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Carriage by Air

Here you will find information and case summaries relating to the carriage of goods by air. For information on Carriage by Sea and by Multi-modal (combined) transportation see the Carriage by Sea page. For information and case summaries on Carriage by Road and Rail see the Carriage by Road and Rail page.

Introduction

For an overview and summary of the law of Carriage of Goods by Air including the Warsaw and Montreal Conventions see the papers:

Case Summaries

Montreal Convention - Limitation of Liability - Requirement of Notice

Durunna v. Air Canada, 2013 ABPC 31

The plaintiff shipped 10 laptop computers with Air Canada from Canada to Nigeria. The computers disappeared en route. Air Canada defended the action arguing that its liability was limited pursuant to the terms of the Montreal Convention.

Decision: Plaintiff is entitled to judgment for the value of the computers plus shipping costs.

Held: The Montreal Convention did not do away with the requirement to provide notice of clause limiting liability. Sufficient notice was not given to the plaintiff of the clause.

Comment: This case should be relied upon only after careful consideration. It is probably incorrect. Pursuant to the Carriage of Goods by Air Act, the Montreal Convention (where applicable, as it was here) has the force of law. There are no notice requirements in that convention and Art. 9 specifically provides that non-compliance with documentary requirements shall not affect the applicability of the limitation of liability provisions.

Air Carriage – Limitation of Liability – Damages

Connaught Laboratories Limited v.  British Airways, 2005 CanLII 16576

This case concerned damage to four cartons of vaccines carried by air from Toronto to Sydney, Australia via Heathrow. The cartons bore labels directing that they be kept refrigerated at between 2 and 8 degrees Celsius. A similar direction was printed on the air waybills. At Heathrow, the cartons were not placed in a refrigerated area and, as a consequence, the vaccines were spoiled upon arrival in Sydney. The main issue in the case was whether the carrier could limit its liability to approximately $2,500 pursuant to Article 22 of the Warsaw Convention. The Plaintiff argued that Article 25 of the Convention applied to disentitle the carrier from relying upon the Article 22 limits. Article 25 provides “The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result”. In a thorough and well reasoned judgment, the trial Judge considered whether the test set out in Article 25 was subjective or objective. The trial Judge ultimately concluded the test was subjective and that the Plaintiff therefore had to prove not only that the carrier was reckless but also that the carrier knew damage would probably result from its recklessness. There was, however, no evidence of why the cartons were not stored in a refrigerated area at Heathrow. The trial Judge noted that it could have been because the relevant person thought no damage would come to the vaccines if not refrigerated or because of mere inadvertence. Neither of these scenarios would meet the Article 25 test. However, the trial Judge also noted that it could have been that the relevant person knew there was a risk of damage but simply did not want to bother storing the cargo as directed. Such conduct would meet the Article 25 test. The trial Judge resolved this issue by drawing an adverse inference from the failure of the carrier to present any evidence as to what actually happened and why. In result, the Plaintiff was entitled to recover its expenses and the cost, but not the invoice price, of the shipment. On appeal, the Ontario Court of Appeal in a relatively short endorsement agreed with the findings and conclusions of the trial Judge and dismissed the appeal. The Court of Appeal said that given the facts and circumstances of the case it was open to the trial Judge to make a prima facie finding of recklessness and knowledge that damage would probably result and that the evidence to rebut this was solely within the knowledge of the carrier, who called no evidence.

Air Carriage – Liability of Forwarder – Delay

Pro-Service Forwarding Co. of Canada v. Sales Corp. Intl. Group Inc., [2005] O.J. No. 3270

This was an application by the Plaintiff freight forwarder to recover the amount of its invoice to the Defendant, its customer. The Defendant claimed a set-off and counter-claim for delay in delivering its goods. The Court held that the delay was due to a downsizing of the aircraft by Air Canada and was not the result of any negligence on the part of the Plaintiff. The Court further held that the Plaintiff had not guaranteed a delivery date but had merely given an estimated time of arrival. Finally, the Court held that the Defendant had not proven any damages due to delay.

