Mosregion Investments Corporation et al. v. Ukraine International Airlines et al.

[Indexed as: Mosregion Investments Corp. v. Ukraine International Airlines]

99 O.R. (3d) 49

Ontario Superior Court of Justice, Divisional Court, J. Wilson J. October 23, 2009

Limitations -- Aviation -- Action "brought" within meaning of art. 29 of Warsaw Convention when it is initiated -- "Brought" not meaning that claim must be both initiated and served within limitation period.

The plaintiffs commenced an action within two years of the event giving rise to the claim. However, the notice of action and statement of claim were not served on several parties within the time frame required by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. More than a year later, an order was granted extending time for service of the statement of claim upon the defendants who had not yet been served. The action was governed by the two-year limitation period stipulated by the Warsaw Convention. The defendant moved to set aside the order. The Master dismissed the motion. The defendant appealed.

Held, the appeal should be dismissed.

Article 29 of the Warsaw Convention states that "The right to damages shall be extinguished if an action is not brought within two years . . .". The Master correctly held that "brought" within the meaning of art. 29 requires only that the claim be initiated, and does not require the claim to be both initiated and served within the limitation period. The action was brought within the limitation period. Rule 3.02 of the Rules of Civil Procedure explicitly allows the request for an extension of time for service of the statement of claim to be brought after the expiry of the time for service.

APPEAL from an order dismissing a motion to set aside an order extending time for the service of a statement of claim.

Cases referred to Goldenberg v. Murphy, 108 U.S. 162, 2 S. Ct. 388, 27 L. Ed. 686 (1883); Hames v. Judd, 18 Civ. Pro. Rep. 324, 9 N.Y.S. 743 (1890); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Kemp v. Metzner, [2000] B.C.J. No. 1624, 2000 BCCA 462, 190 D.L.R. (4th) 388, 140 B.C.A.C. 242, 78 B.C.L.R. (3d) 187, 98 A.C.W.S. (3d) 702; McGrath v. Scriven, 1920 467 (SCC), [1920] S.C.J. No. 75, 56 D.L.R. 117, [1921] 1 W.W.R. 1075 at 1085, 35 C.C.C. 93, affg 1920 384 (NS CA), [1920] N.S.J. No. 1, 52 D.L.R. 342, 54 N.S.R. 1, 33 C.C.C. 70 (S.C.); Mosregion Investments Corp. v. Ukraine International Airlines, [2009] O.J. No. 1457 (S.C.J.); Zeitoun v. Economical Insurance Group (2009), 96 O.R. (3d) 639, [2009] O.J. No. 2003, 2009 ONCA 415, 73 C.P.C. (6th) 8, 307 D.L.R. (4th) 218, 73 C.C.L.I. (4th) 255

Statutes referred to Carriage by Air Act, R.S.C. 1985, c. C-26, Sch. I, arts. 28(1), (2), 29(1), (2)

Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 3.02, 14.08(2), 37.14(1) [as am.]

Treaties and conventions referred to Warsaw Convention, art. 29

John M. Banfill, for plaintiffs. Gerard A. Chouest and Tae Mee Park, for defendant, Ukraine International Airlines. Pat Floyd, for Nav Canada.

[1] J. WILSON J. (orally): -- Ukraine International Airlines ("UIA") appeals from the order of Master Dash dated April 14, 2009 [[2009] O.J. No. 1457 (S.C.J.)], dismissing the appellant's motion to set aside the order of Master Hawkins dated September 30, 2008. In this appeal, the appellant raises one narrow issue with respect to the interpretation of the limitation period stipulated in the Warsaw Convention and accepts as correct the balance of the findings of Master Dash.

[2] On August 2, 2005, an Air France aircraft overran the runway at Pearson International Airport and was ultimately consumed by fire.

[3] This action was commenced on August 1, 2007. However, the notice of action and statement of claim were not served on several parties within the time frame required by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. On September 30, 2008, Master Hawkins extended the time for service of the statement of claim upon the defendants that had not yet been served, including UIA.

[4] It is acknowledged by the parties that this case is governed by the Warsaw Convention. The appellant challenges the conclusions reached by the Master that "brought" within the meaning of art. 29 requires only that the claim be initiated, and does not require the claim to be both initiated and served within the two-year limitation period stipulated by the Warsaw Convention.

