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Baggage Limits under the Montreal Convention
Published in the October 2008 issue of Transportation Notes - View Article
A decision arising out of the appeal of an award made by a judge of the Ontario Small Claims Court has provided some useful clarification on the issue of baggage liability limitation in cases governed by the Montreal Convention. It also, briefly, disposes of an argument respecting the need for notice in accordance with Article 3(4) of the Convention.
Article 3 of the Convention requires “written notice to the effect that where this Convention is applicable it governs and may limit the liability of carriers in respect of . . . destruction or loss of, or damage to, baggage”. However, it goes on to provide that non-compliance with the notice requirement “shall not affect the existence or the validity of the contract of carriage which shall, nonetheless, be subject to the rules of this Convention including those relating to the limitation of liability.”
To the best of our knowledge, the notice requirement of the Convention has been considered only once before by a Canadian court. In Foord v. United Air Lines a judge of the Small Claims Court of the province of Alberta adopted what we believe to be a patently unreasonable argument for avoiding Article 3 and penalizing United for failing to give notice of the liability limits. In the Foord case the judge reasoned that carriers are free to contract out of all limits of liability. The judge then made the unspoken, and unsupportable, assumption that the carrier had the onus of proving that it had not in fact entered into a contract which waived limits. In the absence of such evidence, the judge came to the remarkable conclusion that he had “little choice but to conclude . . . that the carrier in this case stipulated that the contract of carriage was subject to no limits of liability whatsoever”. Having come to this conclusion he added the apparently gratuitous comment that, Article 3 notwithstanding, the terms of the contract must be communicated.
Happily, the Ontario Divisional Court was not drawn into any such result-oriented reasoning. The plaintiffs alleged that they received no notice of the limits of liability set out in the Convention and argued that the limits were not applicable. The Court dealt with this argument very succinctly: “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”.
Having dealt with the notice point without wasting words, the Court turned to the main issue: what is the applicable limit of liability when a passenger checks a single bag which contains items belonging to more than one person, both of whom are passengers on the flight? The issue arises because of wording in the Montreal Convention which makes a clear departure from the earlier Warsaw Convention. Under Warsaw the carrier’s liability for checked luggage is determined by the weight of the bag. That liability is, in most circumstances, limited to 250 francs per kilogram. Under this scheme no question arises as to the identity of the passenger associated with any item in a checked bag.
The Montreal Convention adopted a different approach to liability limitation. The limits are now stated to be 1,000 Special Drawing Rights “for each passenger”.
Against this background, the relevant facts were as follows: Mr. and Mrs. Holden were passengers on a flight from Toronto to New York. Mrs. Holden checked a bag which contained some items belonging to Mr. Holden. The bag was lost and never recovered. The case was clearly governed by the Montreal Convention. It was common ground that the relevant limitation amount “for each passenger” was $1,776.49, being the amount of Canadian dollars equivalent to 1,000 Special Drawing Rights on the day of the loss. (There was no discussion respecting the appropriate day for conversion.) The claimants sued in Small Claims and sought damages of $5,000.
The judge in Small Claims found that the Convention required a finding that the limitation amount was 2,000 SDRs, being 1,000 for each “passenger”. In the Divisional Court, Justice Low quickly identified the issue: What is the meaning of “passenger” in Article 22(2)?
Justice Low then referred to recent jurisprudence which requires that regard be had “for the grammatical meaning, the logical interpretation, the teleological interpretation, and the historic context of the provisions”. With respect to logic, she noted that Article 22(2) continues: “unless the passenger has made . . . a special declaration of interest”. As she rightly points out, this phrase no longer makes good sense if one accepts the argument that “passenger” means any individual who happens to be on the flight, irrespective of whether he checked the bag in question.
The judge then turned to consider the objectives of the Convention. She noted that under the Warsaw Convention 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”. The reading which restricts the meaning of “passenger” to the one passenger who checked the bag preserves this certainty and predictability. The second reading would make for a significant diminution of this certainty and predictability.
Justice Low allowed the appeal and confirmed that the carrier’s liability is limited to 1,000 SDRs.
Ace Aviation Holdings Inc. v. Holden,
2008 Can LII 40223