Air Carriage – Warsaw Convention – Limitation – Notice – Wilful Misconduct – Presumption

Green Computer AB v. Federal Express Corp. et al., 2004 FCA 111

This was a claim for the loss of one carton of integrated circuits valued at $50,000 carried by air from Sweden to Markham, Ontario. The Defendant air carrier argued that it was not liable as the Plaintiff had not given the notice required by Article 26 of the Warsaw Convention. Alternatively, the Defendant argued it was entitled to limit liability pursuant to the terms of the convention to $851. With respect to the notice issue, Article 26(2) provides that notice must be given within 7 days of receipt in the case of damage to cargo and within 21 days in the case of delay. At first instance, the Prothonotary held that these notice requirements were not applicable to a case of non-delivery or loss of cargo. With respect to the limitation issue, the Plaintiff argued that the Defendant was not entitled to limit its liability as the Defendant had been guilty of wilful misconduct pursuant to Article 25. Specifically, the Plaintiff argued that an inference should be made that the lost cargo had been stolen. The Prothonotary was not prepared to draw any such inference and found that the Defendant had merely lost the shipment in transit, something which did not constitute wilful misconduct. Finally, the Plaintiff argued that the Defendant was not entitled to limit liability as it had not proved the cargo was lost during the carriage by air as opposed to carriage by land. The Prothonotary noted the absence of proof as to where the damage occurred and applied the presumption contained in Article 18(3) of the Warsaw Convention which provides that “any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air”. Accordingly, the Prothonotary granted judgment in the limitation amount of $851. The Plaintiff unsuccessfully appealed the ruling in relation to the application of Article 18(3) of the Warsaw Convention first to a Judge of the Federal Court and then to the Federal Court of Appeal. At both levels of appeal the respective courts held that the presumption had been properly applied.

Air Carriage – Warsaw Convention – Limitation of Liability

MDSI Mobile Data Solutions Inc. v. Federal Express, 2003 BCCA 9

This was an appeal from an application by the Plaintiff for summary judgment for damage to computer equipment that occurred during the course of air carriage from Vancouver, British Columbia to Atlanta, Georgia. At trial, the Plaintiff sought to recover the full amount of its loss (approximately $240,000) or, in the alternative, the declared value amount of $214,000. The Defendant carrier admitted liability but argued that the Plaintiff was not entitled to recover the declared value amount since the Plaintiff’s clerk who filled out the air waybill said on discovery that she believed the declared value amount set the amount that could be recovered from the Plaintiff’s insurer. The trial Judge found this argument wholly without merit. The Defendant next argued that its liability was limited to 250 francs per kilogram as per Art. 22(2) of the Warsaw Convention or, in the alternative, to $50,000 as per its standard terms and conditions, which limited the amount that could be declared for carriage and limitation purposes to $50,000. The Plaintiff’s position on these issues was that the Convention limit of 250 francs per kilogram did not apply because of the declaration of value and that the conditions of carriage were ambiguous and inconsistent and did not, in fact, limit the amount that could be declared to $50,000. Additionally, the Plaintiff argued that a provision limiting the amount that could be declared by a shipper for carriage and limitation purposes was null and void by Art. 23 of the Convention. The trial Judge agreed with the Plaintiff that the Warsaw Convention prohibited a carrier from limiting the amount that could be declared and further agreed that the declaration of value of $214,000 replaced the Convention limit of 250 Francs per kilogram. An additional issue was whether the air waybill failed to disclose the agreed stopping places and failed to include a statement that the carriage was subject to the Warsaw Convention, contrary to Art. 8. The trial Judge held that the air waybill did not contravene Art. 8 in these particulars as there was no stopping place actually agreed between the parties and the statement in the air waybill that the Convention “may” be applicable was sufficient compliance with Art. 8. In the result, the trial Judge granted summary judgment in the amount of the declared value. The Defendant appealed to the British Columbia Court of Appeal. The only issues on appeal were whether the conditions of the Defendant limited the value that could be declared for carriage to $50,000 and whether such a limit was contrary to the Warsaw Convention. The Court of Appeal was divided on the first issue. The majority found that the clauses relied upon by the Defendant were unclear and inconsistent and concluded that there was no $50,000 limit on the amount that could be declared for carriage. In view of this holding, the majority did not find it necessary to decide whether a $50,000 limit was contrary to the Warsaw Convention, however, they did say they tended to agree with the dissenting Judge that the Convention would not prohibit the parties to a contract of carriage by air from agreeing on a limit of liability that was in excess of the 250 francs per kilogram provided by the Convention but less than the actual value of the goods carried. In the result, therefore, the appeal was dismissed and the Plaintiff obtained judgment for the declared value amount of $214,000.

