Newsletter > August 2012
In this issue:
1. Firm and Industry News
2. Federal Court of Appeal Affirms Maritime Jurisdiction
3. Air Passenger Suit for Mistreatment
4. Infractions, Charges and the Highway Traffic Act,
5. Officers / Directors of Defunct Load Broker Liable to Carrier
1. Firm and Industry News
- Sept. 15-19, San Diego – International Union of Marine Insurers Annual Conference
- Sept. 26-29, Toronto – Canadian Transport Lawyers Association Annual Conference
- Sept. 26-28, Dublin – International Marine Claims Conference
- October 4th, New York – Association of Average Adjuster of the United States and Canada annual meeting and dinner
- October 5th, New York – Marine Insurance Claims Association Dinner
- November 9, Nashville – Transportation Law Institute
- November 27th, Toronto – Canadian Board of Marine Underwriters Annual Meeting and Dinner.
- November 28th, Toronto – Commons Institute Conference on Aviation Issues.
Rui Fernandes will be participating in the TIDA / OTA Cargo Claims Seminar on September 13th, 2010 in Toronto.
Rui Fernandes will be presenting a short report at the IUMI Annual Conference in San Diego on September 18th titled “Update on Canadian Developments Affecting Marine insurance”.
Rui Fernandes was successful in the Federal Court of Appeal in a case that affirms positively the Federal Court’s nearly exclusive jurisdiction regarding issues of limitation of liability in maritime matters. See the commentary in the first article of this newsletter.
Rui Fernandes, Gordon Hearn and Kim Stoll are all participating in the Canadian Transport Lawyers Association annual conference in Toronto. Kim Stoll is the current President of the Canadian Transport Lawyers Association and is running the conference in Toronto. Gordon Hearn is the current President of the sister organization, the Transportation Lawyers Association of the U.S.A. Both will be giving opening remarks at the conference. Gordon Hearn will be moderating a panel involving Rui Fernandes on Cross Border Transportation. Rui Fernandes will be introducing Dr. Ashley Dunn who will be speaking on Casualty Investigations. Chris Afonso will be running the golf event.
Kimberly Newton was successful at trial on August 23, 2012 obtaining judgment against a load broker and two of its directors and officers, in their personal capacities, for their failure to hold fees received from a shipper in trust for the performing carrier. See the commentary in the last article of this newsletter.
2. Federal Court of Appeal Affirms Maritime Jurisdiction
On August 30th, the Federal Court of Appeal released its reasons in Siemens Canada Limited v. J.D. Irving, Ltd. 2012 FCA 225. Justice Nadon, a former maritime practicing lawyer and the senior maritime judge on the bench, wrote the decision. Justices Mainville and Dawson concurred. The appeal was from a decision of Justice Heneghan released the previous June.
The appeal arose from events which occurred on October 15, 2008 at the port of Saint John, New Brunswick, where, in the course of being loaded upon a barge, two valuable steam turbine rotors worth forty million dollars fell into the waters of Saint John harbour.
On April 7th, 2010, J.D. Irving Ltd. commenced an action in the Federal Court seeking a declaration that it was entitled to limit its liability to the sum of $500,000 and to set up a limitation fund pursuant to the Marine Liability Act. On April 8th, 2010, Siemens Canada Limited commenced proceedings in the Ontario Superior Court of Justice against J.D. Irving, Ltd. and others, for recovery of its loss.
Siemens brought an application in the Federal Court for a stay of the Federal Court action. Justice Heneghan dismissed Siemens’ application and she enjoined Siemens and others from commencing or continuing proceedings against Irving before any court or tribunal other than the Federal Court. Siemens appealed to the Federal Court of Appeal.
