of several items from that baggage. The applicant claims compensation in the amount of CAD 9,095.54.

[2] The applicant received from Delta compensation up to the liability limit set out under Article 22(2) of the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Montreal Convention) and now seeks to recover the remainder of the losses.

[3] The Agency will address the following issue:

Did Delta properly apply its International Passenger Rules and Fares Tariff No. DL‑1 Containing Local and Joint Rules, Fares and Charges on Behalf of Delta Airlines, Inc. Carrying on Business as Delta Airlines, Delta, Delta Shuttle, Delta Connection Applicable to the Transportation of Passengers and Baggage Between Points in the United States/Canada and Points Throughout the World, NTA(A) No. 304 (Tariff), as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (ATR)?

[4] This case turns on its particular facts and availability of the specific relief sought by the applicant under the relevant provisions of the Montreal Convention. For the reasons set out below, the Agency finds that Delta properly applied Rule 55 of its Tariff by compensating the applicant the maximum amount allowable under Article 22(2) of the Montreal Convention, as required by subsection 110(4) of the ATR. Therefore, the application is dismissed.

BACKGROUND

[5] On August 5 and 6, 2018, the applicant flew from Edmonton, Alberta, to Santo Domingo, Dominican Republic, with connections in Seattle, Washington, and Atlanta, Georgia.

[6] The applicant is a photography teacher who packed in the checked baggage several expensive pieces of camera equipment, among other items. The applicant did not plan on packing these items in the checked baggage, but was required to do so at the airport by a Delta agent. Upon arrival at the final destination, the applicant observed damage to the checked baggage and its locks, and noticed that several items were missing.

[7] The applicant brought a claim against Delta for the damage and the loss. Delta compensated the applicant up to the liability limit under Article 22(2) of the Montreal Convention. In Canada, the Montreal Convention is enacted by virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26. Delta incorporates the Montreal Convention in its Tariff.

PRELIMINARY MATTERS

Settlement privileged information

[8] The applicant argues that Delta’s answer improperly includes settlement privileged information as Delta states that it “settled” the claim by compensating the applicant under the Montreal Convention. The applicant submits that accepting this payment did not constitute settling the baggage claim.

[9] Settlement privilege protects information exchanged between parties as they attempt to settle a dispute prior to the adjudicator’s decision. The information exchanged is protected as it may reflect admissions by the parties with respect to the matters being adjudicated. As determined in Decision No. 22-C-A-2018 (Hackman and Boucher v. Air Canada), settlement privileged information, such as settlement offers, should not be included in the answer filed by the carrier. However, the Agency finds that the amount paid by Delta to the applicant is not information subject to settlement privilege, but rather information necessary for the Agency to decide whether to grant the application, including determining whether Delta properly applied its Tariff. Payment as compensation under the Montreal Convention does not constitute privileged settlement information. As a result, the Agency places the entirety of Delta’s answer on the record of these proceedings. However, the Agency also finds that the applicant never agreed to settle the baggage claim in its entirety in accepting the payment from Delta.

New issue in reply and issues already decided

[10] In the reply dated August 8, 2019, the applicant reargued issues that had been decided in the Agency’s directive of July 25, 2019, and raised a new issue regarding the Tariff being difficult to locate on Delta’s website.

[11] A reply represents an opportunity for a party to address additional information or arguments that were raised in another party’s submission. It should not include arguments relating to issues that have already been decided by the Agency. Nor should it include new arguments unrelated to those raised in the other party’s submission unless the applicant files a request under Rules 20 and 34 of the Canadian Transportation Agency Rules (Dispute Proceedings and Certain Rules Applicable to All Proceedings), SOR/2014-104 (Dispute Adjudication Rules).

[12] The Agency will not reconsider the applicant’s request that Delta’s answer be excluded from the record, nor the applicant’s request that Delta be required to create witness statements. Nor will the Agency consider the issue regarding the ease of finding Delta’s Tariff on its website as the applicant did not request that this argument be allowed under Rules 20 and 34 of the Dispute Adjudication Rules.

THE LAW AND RELEVANT TARIFF PROVISIONS

[13] Subsection 110(4) of the ATR requires the carrier to apply its tariff. If the carrier has not properly applied its tariff, section 113.1 of the ATR, as it was in force at the time of the applicant’s travel, states that the Agency may order the carrier to:

1. take the corrective measures that the Agency considers appropriate; and
2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[14] Rule 55 of Delta’s Tariff, which is set out in the Appendix, incorporates the Montreal Convention by reference. The Agency notes that the applicable Tariff rule has been renumbered and amended since the events in question. Although the carrier refers to its current Rule 17 in its answer, the applicable Tariff rule that was in force in relation to the applicant’s travel is Rule 55.