Background Facts

[5] The Master succinctly outlines in his reasons the background facts [at paras. 2-4]:

This action arises out of the August 2, 2005 landing of an Air France aircraft at Toronto International Airport that overran the runway and was ultimately consumed by fire. The plaintiffs claim that critically important documents packed in their checked baggage aboard the flight were destroyed in the fire, causing the plaintiffs a substantial loss. The baggage was loaded in Kiev, Ukraine by UIA and transferred to the Air France flight in Paris. The plaintiffs claim that UIA negligently and in breach of contract failed to issue appropriate documentation to ensure the declared value of the documents and to communicate that value to subsequent carriers.

The action was commenced on August 1, 2007 and in accordance with rule 14.08 the notice of action and statement of claim were required to be served by February 1, 2008. By that date UIA and three other defendants had not been served. Process servers unsuccessfully attempted to locate offices for UIA in Toronto in October and November 2007 and allegedly attempted to serve "incoming crews" from UIA at Toronto Airport but were not permitted access. (UIA indicates it does not fly into Toronto). In February 2008 agents in Ukraine were retained to serve UIA at an address in Kiev, but service could not be effected since UIA had moved.

The plaintiffs initially attended before Master Sproat on July 23, 2008 on a without notice basis to obtain an order extending the time for service nunc pro tunc. Master Sproat adjourned the motion for notice to be served on UIA and other defendants who had not yet been served with the claim.

[6] The motion to extend time for service of the claim was brought before Master Hawkins on September 30, 2008. Although UIA had by this time been served with the motion materials and the statement of claim, through inadvertence only some of the documents were forwarded by UIA to their insurers and solicitors in London, England. Therefore, its insurer and solicitors were unaware of the motion before Master Hawkins and no one attended on behalf.

[7] UIA moved before Master Dash, pursuant to rule 37.14(1) of the Rules of Civil Procedure, seeking to set aside the order of Master Hawkins, raising various issues including misrepresentation and mistake. In his carefully crafted reasons, the Master concluded that there was no merit to the allegation that the principle of misrepresentation or mistake applied to the motion as UIA had been served with the motion material. In any event, the Master concluded that, notwithstanding some inaccuracies in the affidavit material, it would be appropriate in the circumstances to exercise his discretion to extend the order of Master Hawkins with respect to service of the claim. The appellant does not question these findings.

Standard of Review

[8] The standard of review of a final order of a master is stipulated in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31 and Zeitoun v. Economical Insurance Group (2009), 2009 ONCA 415, 96 O.R. (3d) 639, [2009] O.J. No. 2003, 307 D.L.R. (4th) 218 (C.A.). Findings of fact should not be reversed on appeal unless the lower court made a palpable and overriding error in the assessment of facts or in the application of the facts to the law. For questions of law, the standard is correctness.

The Appeal

[9] The appellant does not challenge that Ontario is the appropriate forum to determine this dispute.

[10] The appellant concedes that the plaintiffs' action was commenced within the applicable two-year limitation period stipulated in art. 29 of the Warsaw Convention.

[11] The appellant objects to the extension of time to allow service of the claim once the six-month period for service of the claim provided for in rule 14.08(2) of the Rules of Civil Proceedure had expired.

[12] The appellant challenges the conclusions reached by the Master in paras. 30 and 31 of his decision with respect to whether art. 29 of the Warsaw Convention had been complied with:

UIA asserts that the two year limitation period for commencing this action expired on August 2, 2007, between the date that the statement of claim was issued and the deadline for service under rule 14.08 and it had expired prior to the motion for an extension. In dealing with a similar allegation in Beynon, supra, Master Graham stated at paragraph 18: "The expiry of a limitation period does not create a presumption of prejudice to the defendant in relation to the extension of time for service of the statement of claim." As Master Graham noted, this is consistent with Clairmonte v. Canadian Imperial Bank of Commerce, 1970 470 (ON CA), [1970] 3 O.R. 97 (C.A.) where Laskin J.A. wrote: "[W]here an action has been commenced within the proper limitation period, there can be no pretence that any right of a defendant to rely on a limitation period is prejudiced, because the course of the action is protracted."

UIA argues that if the time is extended they will be prejudiced by the loss of their right to rely on Article 35 of the Convention for the Unification of Certain Rules for International Carriage by Air attached as Schedule VI to the Carriage by Air Act, R.S.C., 1985, c. C-26 which provides that "the right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at a destination . . ." In my view that adds nothing to the rationale in Beynon and Clairmonte since the action was indeed "brought" within the two years set out in that act. The expiry of that limitation period does not by itself amount to prejudice in relation to the extension of time for service of the statement of claim sought on the motion.