A central issue to Siemens’ appeal was that Justice Heneghan erred in use of the legal test used to stay the Ontario action. Siemens argued that the proper test applicable to an application to enjoin proceedings before another court or tribunal was a tripartite test in RJR-MacDonald Inc. v. Canada (Attorney General), set out by the Supreme Court of Canada in 1995 and the anti-suit injunction test enunciated by the Supreme Court of Canada in Amchem Products Inc. v. B.C. (Workers Compensation Board),  1 S.C.R. 897. The test in RJR-MacDonald allows the granting of an interlocutory injunction only where there is a serious issue to be tried, where the failure to grant the injunction will result in irreparable harm to the moving party, and where the balance of convenience favours the moving party. Siemens argued that J.D. Irving failed on this test. The test in Amchem says that an injunction will only be granted in rare circumstances, i.e. when five criteria are met: (i) a foreign proceeding is pending; (ii) an application for a stay in the foreign court has failed; (iii) the domestic court is alleged to be and is potentially an appropriate forum; (iv) the foreign court could not reasonably have assumed jurisdiction on a basis consistent with the principles of forum non conveniens; and (v) that granting the injunction will not deprive the plaintiff of legitimate personal or juridical advantages in the foreign forum of which it would be unjust to deprive him or her. Siemens argued that J.D. Irving failed on both tests.
The Federal Court of Appeal reviewed the language of the Marine Liability Act (the “MLA”). Subsection 33(1) of the MLA provides that the Federal Court “… may take any steps it considers appropriate, including:… (c) enjoining any person from commencing or continuing proceedings in any court, tribunal or authority other than the Admiralty Court in relation to the same subject matter”. Justice Nadon confirmed that the test is one of “appropriateness” and not the tests set out in RJR or Amchem. Justice Nadon found that the tests were inconsistent with the relevant provisions of the Marine Liability Act.
Justice Nadon stated at paragraph 107:
This test is, no doubt, a broad and discretionary one. The words of the provision could not be clearer in that Parliament has directed the Federal Court to make an order of enjoinment where it is of the view that it would be appropriate to make such an order. Thus, I am of the view that the Court may enjoin if, in all of the circumstances, that is the appropriate order to make. The judge, after performing that exercise, was satisfied that an order enjoining Siemens and others was appropriate. Not only do I see no error in her reasons, such an order was the correct one to make when all of the circumstances of the case are taken into consideration.
Justice Nadon added at paragraph 120:
With respect to the tests proposed by Siemens, I am of the view that those are inconsistent with the relevant provisions of the MLA. It is clear that the power to enjoin given to the Federal Court by the MLA does not arise under either common law or equity. It results from a specific grant of power by Parliament to that court. In my view, as I indicated earlier, the basis upon which the Federal Court is to exercise its power to enjoin could not have been made clearer by Parliament when it enacted subsection 33(1) of the MLA. Further, not only is the view taken by Siemens inconsistent with the clear language of section 33, but it is also inconsistent with the nature and purpose of section 33 and the international limitation of liability regime to which Canada adhered to when it adopted the Convention and the Protocol, in that the power granted to the Federal Court by paragraph 33(1)(c) of the MLA is, without doubt, to give effect to international maritime policy and that this power cannot be analogized to a court’s ability to grant anti-suit injunctions in the context of whether the court of one country or the other should accept jurisdiction over a given matter. One cannot avoid the reality that subsection 33(1) can only be properly understood in light of the current limitation of liability regime as set out in the Convention, of which Articles 1 to 15 and 18 are given force of law pursuant to subsection 26(1) of the MLA.
Siemens also argued that the Ontario court action was broader, the rights of discovery larger and that in the Ontario court a jury was available [which was not available in Federal Court]. The Federal Court of Appeal agreed with the analysis of the judge below in dealing with all the issues. Justice Nadon looked at the issues in a pragmatic way, stating at paragraph 94:
It is also obvious to me that the true issue which arises from both the Ontario proceedings and those in the Federal Court is whether Irving and MMC can limit their liability. If both can limit their liability, the case against them will likely go away upon payment by them of the limitation amount of $500,000 plus interest. If both or one of Irving and MMC are not entitled to limit their liability, then the proceedings in Ontario will proceed against the party or parties not entitled to limitation and again, in my respectful view, the likelihood of settlement is very high. In effect, a judge of the Federal Court will have concluded that the loss resulted from intent or recklessness within the meaning of Article 4 of the Convention or, in the case of MMC, that it does not fall under the protection of paragraph 4 of Article 1 of the Convention. In other words, the fundamental issue between the parties is not liability nor damages, but the right to limit liability. Once the right to limit liability has been determined, the debate between the parties will most likely be at an end.
