Decision No. 540-C-A-2002

October 1, 2002

October 1, 2002

IN THE MATTER OF a complaint filed by Howard Kirshenbaum respecting the limit of liability applicable to Air Canada for the domestic carriage of checked baggage, and the availability of tariffs.

File No. M4370/A74/00-709


COMPLAINT

On November 1, 2000, Howard Kirshenbaum filed with the Air Travel Complaints Commissioner the complaint set out in the title. However, due to the regulatory nature of the complaint it was referred to the Canadian Transportation Agency (hereinafter the Agency).

On December 14, 2000, Agency staff requested that Air Canada address the complaint within the context of subsection 67.2(1) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA).

By letter dated January 15, 2001, Air Canada requested an extension until February 2, 2001 to file its answer to the complaint, and by Decision No. LET-A-22-2001 dated January 18, 2001, the Agency granted the extension. On February 2, 2001, Air Canada filed its answer. By letter dated February 6, 2001, Mr. Kirshenbaum requested an extension until March 2, 2001 to file his reply, and by Decision No. LET-A-66-2001 dated February 12, 2001, the Agency granted the extension. On March 2, 2001, Mr. Kirshenbaum filed his reply.

On March 14, 2001, Air Canada responded to Mr. Kirshenbaum's reply and on March 26, 2001, Mr. Kirshenbaum provided comments respecting Air Canada's submission. Although these submissions were received after the close of pleadings, the Agency, in its Decision No. LET-A-169-2001 dated March 30, 2001, accepted them as being relevant and necessary to its consideration of this matter.

By Decision No. LET-C-A-330-2001 dated July 12, 2001, the Agency advised Air Canada and Mr. Kirshenbaum that the Agency had determined that certain issues needed to be addressed to allow the Agency to make its final determination. Accordingly, the Agency posed certain questions to Air Canada respecting its limit of liability, and provided the carrier thirty (30) days in which to respond. Air Canada, by letter dated August 14, 2001, requested an extension until August 24, 2001 to file its response. By Decision No. LET-C-A-378-2001 dated August 17, 2001, the Agency granted the extension and on August 21, 2001, Air Canada filed its response. Mr. Kirshenbaum, by letter dated August 28, 2001, submitted his comments respecting this response.

Pursuant to subsection 29(1) of the CTA, the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, the parties have agreed to an indefinite extension of the deadline.

PRELIMINARY MATTER

Air Canada filed with the Agency a further submission dated September 14, 2001 summarizing its position. Although this submission was filed after pleadings were closed, the Agency, pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23, accepts it as being relevant and necessary to its consideration of this matter.

ISSUES

The issues to be addressed are whether Air Canada has (i) applied the terms and conditions of its domestic tariff, (ii) made a copy of this tariff available for inspection, and (iii) applied terms and conditions of carriage that are unreasonable.

POSITIONS OF THE PARTIES

On August 19, 2000, Mr. Kirshenbaum travelled from Toronto, Ontario to Ottawa, Ontario on Air Canada, connecting with Bradley Air Service Limited carrying on business as First Air and/or Ptarmigan Airways and/or Northwest Territorial Airways and/or NWT Air (hereinafter First Air) for carriage from Ottawa, Ontario to Resolute Bay, Arctic Archipelago. Mr. Kirshenbaum submits that Air Canada failed to transfer his baggage to First Air in Ottawa and as a result, he was obligated to cancel his adventure vacation in the High Arctic as his baggage contained the equipment and medication that were needed for the trip. The complainant rejected Air Canada's offer of compensation of $1,500.00 and the reinstatement of the 15,000 Aeroplan points that Mr. Kirshenbaum applied to his trip, and seeks compensation from the carrier of $18,569.66 ($8,269.66 for actual expenses and $10,300 as damages for loss of holiday), plus a reinstatement of his Aeroplan points.

Mr. Kirshenbaum states that he advised Air Canada personnel of the importance of his baggage, and he was assured that no problems would be encountered in connecting with First Air. Mr. Kirshenbaum alleges that Air Canada was negligent in losing his baggage, and that the carrier breached its contract with him. The complainant submits that any tariff provision respecting limits of liability applicable to Air Canada has no effect because: it was not brought to his attention; it did not form part of the contract of carriage, and, it does not apply to a fundamental breach of the contract. Mr. Kirshenbaum argues further that a tariff provision that limits Air Canada's liability is "grossly unreasonable and unfair".