Air Carriage - Limitation

World of Art nc. v.  Koninklijke Luchtraart Maatschappij N.V., 2000 CanLII 16982

This was an application for summary judgment for the loss of cargo to be carried by air from Iran. The loss apparently occurred because the goods were rerouted through the United States where they were seized by U.S. Customs. The Defendant air carrier was aware of this possibility as a similar incident had occurred previously. As a result, its systems were set up so that a warning would appear automatically on its computer system warning its employees not to route or reroute goods emanating from Iran through the United States. This warning would only appear, however, if the place of origin was accurately stated as being Iran. In this instance that did not occur. The goods were stated as originating in Amsterdam and were rerouted through the United States. This error was noticed by an employee of the Defendant who sent a message to his counterpart in Amsterdam but that message was not acted upon. The Court held that these facts created a strong prima facie case that there had been acts or omissions on the part of the Defendant "done with intent to cause damage or recklessly and with knowledge that damage would probably result". The Defendant filed an affidavit on the application as to the systems of the Defendant but that affidavit did not explain how the various errors that led to the rerouting had occurred. The Court drew an adverse inference from the failure of the Defendant to explain how the errors occurred. In the result, the Defendant was not entitled to limit its liability.

Air Carriage - Theft - Limitation - Cargo Insurance - Cancellation - Misrepresentation

Nuvo Electronics Inc. v. London Assurance et al., 2000 CanLII 22388

This matter arose out of the loss of 15 cartons of integrated circuits valued at US$1,403,000 and carried by air from San Francisco to Toronto. The shipment left San Franciso on August 10, 1996, and arrived at Toronto on the morning of August 11, 1996. It was then placed in the Air Canada cargo warehouse but was never seen again. The Plaintiff consignee commenced this action for the value of the lost cargo against its cargo underwriter and the air carrier.

The air carrier defended the action arguing that the Plaintiff had not proven the value or the contents of the cargo, that it had delivered the goods to a courier for delivery to the Plaintiff and that it was, in any event, entitled to limit its liability pursuant to the Warsaw Convention. The only evidence adduced at trial as to the value and content of the shipment was the air waybill, the packing list and the commercial invoice. The carrier objected to the admission of these documents on the basis that they were hearsay and not properly admissible. The Court, however, held that these documents were business records within the meaning of the Canada Evidence Act and were admissible to prove both the content and value of the shipment. The carrier’s second argument, that it had delivered the cargo to a courier, was also rejected by the Court. The Court found as a fact that although the courier driver had signed for the cargo he did not in fact receive the cargo as it could not be located by the air carrier. The Court next considered whether the air carrier could limit its liability under the Warsaw Convention and held that it could not. There were two reasons advanced by the Court for this decision. First, the Court found that the air waybill was not in conformity with Article 8 of the Convention in that it did not contain the name of the airport departure, the name of the first carrier, whether the weight was in pounds or kilograms and the nature and quantity of the goods. Relying upon American case law, the Court held that if an air carrier fails to include the particulars required by Article 8 of the Convention in the air waybill then, pursuant to Article 9, the carrier is not entitled to limit liability. Second, the Court held that the Plaintiff had proven that it was more probable than not that the cargo was stolen by an employee of the carrier or with the complicity of an employee of the carrier and that there was an irresistible inference that such employee was in the course and scope of his employment when the theft occurred. Accordingly, the Court held that there was "wilful misconduct" and that the carrier was not entitled to limit its liability.