[15] Article 17(2) of the Montreal Convention sets out when a carrier is liable for loss, damage, or delay of checked baggage:

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.…

[16] Article 22(2) of the Montreal Convention sets out the applicable liability limit for destruction, loss, damage, or delay to baggage unless the passenger has made “a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires.”

[17] Article 22(5) sets out an exception to this liability limit:

The foregoing provisions of paragraphs 1 and 2 of this Article shall not apply if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that such servant or agent was acting within the scope of its employment.

[18] Article 29 states:

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.

POSITIONS OF THE PARTIES AND FINDINGS OF FACT

The applicant

[19] The applicant seeks compensation above the liability limit set out in Article 22(2) of the Montreal Convention. The applicant relies on Article 22(5) and Decision No. 8-C-A-2018 (Mudrinic v. Air Serbia) to support the argument that the liability limit should not apply because of the theft of items by the carrier’s servants or agents. In the alternative, the applicant argues that the Montreal Convention does not apply since the baggage was not lost, damaged, or delayed.

[20] The applicant states that the theft was reported immediately after arrival at the final destination, and has provided detailed documentation and phone call summaries in support of the claim, including summaries of conversations with Delta, the Royal Canadian Mounted Police, and various government authorities.

[21] The applicant concludes that since the Transportation Security Administration (TSA), the American security authority, would have been able to open the baggage with a key, only the carrier or one of its agents or servants could have damaged the baggage and the locks. Furthermore, it is posited that the TSA would have left a note if it had opened the baggage. The applicant argues that Delta’s suggestion that the TSA took the items is merely conjecture, and that Delta provided no communication or evidence to suggest that the TSA was responsible.

[22] The applicant claims to have been neither aware of, nor offered, the possibility of making an excess valuation declaration under the Montreal Convention.

Delta

[23] Delta argues that Article 22(5) does not apply because the damage and loss of items were not malicious. Delta argues that the applicant provided no evidence of malicious intent. Rather, its file indicates that the TSA searched the applicant’s bag and may not have replaced all the items. In particular, Delta’s submits that its records include a “reference to a foreign article in the bag that did not belong to the customer.” Delta argues that if TSA had left a note, as it was supposed to, the carrier may not have compensated the applicant under the Montreal Convention because Delta is not responsible for losses caused by security searches.

[24] Delta also submits that the applicant could have made a special declaration for excess valuation pursuant to Article 22(2) and paid the associated fee.

Findings of fact

[25] It is undisputed that the applicant was compensated CAD 2,032, or 1,131 Special Drawing Rights (SDR), which is the SDR liability limit under the Montreal Convention.

ANALYSIS AND DETERMINATIONS

[26] The onus is on the applicant to establish, on a balance of probabilities, that the carrier has failed to properly apply the terms and conditions of carriage set out in its tariff.

The liability limit under the Montreal Convention

[27] As determined in Decision No. 208-C-A-2009 (Lukács v Air Canada), under Article 17(2) of the Montreal Convention, the carrier assumes liability to the limit set out in the Montreal Convention during the period it has care and control of the baggage, other than in the case of an “inherent defect, quality or vice of such baggage.” Essentially, this is presumed fault with limited exceptions.

[28] In this case, the damage occurred while the baggage was in the care and control of the carrier. As a result, the Agency finds that Delta is liable for the damage under Article 17(2) of the Montreal Convention. Delta’s payment aligns with this finding as it provided the applicant with compensation up to the liability limit set out in Article 22(2).

[29] To exceed the liability limit, Article 22(5), by contrast, requires intent to cause damage or knowledge that damage would be the result of the action taken by the carrier’s servants or agents in the course of their employment. Article 22(5) sets a more substantial hurdle for the applicant to clear in order to exceed the limit.

[30] The Agency finds that the applicant has not met the burden of proof under Article 22(5) to establish that the carrier, or its servants or agents, acted or omitted to act “recklessly and with knowledge that damage would probably result” in a manner that resulted in the damage. Instead, the applicant effectively asks that an inference be drawn that it could only be Delta’s servants or agents who were responsible for the pilfering of the baggage. The Agency notes that the checked baggage passed through the baggage handling areas of four airports in three countries where Delta, security, customs, and agricultural authorities, and possibly others, likely had access to these secure areas. There are too many other possible actors to draw the requested inference that it was Delta’s servants or agents who took the applicant’s items.

The special declaration of value under the Montreal Convention

[31] Under Article 22(5) of the Montreal Convention, passengers have the option to extend the liability limit by making a special declaration of value and paying a supplementary sum. The applicant did not make such a declaration in this case, and states to not having been made aware of the option. The Agency notes that the applicant’s ticket clearly states the limitations for compensation by Delta in the event of loss or damage of baggage, and provides information on the special declaration. Specifically, the ticket states:

For international travel to or from another country, airline liability is governed by the Montreal Convention or the Warsaw Convention.... The airline’s liability … for loss, delay or damage to baggage may be limited by the Conventions. In case of, baggage, the liability limit is 1131 Special Drawing Rights (approximately US $1787) per passenger for international travel.… These baggage liability limitations apply unless you declare a higher valuation and pay additional charges at check-in…. [emphasis added]

[32] This information is also set out in the Tariff.