In discussing limitation of liability generally the Court of Appeal reaffirmed earlier decisions of the Federal Court that breaking limitation is very difficult. The Marine Liability Actincorporates the 1976 Limitation Convention. The Court highlighted the fact that under the 1976 Convention the limits had increased greatly. In exchange the burden of proof was not on the claimant and not on the shipowner. The purposes of the 1976 Convention was to establish a right to limit liability that was almost “indisputable.”
At paragraph 102 the Court affirmed that:
[O]ne of the goals of the Convention was to reduce the amount of litigation as far as actions for limitations of liability were concerned, explaining that to achieve that goal, the signatories to the Convention had agreed to increase the limitation fund and to create “a virtually unbreakable right to limit liability”.
It is interesting to note that in dealing with issue of the lack of a jury in the Federal Court, the court was of the view that [at paragraph 93]:
In other words, that issue is not one which a jury in Ontario would be faced with in the context of the Ontario proceedings commenced by Siemens. That jury would, no doubt, hear evidence regarding liability and damages but, in my respectful view, the issue pertaining to the right to limit is not one which an Ontario judge would put to it, by reason of the Federal Court being properly seized of that issue pursuant to subsection 33(1) of the MLA.
In dismissing Siemens’ appeal the Federal Court of Appeal confirmed that J.D. Irving, Ltd. had the right to bring an application to determine if it could limit liability. To allow Siemens to pursue its action before the Ontario Superior Court prior to that determination would not be reasonable. There was no prejudice to Siemens in temporarily preventing it from continuing it action in Ontario and by forcing it to proceed in the Federal Court to resolve the limitation issue.
The Federal Court of Appeal reaffirmed in the strongest words possible the jurisdiction of the Federal Court to determine limitation of liability in a marine matter and the right of a shipowner to bring an application to the Federal Court for such a determination. At paragraph 115 Justice Nadon concluded that:
In my respectful view, Siemens’ attempt to pursue the matter in the Ontario Superior Court is the result of its belief that it stands a better chance of succeeding on intent and recklessness before a jury as opposed to a judge. Whether or not there is some basis for this view is, in my opinion, an irrelevant consideration. Further, as I have indicated on a number of occasions, the issue pertaining to the right to limit is now a matter for the Federal Court only because of the choice made by Irving and MMC to have that issue determined, pursuant to subsection 32(2) of the MLA, by that Court. That choice, in my respectful opinion, cannot be overridden by the courts, either the Federal Court or the Ontario Superior Court.
In this decision Justice Nadon also pointed out that although the Federal Court does not have exclusive jurisdiction regarding the issue of limitation of liability, it does, for all practical purposes, have that exclusive jurisdiction, adding [at paragraph 116]:
I am of this view because first, subsection 32(2) allows a shipowner to choose the forum in which he will assert his right to limit his liability. Second, the Federal Court is the only court which has jurisdiction with regard to the constitution and distribution of a limitation fund. Thus, save in exceptional circumstances, shipowners will almost invariably choose to assert their right to limit liability in the court which has exclusive jurisdiction with respect to the constitution of the limitation fund. To this, I would add that the Federal Court is the court which has the expertise in admiralty matters and that that fact is well known to the shipping community here in Canada and internationally.
