Decision No. 15-C-A-2019

March 15, 2019

APPLICATION by Colm Heaney et al. against Air Canada.

Case number: 
18-05522

SUMMARY

[1] Danailova, Todorov & Partners Law Firm (Firm) filed an application with the Canadian Transportation Agency (Agency) on behalf of Colm Heaney, Maureen Heaney and their two minor children (applicants) regarding Air Canada’s refusal to process their claim under Regulation (EC) No 261/2004 of the European Parliament and of the Council (Regulation (EC) No 261/2004).

[2] The applicants ask the Agency to impose sanctions on Air Canada for refusing to process the claim because it was submitted by SkyRefund and the Firm, rather than by themselves. They also want Air Canada to process the claim and pay compensation in accordance with Regulation (EC) No 261/2004.

[3] The Agency does not have jurisdiction to apply European Union (European) law to the facts of this case. It does, however, have jurisdiction to address the following issues raised by the applicants:

    1. Is Rule 105(F) of Air Canada’s International Passenger Rules and Fares Tariff, NTA(A) No. 458 (Tariff), which sets out a process related to claims made under Regulation (EC) No 261/2004, reasonable within the meaning of subsection 111(1) of the Air Transportation Regulations, SOR/88-58, as amended (ATR)?
    2. Is Rule 105(F) of Air Canada’s Tariff unjustly discriminatory within the meaning of subsection 111(2) of the ATR?

[4] For the reasons set out below, the Agency finds that Rule 105(F) of Air Canada’s Tariff is reasonable and not unjustly discriminatory.

BACKGROUND

[5] On August 3, 2018, the applicants travelled from Dublin, Ireland, to Edmonton, Alberta, via Toronto, Ontario. The departure of their flight from Dublin was delayed by approximately 10 hours. Instead of arriving in Toronto on August 3, 2018 at 2:45 p.m. as scheduled, they arrived in Toronto at 1:13 a.m. on August 4, 2018. As a result of this delay, the applicants missed their connecting flight in Toronto and were rebooked on another flight to Edmonton the following day.

[6] On August 5, 2018, the applicants retained SkyRefund and the Firm to represent them in a claim against Air Canada.

[7] On August 7, 2018, SkyRefund contacted Air Canada on behalf of the applicants, claiming compensation for the flight delay under Regulation (EC) No 261/2004.

[8] On August 16, 2018, Air Canada refused to consider the claim filed by SkyRefund because it had not been submitted directly by the applicants, as required by its Tariff. In the weeks that followed, SkyRefund and the Firm reiterated to Air Canada that the applicants wished to be represented, but Air Canada maintained its position that the claim had to be submitted directly by the applicants.

PRELIMINARY MATTER

Jurisdiction

[9] As noted by the Agency in Decision No. 49-C-A-2016, Decision No. 432-C-A-2013 and Decision No. 34-C-A-2018, the Agency cannot enforce foreign instruments, including Regulation (EC) No 261/2004.

[10] This case is distinct from these Decisions because Air Canada has expressly adopted Regulation (EC) No 261/2004 into its Tariff. In particular, Rule 80(C)(2) of its Tariff states that:

In the case of a schedule irregularity, AC shall implement the provisions of this rule, unless applicable local law provides otherwise. In particular, for flights departing from the following countries, Air Canada will apply the provisions of the following legislations: European [u]nion and Switzerland: EC [r]egulation No. 261/2004[…].

[11] As a result, the Agency has jurisdiction to determine whether the process set out in Rule 105(F) of Air Canada’s Tariff is reasonable or unjustly discriminatory within the meaning of section 111 of the ATR.

Additional submission from Air Canada

[12] On February 20, 2019, Air Canada filed a request under section 34(1) of the Canadian Transportation Agency Rules (Dispute Proceedings and Certain Rules Applicable to All Proceedings), SOR/2014-104, to file a decision of the Royal Courts of Justice of England, Court of Appeal in Bott & Co Solicitors Ltd. v. Ryanair DAC, [2019] EWCA Civ 143 (Court of Appeal Decision), after the close of pleadings. The applicants did not file a response to Air Canada’s request.