On February 2, 2001, Air Canada submits that Mr. Kirshenbaum's "complaint" represents a claim for relief, that the Agency has no jurisdiction to make determinations regarding breaches of contract or negligence and that the Agency is not empowered to award costs pursuant to subsection 67.2(1) of the CTA. Air Canada maintains this matter is best addressed in civil court.

Mr. Kirshenbaum disputes Air Canada's contention that the Agency has no jurisdiction to consider his complaint, arguing that recent amendments to the CTA contemplate the Agency granting relief, including monetary compensation, to persons aggrieved by the inappropriate application or the purported application of a term and condition applicable to domestic air travel. The complainant states that, in applying an exclusion of liability without establishing that such exclusion appears in a tariff, Air Canada has applied a term and condition that is not set out in the carrier's tariff, thereby contravening section 67.1 of the CTA. In this regard, Mr. Kirshenbaum notes that, despite repeated efforts to obtain a copy of Air Canada's tariff, including at airports in Toronto and Ottawa, the carrier failed to provide him with such copy, explaining on one occasion that, unless the specific provision with which Mr. Kirshenbaum had an interest could be identified, a copy could not be provided. Mr. Kirshenbaum argues that, given Air Canada's contravention of section 67.1 of the CTA, the Agency has the jurisdiction to award damages.

With respect to subsection 67.2(1) of the CTA, Mr. Kirshenbaum states that the jurisdiction must exist to give effect to a disallowance or suspension of a term and condition of carriage under this provision, and that such jurisdiction is found either outside the terms of the regulation or is deemed to be included in the regulation as ancillary and necessary. Mr. Kirshenbaum further states that there is nothing in principle, policy or legislation that precludes the remedial jurisdiction from including the power to award monetary compensation.

On March 14, 2001, Air Canada responded to Mr. Kirshenbaum's letter and it indicates that its tariff is clear with respect to limits of liability for the domestic carriage of baggage, and reiterates that this matter is more properly suited for civil adjudication.

On March 26, 2001, Mr. Kirshenbaum again states that the Agency has the jurisdiction to consider his claim and submits that Air Canada's failure to disclose its tariffs makes a mockery of the carrier's obligation to make these tariffs available for public inspection, and of the public's right to know.

In its letter of July 12, 2001 to Air Canada and Mr. Kirshenbaum, the Agency posed the following questions to the carrier:

  1. Why is the limit of baggage liability for domestic carriage lower than that applicable to international and transborder travel?
  2. How did Air Canada determine that $1,500 per passenger would be an appropriate limit for the domestic carriage of baggage?
  3. Why has Air Canada not chosen to increase its limit of liability applicable to the domestic carriage of baggage to levels comparable to other jurisdictions, such as that which applies to domestic U.S. carriage, i.e., US$ 2,500 per passenger?

With respect to Question (i), Air Canada argues that the assumption underlying the question is incorrect as the baggage liability limit varies according to weight for international travel, while the limit for domestic travel is set at $1,500 per passenger. Air Canada notes that, for international transportation, the limits of liability are contained in the Warsaw Convention, and that such limits have been incorporated in Canadian legislation, namely, the Carriage by Air Act, R.S.C., 1985, c. C-26, as amended. In addition, Article 22 of the Warsaw Convention, as amended by the Hague Protocol in 1955 and by the Montreal Protocol No. 4 in 1975 limits the liability of an air carrier for checked baggage to an amount of 250 French gold francs (or 17 Special Drawing Rights) per kilogram, unless the passenger has paid for excess valuation or weight. Air Canada cites as an example the loss of a piece of baggage weighing 32 kilograms, which is the maximum weight allowed by Air Canada without excess baggage charges being assessed; Air Canada indicates that, after performing the appropriate calculations, the resulting limit of liability of $1,034.83 is lower than that applicable to domestic carriage.

Concerning Question (ii), Air Canada indicates that it revised its limit of liability in the summer of 2000 from $750 per passenger to $1,500 per passenger in response to changes in the air transport industry, and as it considered a higher amount to be appropriate in light of the limit for international transportation set out in the Carriage by Air Act.

Air Canada, in reply to Question (iii), notes that its limit of liability exceeds that applicable to any other domestic Canadian carrier and expresses its view that an Agency decision finding that Air Canada's limit of liability is unreasonable would effectively mandate a limit that applies to all other domestic carriers, and that such a limit may have a negative financial impact on these carriers.