[33] Although there is no specific requirement in the Montreal Convention to inform passengers of the possibility to make a special declaration to extend the liability limits, the Agency encourages Delta to proactively inform passengers of the special declaration option in similar circumstances in the future where a passenger is unexpectedly required to move evidently valuable items from carry-on to checked baggage.

Theft of baggage contents not covered by Montreal Convention

[34] As an alternative argument, the applicant asserts that theft should not be considered to be loss or damage for the purposes of Articles 17(2) and 22(2) of the Montreal Convention.

[35] The Agency has consistently treated claims for items lost or stolen from baggage as falling within the ambit of a claim under Article 17(2) of the Montreal Convention, as in Decision No. 384-C-A-2015 (Mallanagouda v. Jet Airways) and Decision No. 598‑C‑A‑2006 (Marian Lobo v. Kuwait Airways).

[36] Moreover, Article 29 of the Montreal Convention explicitly precludes the argument that theft does not fall within the ambit of the Convention:

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….[emphasis added]

[37] The Agency understands that the applicant has incurred significant losses as a result of the loss of the camera equipment from the checked baggage. However, as the applicant has received compensation up to the liability limit set out in the Montreal Convention, and none of the exceptions to the liability limit apply, the Agency finds that the carrier properly applied its Tariff, as required by subsection 110(4) of the ATR.

CONCLUSION

[38] Consequently, the Agency dismisses the application.

---

APPENDIX TO DECISION NO. 36-C-A-2020

Delta’s International Passenger Rules and Fares Tariff No. DL-1 Containing Local and Joint Rules, Fares and Charges on Behalf of Delta Airlines, Inc. Carrying on Business as Delta Airlines, Delta, Delta Shuttle, Delta Connection Applicable to the Transportation of Passengers and Baggage Between Points in the United States/Canada and Points Throughout the World, NTA(A) No. 304

Rule 55 states:

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 these rules.

….

B. LAWS AND PROVISIONS APPLICABLE

….

(4) The Carrier is liable for damages sustained in the case of destruction or loss of, damage to, or delay of checked and unchecked baggage, as provided in the following paragraphs:

a. Except as provided below, the liability of the Carrier is limited to 1,131 Special Drawing Rights for each passenger in the case of destruction, loss, damage, or delay of baggage, whether checked or unchecked, under the Warsaw Convention or the Montreal Convention, whichever may apply. Unless the passenger proves otherwise:

1. all baggage checked by a passenger shall be considered to be the property of that passenger;
2. a particular piece of baggage, checked or unchecked, shall not be considered to be the property of more than one passenger; and
3. unchecked baggage, including personal items, shall be considered to the property of the passenger in possession of the baggage at the time of embarkation.

b. If a passenger makes, at the time checked baggage is handed to the Carrier, a special declaration of interest and has paid a supplementary sum, if applicable, the Carrier will be liable for destruction, loss, damage, or delay of such checked baggage in an amount not exceeding the declared amount, unless the Carrier proves that the declared amount is greater than the passenger’s actual interest in delivery at destination. The declared amount, and the Carrier’s liability, shall not exceed the total amount of declaration permissible under the Carrier’s regulations, inclusive of the limitation of paragraph (D)(1) hereof. In the case of transportation under the Warsaw Convention, no supplementary sum shall apply unless the declared amount exceeds 19 Special Drawing Rights per kilogram of the total recorded weight of the checked baggage at the time of the baggage is handed to the Carrier. Nevertheless the Carrier may impose charges for pieces of baggage in excess of any free allowance the Carrier may provide.

….

d. The Carrier is not liable for destruction, loss, damage, or delay of the baggage not in the charge of the Carrier, including baggage undergoing security inspections or measures not under the control and direction of the Carrier.

e. The Carrier reserves all defenses and limitations available under the Warsaw Convention, and the Montreal Convention, whichever may apply to such claims including, but not limited to, the defense of Article 20 of the Warsaw Convention and Article 19 of the Montreal Convention, and the exoneration defense of Article 21 of the Warsaw Convention and Article 20 of the Montreal Convention, except that the Carrier shall not invoke Article 22(2) and (3) of the Warsaw Convention in a manner inconsistent with paragraph 4(a) hereof. The limits of liability shall not apply in cases described in Article 25 of the Warsaw Convention in a manner inconsistent with paragraph 4(a) hereof. The limits of liability shall not apply in cases described in Article 25 of the Warsaw Convention or Article 22(5) of the Montreal Convention, whichever may apply.

….