[13] Air Canada argues that the Court of Appeal Decision is relevant and necessary to the current proceeding because it affirms the decision made in the Bott & Co Solicitors Ltd. v. Ryanair DAC, [2018] EWHC 534 (Ch) (High Court Decision), which Air Canada used to support one of its arguments in its answer. It submits that the Court of Appeal Decision was not available before the close of pleadings in this case, as the decision was rendered on February 12, 2019. Air Canada argues that placing the Court of Appeal Decision on the record will advance the proceeding and assist the Agency in making a determination on the issue of this case.

[14] The Agency has considered Air Canada’s request and denies it for the following reasons:

  • it is already aware of the High Court Decision as it was cited in Air Canada’s answer;
  • the determination made in the High Court Decision stands given that the appeal was dismissed in the Court of Appeal Decision, and therefore, the inclusion of the Court of Appeal Decision does not change the considerations or determination in this proceeding; and
  • the High Court Decision has limited relevance to the current proceeding because the determination set out in the decision is not binding on the Agency.

THE LAW AND RELEVANT TARIFF PROVISIONS

[15] The relevant provisions of the ATR and the carrier’s tariff are set out in the Appendix.

IS RULE 105(F) OF AIR CANADA’S TARIFF, WHICH SETS OUT A PROCESS RELATED TO CLAIMS MADE UNDER REGULATION (EC) NO 261/2004, REASONABLE WITHIN THE MEANING OF SUBSECTION 111(1) OF THE ATR?

Positions of the parties

THE APPLICANTS

[16] The applicants argue that Air Canada’s requirement that they file a claim directly with it before they can designate a third party representative is unlawful under European law, and therefore must be unreasonable. They claim the right to be represented by the Firm, referring to the right to legal representation enshrined in European human rights law and Article 7.1 of the Interpretive Guidelines on Regulation (EC) No 261/2004 of the European Parliament and of the Council establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights and on Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents as amended by Regulation (EC) No 889/2002 of the European Parliament and of the Council (EC Guidelines) to support their position.

[17] The applicants also argue that it is unreasonable to expect all passengers to have knowledge of their legal rights under European law or to expect them to be comfortable with the process of submitting claims directly to the carrier using online tools. Finally, they argue that it is unreasonable to require passengers to provide their personal banking information for compensation payments, when Air Canada accepts payments for tickets from accounts not belonging to the passenger.

AIR CANADA

[18] Air Canada refused to process the applicants’ claim on the basis that it was submitted by third parties (SkyRefund and the Firm), and not the applicants themselves. It stated the following to the applicants’ representative in two e-mails dated August 16, 2018 and September 17, 2018:

[…] it falls within the scope of our process applicable to all our customers making claims under the Regulation (EC) No 261/2004. We will not process claims submitted by a third party if the customer has not submitted a claim directly to us and allowed us sufficient time to respond. At this point since the passenger has not contacted us directly, we respectfully consider this matter closed.

[19] In support of the reasonableness of Rule 105(F) of its Tariff, Air Canada argues that Article 7.1 of the EC Guidelines suggests that passengers should contact the carrier directly when first submitting a claim. It cites a March 2017 Information Notice to Air Passengers from the European Commission in support of this interpretation.

[20] Air Canada submits that its online process for submitting a claim under Regulation (EC) No 261/2004 is straightforward and does not require knowledge of the European legal regime. Air Canada adds that its policy benefits itself and passengers, as third party representation decreases the compensation received by passengers since the representative generally takes a percentage of the compensation as payment for its work. Making payments directly to passengers ensures that they receive the compensation to which they are entitled. Finally, Air Canada argues that third party involvement increases the administrative burden, creates time delays, and has a negative impact on its ability to maintain good relationships with its passengers.

Analysis and determinations

[21] As stated in Decision No. 44-C-A-2006, in determining whether a term or condition of carriage applied by a carrier is “unreasonable” within the meaning of section 111 of the ATR, the Agency must strike a balance between the rights of the passengers to be subject to reasonable terms and conditions of carriage and the particular air carrier’s statutory, commercial and operational obligations.