In reply to Air Canada's comments, Mr. Kirshenbaum reiterates that the Agency does have jurisdiction to consider his complaint, and that Air Canada's limits of liability do not apply when the carrier absolutely fails to provide notice, or gives inadequate notice, of such limits. Mr. Kirshenbaum maintains that to grant the remedies sought, it is not necessary to require the revision of limits of liability appearing in tariffs applicable to Air Canada or any other carrier, but only to make Air Canada accountable for its failure to respect current requirements.

Air Canada submits that given that Mr. Kirshenbaum has stated that he does not believe that Air Canada is entitled to apply any limit of liability with regard to his claim, the Agency cannot use Mr. Kirshenbaum's complaint to determine whether Air Canada's tariff provision, setting out the maximum liability assumed by the carrier for the delay in delivery of luggage, is reasonable. As to Mr. Kirshenbaum's contention that Air Canada's failure to advise him of any limit of liability with respect to delayed luggage precludes the carrier from applying such a limit, the carrier states that it is improbable that Mr. Kirshenbaum was unaware of this limit. In this regard, Air Canada notes that its policy is to provide the conditions of carriage with every E-ticket itinerary/receipt, and that Mr. Kirshenbaum has travelled by air with Air Canada on numerous occasions. Air Canada also submits that it is not possible for the Agency to determine that the carrier's limit of liability is unreasonable based on the alleged damage suffered by one individual.

ANALYSIS AND FINDINGS

In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

Preliminary issue

In its response to the complaint filed by Mr. Kirshenbaum, Air Canada submitted that the complaint is not one as per the terms of the CTA, but rather a claim for relief. As such, Air Canada maintained that the Agency has no jurisdiction to make a determination regarding breaches of contract or negligence and has no authority to award costs pursuant to subsection 67.2(1) of the CTA.

The complaint filed with the Agency by Mr. Kirshenbaum on October 30, 2000 is, by nature, a consumer complaint. The authority of the Agency to investigate consumer complaints with respect to a carrier's domestic service is found in Part II, Air Transportation, of the CTA.

Pursuant to provisions of Part II of the CTA, the Agency has the authority to ensure that Air Canada applies the fares, rates, charges or terms and conditions of carriage found in the carrier's domestic tariff. In the event of a finding that Air Canada has not applied such fares, rates, charges or terms and conditions of carriage to domestic services, the Agency also has the authority to order Air Canada to compensate any person adversely affected for any expenses the person incurred as a result of the carrier's failure to apply its tariff, or to order Air Canada to take any other appropriate corrective measures. Further, the Agency also has the authority, pursuant to subsection 67.2(1) of the CTA, to ensure that Air Canada does not apply terms and conditions of carriage that are unreasonable or unduly discriminatory. The Agency is not empowered to award damages should it determine that particular terms and conditions of carriage are unreasonable or unduly discriminatory.

Throughout the pleadings, Mr. Kirshenbaum argued that Air Canada did not apply the terms and conditions of carriage of its domestic tariff or, alternatively, that those terms and conditions were unreasonable and unfair.

Given the Agency's clear mandate to investigate this type of complaint, the Agency will examine whether Air Canada, in this case, applied the terms and conditions of its domestic tariff, and whether these terms and conditions are unreasonable.

The present case

A number of statutory provisions in force at the time of the incident are relevant to the present analysis.

Part II, Air Transportation, of the CTA states, in part, that:

67. (1) The holder of a domestic licence shall

(a) publish or display and make available for public inspection at the business offices of the licensee all the tariffs for the domestic service offered by the licensee;

(b) in its tariffs, specifically identify the basic fare between all points for which a domestic service is offered by the licensee; and

(c) retain a record of its tariffs for a period of not less than three years after the tariffs have ceased to have effect.

(2) A tariff referred to in subsection (1) shall include such information as may be prescribed.

(3) The holder of a domestic licence shall not apply any fare, rate, charge or term or condition of carriage applicable to the domestic service it offers unless the fare, rate, charge, term or condition is set out in a tariff that has been published or displayed under subsection (1) and is in effect.

(4) The holder of a domestic licence shall provide a copy or excerpt of its tariffs to any person on request and on payment of a fee not exceeding the cost of making the copy or excerpt.

