Court File and Parties

Court File No.: 346/07 Date: 2008-08-14 Superior Court of Justice – Ontario (Divisional Court)

Re: ACE AVIATION HOLDING INC. and 1467989 ONTARIO, cob as air canada (Appellants/Respondents to the Cross-Appeal) v. WILLIAM HOLDEN and Lorraine HOLDEN (Respondents/Appellants by Cross-Appeal)

Before: Justice Low

Counsel: Clay S. Hunter, for the Appellants Cynthia R. C. Sefton, for the Respondents

Date Heard: August 12, 2008

Endorsement

[1] This is an appeal by Air Canada from the judgment of Deputy Judge John J. Freeman in the Small Claims Court dated June 18, 2007.

[2] The respondents Mr. and Mrs. Holden were passengers on one of Air Canada's flights to New York on or about August 3, 2005. Mrs. Holden checked a piece of baggage. Mr. Holden did not. The piece of baggage that Mrs. Holden checked was lost and was never recovered. The bag contained articles belonging to Mrs. Holden and articles belonging to Mr. Holden. They advised the Air Canada agent of that.

[3] Mr. and Mrs. Holden joined as co-plaintiffs in a small claims court proceeding against Air Canada arising out of the loss of the piece of baggage checked by Mrs. Holden. Mr. and Mrs. Holden sought damages of $5,000 arising from the loss of his and her respective articles contained in the piece of baggage.

[4] The rights and responsibilities of the Holdens and Air Canada relative to the Holdens' international flight to New York is governed by the Convention for the Unification of Certain Rules for International Carriage by Air ("the Montreal Convention, 1999") which is incorporated into the laws of Canada by the Carriage by Air Act, R.S.C. 1985, c. C-26 as amended.

[5] The relevant article for purposes of deciding the claim and this appeal is Article 22(2) of the Montreal Convention, 1999 which provides:

In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1 000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage 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 it proves that the sum is greater than the passenger's actual interest in delivery at destination.

[6] There is no dispute that the value of 1000 Special Drawing Rights was $1,776.49 at the time of loss. There is no dispute that Mrs. Holden, the passenger who checked the piece of baggage, was entitled to compensation in the amount of $1,776.49 as a result of the loss.

[7] I digress at this point to deal with the cross-appeal. The Holdens contend that the limits of liability contained in the Montreal Convention for loss of baggage was never drawn to their attention and that Air Canada therefore is not entitled to rely on the limits of liability in the Convention. In the cross-appeal they seek an order varying the judgment to award them damages in the amount of $5,000.

[8] In my view, the trial judge held correctly that the language of Article 3(5) governs and that the quantum of recovery is limited even in the absence of notice. Clearly the provision in Article 3(4) is intended to be directory only and does not negative the monetary limitation of liability.

[9] The cross-appeal is therefore dismissed.

[10] The issue on the appeal is whether a passenger is entitled to compensation for loss of chattels contained in a piece of baggage which he did not check with the carrier but which another passenger has checked.

[11] The outcome of Mr. Holden's claim and this appeal turns on the proper construction of the word "passenger" in Article 22(2). I am not persuaded that the meaning of that word is plain, obvious and pellucidly clear in the context in which it is used in Article 22(2). The trial judge's reasons deal with the point at paragraph 9, but, with respect, I am unable to find assistance in those reasons. His observation that Article 22 provides that each passenger may make a claim does not help in elucidating what is meant by the word "passenger".

[12] I accept the submission that in construing the meaning of the word "passenger" in Article 22 of the Montreal Convention, recourse must be made to the canons of interpretation of international treaties and to the Vienna Convention on the Law of Treaties: regard should be had for the grammatical meaning, the logical interpretation, the teleological interpretation, and the historic context of the provision. (see Plourde v. Service aérien F.B.O. inc. (Skyservice), 2007 CarswellQue 4562, (Que. C.A.) leave to appeal dismissed, 1007 CarswellQue 11028 (S.C.C.).

[13] The trial judge was regrettably not afforded the benefit of the arguments and materials which were placed before this court on the argument of the appeal.

[14] The interpretation of the word "passenger" in Article 22(2) as advanced by the appellant is one which denotes an individual who is on the flight and who has checked the piece or pieces of baggage lost. The interpretation of the word as advanced by the respondents is one which denotes an individual who is on the flight without regard to whether he or she has checked a piece of baggage.

[15] If the word "passenger" is interpreted in the second way, then the words which follow"unless the passenger has made, at the time when the checked baggage was handed over to the carrier…" no longer make good sense.

[16] If, on the other hand, the word "passenger" is construed in the first way, then the whole of Article 22 is internally consonant and all of the words have meaning. In my view, the words "at the time when the checked baggage was handed over" indicates that the passenger to whom liability is owed is one who has checked the piece of baggage.

[17] Very different consequences flow from the competing interpretations of the word. On the first interpretation, there is certainty for the carrier and certainty for the passenger checking the piece of baggage. The result, in terms of level of certainty for both passenger and carrier is the same as under the Warsaw Convention, the precursor to the Montreal Convention, which limited liability for baggage in terms of a monetary value per unit of weight. There is a high level of certainty and predictability in that the passenger knows the limits of his recovery and the carrier knows the limits of its liability in case of loss. Further, the passenger has the option of making a special declaration if he or she wishes to increase the monetary limits of liability.

[18] On the second interpretation, there is a significant diminution of certainty and predictability as it permits the bringing of claims and the proliferation of litigation arising out of claims of ownership of chattels lodged in another passenger's check baggage. The carrier cannot know then what the limits of its liability are in respect to any one piece of baggage as a number of different passengers may assert claims arising from its loss by asserting ownership of chattels within it.

[19] In my view, both the logical and teleological interpretations militate in favour of the construction advanced by the appellant. A primary objective and purpose of the Montreal Convention, 1999 and its predecessor, the Warsaw Convention, is uniformity, consistency, certainty and predictability with respect to the rights and obligations of carriers and passengers engaged in international carriage by air. This is apparent from the Minutes of the Thirteenth Meeting, May 25, 1999, of the International Conference on Air Law, Commission of the Whole; see also Connaught Laboratories Ltd. v. British Airways, 2002 4642 (ON SC), 61 O.R. (3d) 204, aff'd 2005 CarswellOnt 1975 (C.A.).

[20] The construction of the word "passenger" advanced by the appellant is consonant with the purposes of uniformity, certainty and predictability whereas the construction advanced by the respondents and adopted by the trial judge would allow for the anomalous result that any passenger on a flight could advance a claim for compensation arising out of loss of another passenger's baggage.

[21] In my view, the proper construction of the word "passenger" in the context of Article 22(2) is the one which denotes an individual who is a passenger and who has checked the piece of baggage that is lost. That construction is consonant with the purposes of the Convention and results in all of the language of the Article having meaning and internal logic. It avoids the potential for exposure to an uncertain quantum of liability and exposure to an uncertain number of claimants. There is no prejudice to the passenger as he or she is at liberty to check his or her own bag and/or make the special declaration contemplated in the Article. Accordingly, I would allow the appeal and set aside the judgment in favour of William Holden in the amount of $1,776.49.

[22] If the parties are not able to agree as to costs, submissions of no more than 3 pages may be made in writing by the appellants within 10 days and by the respondents within 10 days following receipt of appellants' submissions.

Low J.

DATE: August 14, 2008