[22] Rule 105(F) of Air Canada’s Tariff states that passengers claiming compensation pursuant to Regulation (EC) No 261/2004 must submit their claims directly to the carrier and allow it 30 days to respond before engaging third parties to manage claims on their behalf. The Tariff also stipulates that Air Canada will issue payments or refunds directly to the passenger.

[23] The Agency recognizes that Rule 105(F) is designed to encourage passengers to deal directly with the carrier in an effort to minimize the time delays and offer an efficient way to resolve claims where the application of European law is straightforward. In these respects, the design of the Rule aligns with EC interpretive guidance for Regulation (EC) No 261/2004.

[24] At the outset of Air Canada’s claim process, Rule 105(F) does restrict the freedom of most passengers to designate a representative of their choice to manage their claim against the carrier. However, these restrictions are limited in several important ways. The Rule allows for exceptions where, for example, passengers are travelling on the same booking or a passenger does not have the capacity to submit a claim personally. It does not prevent passengers from seeking advice or counsel from third parties, including legal advice, at any point during the claim process. Where Air Canada’s process is not effective for passengers within thirty days, they can seek third party representation in pursuit of their claims.

[25] Given that there is an existing contractual relationship between Air Canada and its passengers, it is reasonable to allow the carrier the first opportunity to address its passengers’ claims. Rule 105(F) therefore strikes a reasonable balance between providing the carrier with sufficient time to apply its dispute resolution process and preserving the rights of passengers to seek representation and escalate a dispute if they are not satisfied.

[26] The applicants also argue that the process through which passengers submit compensation claims is unreasonable because Air Canada’s online tool could be misleading or could be designed to require fewer steps to submit a claim. The Agency finds that Air Canada’s compensation process is reasonable. The web-based procedure is easy to navigate and straightforward, allowing passengers to interact directly with the carrier, through a single site, on a wide variety of travel issues, including compensation claims. A passenger is unlikely to be misled while filling out the form and can retrace their steps to correct an error. The Agency also notes that Rule 105(F) does not require passengers to use the web-based procedure.

[27] With regard to Air Canada’s policy of issuing payments or refunds directly to passengers, the Agency accepts Air Canada’s contention that it has designed its policy to ensure that those experiencing the inconvenience receive the compensation to which they are entitled under European law. This approach reduces the potential for mistakes, fraud or exploitation of vulnerable passengers, regardless of who made the travel reservation or paid for the ticket. Passengers are not obliged to provide their banking information in order to receive compensation: Rule 105(F) of Air Canada’s Tariff specifies that payment may be made by cheque, email transfer or bank transfer.

[28] For these reasons, the Agency finds that Rule 105(F) is reasonable within the meaning of subsection 111(1) of the ATR, striking a balance between passenger rights and Air Canada’s statutory, commercial and operational obligations.

IS RULE 105(F) OF AIR CANADA’S TARIFF UNJUSTLY DISCRIMINATORY WITHIN THE MEANING OF SUBSECTION 111(2) OF THE ATR?

Positions of the parties

THE APPLICANTS

[29] The applicants argue that Rule 105(F) discriminates against passengers who are:

  • visually impaired;
  • physically impaired;
  • illiterate;
  • not able to speak one of the languages used on Air Canada’s website;
  • purchasing tickets through a third party and who do not possess any of their flight information; and
  • not computer literate.

[30] The applicants claim that anyone falling within any one of these groups will likely need to obtain the assistance of a third party to submit a claim to a carrier.

AIR CANADA

[31] Air Canada argues that its policy does not place any particular group of passengers at a disadvantage. It points out that its website is accessible to visually impaired passengers using screen readers. Air Canada indicates that Rules 105(F)(3) and (4) clearly stipulate that a legal guardian can submit a claim for a passenger and that a passenger can submit a claim on behalf of another passenger. Air Canada states that its current process allows claims filed on a passenger’s behalf if the representation can be reasonably justified, for example, for passengers who are minors or who have a disability. It also submits that Rule 105(F) does not impede access to third party assistance at any point in the claims process.