67.1 If, on complaint in writing to the Agency by any person or on its own motion, the Agency finds that, contrary to subsection 67(3), the holder of a domestic licence has applied a fare, rate, charge or term or condition of carriage applicable to the domestic service it offers that is not set out in its tariffs, the Agency may order the licensee to

(a) apply a fare, rate, charge or term or condition of carriage that is set out in its tariffs;

(b) compensate any person adversely affected for any expenses they incurred as a result of the licensee's failure to apply a fare, rate, charge or term or condition of carriage that was set out in its tariffs; and

(c) take any other appropriate corrective measures.

67.2 (1) If, on complaint in writing to the Agency by any person, the Agency finds that the holder of a domestic licence has applied terms or conditions of carriage applicable to the domestic service it offers that are unreasonable or unduly discriminatory, the Agency may suspend or disallow those terms or conditions and substitute other terms or conditions in their place.

(2) The holder of a domestic licence shall not advertise or apply any term or condition of carriage that is suspended or has been disallowed.

(i) Application of the tariff by the carrier

Subsection 67(3) of the CTA provides that the holder of a domestic licence shall not apply any fare, rate, charge or term or condition of carriage applicable to the domestic service it offers unless the fare, rate, charge, term or condition is set out in a tariff that has been published or displayed under subsection (1) and is in effect. If, following a complaint filed by any person, the Agency finds that the holder of a domestic licence has applied a fare, rate, charge or term and condition of carriage that is not set out in the holder's tariffs, the Agency may order remedial action as provided in section 67.1 of the CTA.

The facts leading to the present application are uncontested. On August 19, 2000, Mr. Kirshenbaum travelled from Toronto to Ottawa on Air Canada, connecting with First Air for carriage from Ottawa to Resolute Bay. Mr. Kirshenbaum's baggage was not transferred in time to First Air in Ottawa and, as a result, Mr. Kirshenbaum was obligated to cancel his adventure vacation in the High Arctic as his baggage contained the equipment and medication that were needed for the trip.

The terms and conditions of carriage applicable to Air Canada's flight from Toronto to Ottawa on August 19, 2000 were governed by Air Canada's Canadian Domestic General Rules Tariff (hereinafter the ACDT). Rule 230, Liability - baggage, of the ACDT contained the information required by subparagraph 107(1)(n)(x) of the Air Transportation Regulations, SOR/88-58, as amended.

Subparagraph (A)(1) of Rule 230, Liability - baggage, of the ACDT provides as follows:

(A)(1) (Applicable for transportation solely within Canada only and not in conjunction with any international travel.) Liability for the loss of, damage to, or the delay in delivery of, baggage or other personal property (whether checked or otherwise delivered into the care of the carrier (...)) shall not be more than 1,500 dollars per passenger unless a higher value is declared in advance and charges are paid pursuant to carriers regulations as defined in paragraph (C). In the event, the liability of the carrier shall be limited to such higher declared value. In no case shall the carriers liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss (...).

Following Mr. Kirshenbaum's letter dated September 12, 2000, in which he requested Air Canada to compensate him for the delay of his baggage, Air Canada, in a letter dated September 18, 2000, made the following proposal to Mr. Kirshenbaum:

If a passenger is away from home, and his or her baggage is delayed more than 24 hours, Air Canada will contribute a maximum of $100 US towards the cost of the interim clothing and toiletry purchases. Although we are unable to offer you a full reimbursement of all your trip related costs, in consideration of your special circumstances, we will apply to this baggage delay our maximum liability of $1,500 per passenger for baggage loss, delay or damage.

I understand you will be disappointed, as this amount does not cover the total amount claimed, and, as a goodwill gesture, I am also asking Aeroplan to credit your account with the 15,000 miles that were used for the portion of this trip on Air Canada.

Given that Air Canada's domestic tariff provides a limit of liability of $1,500 per passenger in case of delayed baggage, and that Air Canada, in its letter of September 18, 2000, offered that amount to Mr. Kirshenbaum, the Agency finds that Air Canada applied the provision of its domestic tariff with respect to limit of liability for loss of, damage to, or the delay in delivery of, baggage or other personal property.

Mr. Kirshenbaum argued that Air Canada applied an exclusion of liability without establishing that there is any tariff provision entitling the carrier to do so and that Air Canada is obligated to make the tariff available and demonstrate that there is a proper exclusion in the tariff. Mr. Kirshenbaum maintained that, as Air Canada failed to provide him with a copy of its tariff, it applied an exclusion of liability without establishing the existence of the exclusion. Mr. Kirshenbaum further contended that, even if there is a provision in the tariff that apparently excludes liability, the provision should not be regarded as having been set out in a tariff for the purposes of subsection 67.1 of the CTA. Mr. Kirshenbaum asserted that, as the tariff has not been made available for public inspection at the business office of the licensee, as required by subsection 67(1) of the CTA, the tariff cannot be said to be in effect pursuant to subsection 67(3) of the CTA.