3. Air Passenger Suit for Mistreatment: Gontcharov v. Canjet, 2012 ONSC 2279
This is a rare case that considers sections under the Carriage by Air Act, R.S. 1985 c. C-26, as well as examines foreign law to interpret those sections. The court was keenly aware of the possible international ramifications of its decision.
The plaintiff airline passenger sued the defendant air carrier for damages for mistreatment by the flight attendants and also for his subsequent arrest and forcible confinement upon arrival in Toronto.
The plaintiff, Mr. Gontcharov, a Canadian resident, purchased a return ticket on Canjet via a tour operator for his vacation in Puerto Plata, Dominican Republic. On the return flight, the plaintiff felt cold and he asked the flight attendants to turn up the heat or provide a blanket. The plaintiff testified that the flight attendants refused both requests. He alleged that, upon a second request for a blanket, he was told he would be charged $10.00 and that the staff considered him a “high maintenance passenger”.
After landing in the wee hours of the next morning, the plaintiff was met by and escorted off the aircraft by two Peel Regional Police officers. Outside the aircraft, there were two other officers with sub-machine guns. Other passengers disembarked while the plaintiff was required to stand aside in the presence of the four armed officers. The plaintiff was detained or forcibly confined until some four hours after landing. He was then released by the police with an apology.
The plaintiff testified that he was unable to sleep for the next 10 to 12 days, contracted severe bronchitis and that his fear of police from his earlier experiences in Russia was exacerbated.
He claimed general, aggravated and punitive damages for pain and suffering and infliction of mental distress as well as damages for his bronchitis, forcible confinement and false imprisonment.
Canjet and its employees brought a motion to dismiss the plaintiff’s claim for failing to disclose a cause of action.
The governing legislation is the Carriage by Air Act, R.S. 1985 c. C-26, which incorporates the Warsaw Convention of 1929 and the Montreal Convention of 1999 (the “Convention”). The defendants argued at the motion that the application of the Convention precluded the plaintiff’s claim and that the damages for psychological harm were not recoverable. The defendants relied upon Articles 17 and 29 of the Convention and the associated case law interpreting the Convention. The plaintiff asserted that whether or not the facts of this case are covered by the Convention was a question of law that was unclear, and that such questions raised should be decided with a full trial.
The Legal Test to Strike a Claim
The test for striking a pleading under Rule 21 is a high one in that a claim will only be struck when it has no chance of success.
The issues at the motion were identified as being whether the Convention and its rights and obligations applied; that is, (1) whether the injury-causing event took place onboard the aircraft or during disembarkation and (2) whether the injury-causing event could be considered an accident. Lastly, if the Convention applied, were damages for psychological harm and mental distress available in light of Article 29 and the case law interpreting the Convention.
The Convention applies to “all international carriage of persons … by aircraft for reward” if the State, as in the case of Canada, is a contracting party to the Convention.
The Convention applies based upon place of origin and destination and is intended to bring predictability regarding all claims brought against international carriers. The Court confirmed that the Convention applied and went on to interpret the various sections of the Convention.
The Court at the motion, in its interpretation of the Convention and Section 17, cited the Divisional Court’s commentary in Ace Aviation Holding Inc. v. Holden (2008) CanLII 40223, at para. 19, “a primary objective and purpose of the Montreal Convention 1999 and its predecessor, the Warsaw Convention, is uniformity, consistency, certainty and predictability with respect to the rights and obligations of carriers and passengers engaged in international carriage by air”
The Court went on to cite a case successfully argued by Rui Fernandes of our offices. Molloy J. in Connaught Laboratories Ltd. v. British Airways 2002 CanLII 4642 (ON SC), (2002) 61 O.R. (3d) 204 (S.C.), stated at para. 50:
It is therefore of fundamental importance that there be consistency in interpreting the provisions of the Convention from one country to another. That is not to say that a judge in Canada is necessarily bound to follow what has been decided in other jurisdictions. However, where a body of case law interpreting a particular provision has been applied consistently in other jurisdictions, it would be a mistake to depart from it without very sound reasons.