[32] Air Canada argues that, in the event that its policy is found to be discriminatory, the discrimination is not undue given that it is acting within its operational, statutory and commercial obligations.

Analysis and determinations

[33] The Agency held in Decision No. 436-C-A-2007 that when determining whether a term or condition applied by an air carrier constitutes “unjust discrimination” within the meaning of section 111 of the ATR, it must adopt a contextual approach which balances the right of the travelling public not to be subject to terms and conditions that are discriminatory with the air carrier’s regulatory, operational and commercial obligations.

[34] The first issue for the Agency to consider in determining whether a term or condition of carriage constitutes “unjust discrimination” within the meaning of section 111 of the ATR is whether the term or condition of carriage is discriminatory.

[35] The Agency has stated in past decisions, such as in Decision No. 436-C-A-2007 and Decision No. 746-C-A-2005, that a toll, term or condition of carriage would be discriminatory if it singled out a particular passenger or group of passengers, or shippers, for different treatment for reasons that could not be justified.

[36] While the applicants assert that Rule 105(F) discriminates against certain categories of passengers, no evidence has been put forward that passengers who are incapable of making a claim themselves have, in fact, been prevented from filing claims through Air Canada’s process. Rule 105(F) provides for passengers who are not legally capable of submitting claims to be represented, and for a passenger to represent other passengers on the same booking. In addition, Air Canada stated in its answer that its current procedure is to allow claims made by a third party on a passenger’s behalf if this representation can be reasonably justified. The applicants have not provided any evidence that these mechanisms are insufficient to address the concerns that they have raised.

[37] In light of the above, the Agency finds that Rule 105(F) has not been shown to be discriminatory within the meaning of subsection 111(2) of the ATR. Consequently, there is no need to consider whether discrimination is unjust in this case.

ORDER

[38] The Agency dismisses the application.


APPENDIX TO DECISION NO. 15-C-A-2019

THE LAW AND RELEVANT TARIFF PROVISIONS

Air Transportation Regulations, SOR/88-58, as amended (ATR)

Subsection 111(1) of the ATR requires that a carrier’s terms and conditions of carriage be just and reasonable, and provides as follows:

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.

Subsection 111(2) of the ATR provides that:

No air carrier shall, in respect of tolls or the terms and conditions of carriage,

(a) make any unjust discrimination against any person or other air carrier;

(b) give any undue or unreasonable preference or advantage to or in favour of any person or other air carrier in any respect whatever; or

(c) subject any person or other air carrier or any description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatever.

Air Canada’s International Passenger Rules and Fares Tariff, NTA(A) No. 458

Rule 105(F) of Air Canada’s Tariff, which relates to liability of carriers respecting claims made pursuant to Regulation (EC) No. 261/2004, states as follows:

1) Passengers must submit claims made pursuant to Regulation (EC) No. 261/2004 directly to the Carrier and allow the Carrier 30 days or such time as prescribed by applicable law (whichever is the shorter time period) to respond directly to them before engaging third parties to claim on their behalf.

2) The Carrier will not process claims submitted by a third party if the passenger concerned has not submitted the claim directly to the Carrier and allowed the Carrier time to respond, in accordance with the above.

3) In the event that a passenger does not have the capacity to submit a claim personally, the legal guardian of said passenger may submit a claim to the Carrier on the passenger’s behalf. The Carrier may request evidence that the legal guardian has authority to submit a claim to the carrier on the passenger’s behalf.

4) A passenger may submit a claim to the Carrier on behalf of other passengers on the same booking. The Carrier may request evidence that the passenger has the consent of other passengers on the booking to submit a claim on their behalf.

5) The Carrier will not process claims submitted by a third party unless the claim is accompanied by appropriate documentation duly evidencing the authority of the third party to act on behalf of the passenger.

6) Passengers are not prohibited by this clause from consulting legal or other third party advisers before submitting their claim directly to the Carrier.

7) Any payment or refund will be made by cheque, email transfer or bank transfer directly to the passenger at the choice of the Carrier. The Carrier may request evidence that the bank account is held by the passenger concerned.

Member(s)

Heather Smith
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