The obligation imposed on domestic licensees pursuant to paragraph 67(1)(a) of the CTA is to publish or display and make available for public inspection at the business offices of the licensee all the tariffs for the domestic service offered by the licensees. Subsection 67(3) of the CTA provides that a domestic licensee shall not apply any fare, rate, charge or term or condition of carriage applicable to the domestic service it offers unless the fare, rate, charge, term or condition is set out in the tariff that has been published or displayed under subsection (1) and is in effect.

In this case, following the complaint filed by Mr. Kirshenbaum, Air Canada provided the Agency with a copy of its published domestic tariff. The fact that Air Canada failed to make available a copy of its published domestic tariff to Mr. Kirshenbaum, contrary to subsection 67(1) of the CTA, does not have any bearing on the Agency's determination as to whether, with respect to the domestic service it offers, Air Canada has applied terms or conditions of carriage that are not provided in a tariff that has been published or displayed under subsection 67(1) of the CTA.

(ii) Availability of domestic tariffs

Paragraph 67(1)(a) of the CTA requires domestic licensees to publish or display and make available for public inspection at the licensees' business offices, all the tariffs for the domestic services the licensees offer.

In the course of pleadings, Mr. Kirshenbaum indicated that, despite his requests at airports in Toronto and Ottawa, Air Canada failed to make available a copy of its tariffs for viewing. As Air Canada offers tickets for purchase at these airports, the Agency finds that such airports are business offices within the meaning of paragraph 67(1)(a) of the CTA. The Agency notes Air Canada's comments that it is improbable that Mr. Kirshenbaum was unaware of the carrier's limit of liability for the domestic carriage of baggage because of Air Canada's policy to provide the conditions of carriage with every E-ticket itinerary/receipt, and that Mr. Kirshenbaum has travelled by air with Air Canada on numerous occasions. These circumstances, however, do not relieve Air Canada from the requirement, set out in paragraph 67(1)(a) of the CTA, to make tariffs available for inspection. In failing to satisfy this requirement, the Agency finds that Air Canada contravened paragraph 67(1)(a) of the CTA.

(iii) Application of unreasonable or unduly discriminatory term and condition of carriage

Subsection 67.2(1) of the CTA provides that, if the Agency finds that the holder of a domestic licence has applied terms or conditions of carriage applicable to the domestic service that it offers that are unreasonable or unduly discriminatory, the Agency may suspend or disallow those terms or conditions and substitute other terms or conditions in their place. As stated earlier, the Agency does not have the authority to award damages if it determines that a term or condition of carriage is unreasonable or unduly discriminatory.

In the present case, Mr. Kirshenbaum contended that Air Canada's stated limit of liability of $1,500 per passenger for baggage loss, delay or damage is unreasonable.

In examining the reasonableness of the tariff provision applied by Air Canada, one must keep in mind the circumstances leading to the application of such a provision. The $1,500 compensation offered by Air Canada was not, in this case, designed to cover any loss of or damage to Mr. Kirshenbaum's baggage, but rather to compensate Mr. Kirshenbaum for the delay in delivering his baggage.

The purpose of a tariff provision established to cover the likely expenses resulting from a delay in delivering baggage is to ensure that a passenger, whose baggage was not delivered in a timely manner by a carrier, is compensated for the interim expenses incurred as a result of this delay in delivery, such as for the purchase of clothing and toiletries pending the return of baggage. The Agency notes that, in this instance, there was no actual loss of or damage to Mr. Kirshenbaum's baggage. Nevertheless, the Agency is of the opinion that the amount of $1,500 established by Air Canada to cover interim expenses and offered to Mr. Kirshenbaum is reasonable within the meaning of section 67.2 of the CTA; that is, the Agency finds that such an amount is fair and equitable to cover interim expenses resulting from a delay in the delivery of baggage.

CONCLUSION

The Agency finds that Air Canada contravened paragraph 67(1)(a) of the CTA by failing to make available the carrier's tariffs for public inspection at airports at Toronto and Ottawa. The Agency reminds Air Canada to respect this regulatory requirement in the future. The Agency hereby dismisses the remainder of Mr. Kirshenbaum's complaint.

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