[13] The appellant argues that the Master should not have determined the issue, as it prejudices the defendants' right to make an argument about the limitation period in the action. I disagree. The Master quite correctly determined the issue. First, the issue was raised by the appellant. Second, the issue is relevant to whether or not the Master should exercise his discretion to extend the time limits for service.

The Warsaw Convention

[14] The official version of the Warsaw Convention adopted worldwide is in French. Both the French and English version were adopted and incorporated into the laws of Canada by the Carriage by Air Act, R.S.C. 1985, c. C-26, Sch. I. Therefore, both the French and the English versions of the convention should be considered.

[15] Articles 28 and 29 are the relevant provisions and provide:

Article 28:

(1) L'action en responsabilité devra être portée, au choix du demandeur, dans le territoire d'une des Hautes Parties Contractantes, soit devant le tribunal du domicile du transporteur, du siège principal de son exploitation ou du lieu où il possède un établissement par le soin duquel le contrat a été conclu, soit devant le tribunal du lieu de destination.

(2) La procédure sera réglée par la loi du tribunal saisi.

(1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the Court having jurisdiction at the place of destination.

(2) Questions or procedure shall be governed by the law of the Court seized of the case.

Article 29:

(1) L'action en responsabilité doit être intentée, sous peine de déchéance, dans le délai de deux ans à compter de l'arrivée à destination ou du jour où l'aéronef aurait dû arriver, ou de l'arrêt du transport.

(2) Le mode du calcul du délai est déterminé par la loi du tribunal saisi.

(1) The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

(2) The method of calculating the period of limitation shall be determined by the law of the Court seized of the case. (Emphasis added)

[16] The appellant argues that the Warsaw Convention is a special regime providing for a clear limitation period and should not be interpreted or "watered down" by Ontario procedural law. There is no merit to the appellant's argument that an action being "brought", or an action "doit être intentée", means that it must be initiated and served within the two-year limitation period stipulated by the treaty.

[17] Article 29(2) confirms that "[t]he method of calculating the period of limitation shall be determined by the law of the Court seized of the case". In this case, the court is acknowledged to be Ontario.

[18] Similarly, art. 28(2) is clear that "[q]uestions or procedure shall be governed by the law of the Court seized of the case", which again is Ontario.

[19] Rule 3.02 of the Rules of Civil Procedure explicitly allows the request for an extension of time to be brought after the expiry of the time for service.

[20] Counsel for the appellant provided no authorities interpreting the meaning of "brought" or "doit être intentée". Therefore, I adjourned the matter and asked counsel to provide the court with any available authorities, as well as any definitions of "brought" or "doit être intentée".

[21] The plain meaning of "bring" or "brought" or "doit être intentée" does not mean initiated or commenced and served, as suggested by the appellant/defendant.

[22] "Intenter une action" is defined in Hubert Reid, Dictionnaire de Droit Québécois et Canadien, 3rd ed. (Montréal: Wilson & Lafleur Ltée, 2004) as: "to bring an action, to institute proceedings, to sue".

[23] Black's Law Dictionary, 9th ed. (St. Paul, Minn.: West, 2009) defines "bring" as: "[t]o sue: initiate legal proceedings".

[24] Courts have held that "bring" means to commence or institute a legal proceeding and does not include service of the documents initiating the proceeding. In Goldenberg v. Murphy, 108 U.S. 162, 2 S. Ct. 388 (1883), at p. 163 U.S., the court stated that "[a] suit is brought when in law it is commenced". Similarly the court in Hames v. Judd, 18 Civ. Pro. Rep. 324, 9 N.Y.S. 743 (1890), at p. 325 Civ. Pro. Rep., stated"[t]he phrase to bring an action has a settled, customary, legal, as well as general meaning and refers to the initiation of legal proceedings in the suit".

[25] Courts in Canada have interpreted "brought" within particular legislative regimes to mean commencing a suit by filing a statement of claim: see Kemp v. Metzner, 2000 BCCA 462, [2000] B.C.J. No. 1624, 190 D.L.R. (4th) 388 (C.A.) and McGrath v. Scriven, 1920 384 (NS CA), [1920] N.S.J. No. 1, 52 D.L.R. 342 (S.C.), affd 1920 467 (SCC), [1920] S.C.J. No. 75, [1921] 1 W.W.R. 1075 at 1085.

[26] There is no merit to the appellant's arguments. The Master correctly concluded that the limitation period contemplated in art. 29 of the Warsaw Convention had been met. For these reasons, the appeal is dismissed.

Costs

[27] This matter has been quite complicated, and required two court appearances. I fix costs payable in that amount of $5,900 payable by the appellant/defendant UIA to the respondents forthwith.

Appeal dismissed.