With respect to the insurance issues, the cargo underwriter denied coverage on the basis that it had cancelled the policy of insurance prior to the loss and also on the basis that the assured had failed to disclose prior losses. The shipment was insured under an open cargo policy that provided that it could be cancelled upon 30 days written notice "but such cancellation shall not affect any risks which have already attached hereunder". The policy further provided that notices mailed to the broker were deemed to have been received by the assured. On July 10, 1996, the underwriter faxed a notice of cancellation to the broker giving 30 days notice of cancellation and stating that the cancellation would be effective on August 10, 1996. The underwriter took the position that the policy was cancelled as of 12:01 a.m. on August 10, 1996. The Court, however, held that there were three problems with the underwriter’s notice of cancellation. First, the notice of cancellation was vague and imprecise in that it did not say how the 30 days was to be calculated and did not specify the exact time on August 10, 1996, the cancellation would be effective. The Court held that the notice of cancellation could be interpreted to mean that coverage would be in force for the entire day of August 10, 1996. Second, the policy required that the notice of cancellation be mailed to the broker. Third, the policy also contained statutory conditions which contained clauses dealing with termination that were different from those in the body of the policy and which the underwriter made no attempt to comply with. The Court therefore held that the policy was ambiguous and the underwriter had failed to give proper notice of cancellation. The Court next turned to the issue of whether the policy was void ab initio by reason of the assured’s failure to disclose at the time it applied for the policy that it had suffered prior losses. The evidence disclosed that the assured’s broker had advised the underwriter that there had been no losses except for one lost package (value $300.00) three years earlier. This information was not accurate. In fact, the assured had suffered a series of losses in the hands of its courier totalling $18,000.00. This information did not come to the attention of the underwriter until after the loss in issue. The underwriter submitted that these facts were material to the risk and should have been disclosed. The underwriter led the evidence of an expert independent underwriter to the effect that the courier losses would have caused him to either increase the premium or modify the conditions of carriage. The Court, however, found as a fact that the Defendant underwriter would have written the risk even if it had been advised of the prior losses. Under these circumstances it was irrelevant what an independent underwriter would have done. The Court held that a successful defence on the basis of material non-disclosure requires proof that, if the facts had been disclosed, the underwriter who wrote the risk would have declined the risk or required a higher premium and evidence from an independent "prudent" underwriter to the same effect. Accordingly, the Court held that the underwriter had failed to prove material non-disclosure and the underwriter was held liable for the insured value of the lost cargo. (Note: The underwriter was not without a remedy as there was a recovery from the air carrier which is detailed below under "Carriage of Goods".)

Air Carriage - Notice Periods

Markham Meat Industries Supplies Inc. v. Air France, (July 9, 1998) No.98-BN-01639 (Ont. Ct. Gen. Div.)

This action concerned damage to cargo carried by air from Paris, France to Montreal. The cargo arrived on June 27, 1995 and was delivered on June 28, 1995. The air carriers were, however, not notified of the damage to the cargo until September 19, 1995. The carriers therefore brought this motion to dismiss the Plaintiff's claim for failure to give the required notice within 14 days of delivery as required by Article 26(2) of the Warsaw Convention. The Plaintiff argued that it had not given timely notice because the damage to the cargo was concealed. The Court resolved the matter by ordering that there be a trial of the issue and that the Plaintiff would have to prove that the damages were of such a nature that they were not discoverable.

Fatal Accident - whether international carriage

Huxley v. Aquila Air Ltd., 1995 CanLII 1008

This was a fatal accident claim brought by the children of the deceased, Mr. Huxley, who died in the crash of a commercial aircraft operated by the Defendant, Aquila Air Ltd., on a flight from Nanaimo to Vancouver. The Defendant sought a determination by the Court that the Defendant's liability was governed by the Federal Carriage By Air Act which would result in the application of statutory limits of liability. The Plaintiffs based their claims on provincial fatal accidents legislation which did not limit the Defendant's liability.

The deceased, after arrival in Vancouver, was to continue on an American Airlines flight to St. Louis, Missouri. Two tickets had been issued to Mr. Huxley, one written on Canadian Airlines stock for two Aquila flights, one Nanaimo-Vancouver and the other a return flight seven days later. The other ticket was a United Airlines ticket from Vancouver to St. Louis and return via a number of stops. The deceased booked his flight from Vancouver to St. Louis return before he had decided how he was to travel to Vancouver from Nanaimo. One day after his flight to St. Louis was booked, he decided to fly Aquila Air to Vancouver. The sole purpose of Mr. Huxley's trip to Vancouver was to board his flight to the U.S.

The Court held that the flight from Nanaimo to Vancouver was not the subject of international carriage as the term is used in the Schedule to the Carriage By Air Act (the Warsaw Convention as amended by the Hague Protocol). The carriage was not regarded as one undivided carriage by the parties. Aquila knew nothing of the United Air carriage and vice versa. The Court found the travel agent was an agent of both carriers for only limited purposes and the travel agent's knowledge of both domestic and international travel could not be imparted to either carrier.

Air Carriage

Quinn v. Canadian Airlines International, 1994 CanLII 7262

The 72 year old Plaintiff who suffered from advanced osteoporosis sued the Defendant airline. The Plaintiff was a passenger on the airlines charter flight from Toronto to St. Petersburg, Florida which encountered air turbulence. She alleged that, as a result of the turbulence, she suffered a compression fracture of three vertebrae. The Plaintiff contended that the turbulence was an accident under article 17 of the Warsaw Convention as modified by the Montreal Agreement of 1966 (which excludes the Article 20 due diligence defence of the Warsaw Convention) and that the Defendant was liable for her resulting injury. The airline contended that the Plaintiff injured herself after the flight and, alternatively, the event of air turbulence did not amount to an "accident" within the meaning of the convention.

The Court dismissed the Plaintiff's case. The Court held that an airline is liable only if an unexpected or unusual event external to the passenger causes the passenger's injury. The Court was satisfied one of the linked causes of the Plaintiff's injury was the air turbulence but held that the turbulence encountered on the flight was not unusual or unexpected or of the level of severity to amount to an "accident" within the meaning of Article 17 of the Warsaw Convention.

Lost luggage - domestic carriage - limitation

Meurin v. Canadian Airlines International Inc., (May 13, 1994) No.P9190100730 (Alta. Prov. Ct.)

The Plaintiff purchased a ticket from Canadian Airlines for travel from Calgary to Montreal via Toronto. Canadian Airlines cancelled its flight from Calgary to Toronto and substituted a flight with Air Canada. The Plaintiff delivered her luggage to Air Canada and flew from Calgary to Toronto with Air Canada. Her luggage was to be transferred to Canadian in Toronto as she was flying with Canadian from Toronto to Montreal. Her luggage was lost by the Defendants. The Defendants contended the notice of baggage liability limitations printed on the cover of the ticket and the Canadian Tariff rules applied. The Court found the Defendants breached the contract and were bailees for reward. The Defendants could not rely on the limitation of liability contained in the ticket or the Canadian General Rules Tariff as they were not brought to the Plaintiff's attention.

Air Carriage

Van Halderen v.  Canada 3000 Airlines Ltd., [1994] B.C.J. No. 2795.

The Plaintiff flew from Vancouver to Costa Rica return with the Defendant airline. The Plaintiff's luggage was not delivered to him on his return to Vancouver. The Plaintiff did not have the usual baggage tags but his ticket was marked indicating he checked two bags. He sued the Defendant to recover the value of the contents of the bags. The Defendant contended 1. the Plaintiff did not consign the baggage for the return flight; 2. alternatively, if the luggage was lost the Defendant took all possible measures to avoid the loss and was not liable; and 3. alternatively if the Defendant was liable, the statutory limits of liability set out in the Warsaw Convention apply.

The Court found that the Plaintiff did check two pieces of luggage, and that the Defendant did not prove that it took all necessary measures to avoid the loss. The Defendant was not allowed to rely on the limitation of liability as the Plaintiff's passenger ticket did not contain the notice required by Article (1)(3)(c). The ticket did not state the Warsaw Convention applied and that it limited liability in respect of loss or damage to baggage.

Air Carriage

George Straith Ltd. v. Air Canada, 1991 CanLII 999

The Plaintiff purchased three cartons of sweaters in Scotland and the seller arranged the shipment through Rockwood International Freight Ltd. The three cartons were delivered to the Defendant, Air Canada, at Heathrow Airport in London and consigned to Rockwood International Freight Inc. at Vancouver. When the three cartons were received, one had been opened and taped and 19 of the 55 sweaters were missing. The Plaintiff sued for the lost cargo. The Defendant contended that under the Warsaw Convention only the consignor or consignee (both being freight forwarders) could sue for the loss. The Court followed the English case of Gatewhite Ltd. et.al. v. Iberia Lineas Aeras de Espena S.A., [1989] 1 All ER 944, [1989] 1 Lloyds Rep. 160 and held that the owner of the goods is entitled to sue and that there was nothing in the Convention which deprives the owner of this right.

Adjuster's Reports

Air Canada v. Demond, (April 19, 1990) No. 60317 (N.S.Co. Ct.)

The Plaintiff, Air Canada, contracted to deliver video equipment to Concept Music Video in Newfoundland. The Defendant, who had contracted to buy the video equipment from Concept Music Video, instructed Air Canada to transship the equipment from Newfoundland to Halifax for pickup by it. Air Canada did as requested. Concept Music Video then made a claim against Air Canada for wrongfully and negligently transshipping the equipment to the Defendant. Air Canada paid the claim then sued the Defendant to recover the amount paid to Concept Music Video. Air Canada recovered from the Defendant as the goods were transshipped because of the wrongful representations of the Defendant.