The Court went on to interpret Article 17(1), which provides:
17(1) The carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking. (Emphasis added)
The Court considered two lines of authority in the international jurisprudence clarifying whether Article 17 applies.
The first line of authority, relied upon by the plaintiff, considers whether the injury to the passenger occurred while on the aircraft, or while embarking or disembarking. (Acevedo et al v. Iberia 449 F. 3d 7 (1st Cir.) (Puerto Rico) (2006); Marotte v. American Airlines Inc., 296 F. 3d 1255, 1259 (11th Cir. 2002); Jaoude v. KLM Royal Dutch Airlines 2005 WL 1949545 (S.D Tex.).
The second line of authority, relied upon by the defendants, considers whether the injury causing the incident is an “accident” within the meaning of the case-law interpreting Article 17. [Tandon v. United Air Lines 926 F.Supp. 366 (SDNY) (1996), Naval-Torres v. Northwest Airlines Inc., 1998 CanLII 14916 (ON SC), (1998) 159 D.L.R. (4th) 67; Ashad v. Deutsche Lufthansa Aktiengesllschaft (Lufthansa German Airlines), 2009 CanLII 64820 (ON SC), 2009 CanLII 64820 (Ont. S.C.)].
The Court did not accept Article 17 as an “either/or” proposition and found that both questions must be answered.
Location of the “injury causing incident” pursuant to Article 17
The first question to be determined was where the “injury causing incident” had occurred. The Court reviewed and applied the three-part “location, activity and control” test outlined in the American jurisprudence, beginning with Acevedo et al. v. Iberia, above. The law considered (1) the passenger’s activity at the time of the injury; (2) the location of the passenger when injured; and (3) the extent to which the carrier was exercising control over the passenger at the time of the injury.
The plaintiff argued that his injury happened after disembarkation from the aircraft at the moment of his wrongful arrest and that the Convention did not apply. The defendants cited the allegations in the statement of claim and argued that the plaintiff’s own pleading stated that the initial injury was the denial of heat and blanket and the alleged contraction of bronchitis arising from same. Further, the claim alleged a humiliating disembarkation and, while the continued confinement occurred after disembarkation, that aspect was part of the chain of causation that occurred much earlier in the flight. Therefore, the defendants argued that the injury commenced during the flight and disembarkation and continued thereafter during his confinement by the police and that Article 17 applied.
The plaintiff relied on four cases from the United States that applied the “location, activity and control” test that found that the Convention did not apply because the injury occurred after disembarkation. The Court distinguished all of the cases as actions for injuries sustained while in detention.
The Court concluded that all four cases relied upon by the plaintiff could be distinguished from the facts of the case at bar. In these cases, each action was brought for injuries sustained while in detention and there were allegations of misconduct on the part of the authorities in question, which had caused the associated injury. There was no continuum of the injury from earlier in the flight and through disembarkation.
In this case, the pleaded injury began while the plaintiff was on board the aircraft, continued during disembarkation, and concluded with the continued detention by the police. There was no information provided to the Court regarding the three hours of the plaintiff’s detention. There was no allegation of inappropriate conduct by the police and, in fact, the plaintiff had received an apology.
The Court specifically referred to Eid v. Alaska Airlines Inc. 621 F. 3rd 858 (9th Circuit 2010), a claim for defamation where the pilot diverted the plane after the attendants felt they had lost control of the first class cabin. Comments alleged to be defamatory were made to the local police by the pilot and attendants upon arrival. The Court found the words to have been spoken in that case as part of the disembarkation process and adopted the Israeli Court’s use of chain of causation analysis and finding in Zikry v. Air Canada, Civil File No. 1716/05 A (Magistrates Court of Haifa 2006) in its interpretation of the Tokyo Convention (Convention on Offences and Certain Other Acts Committed on Board Aircraft, 14 September 1963) and the provisions regarding the restraint and calls for assistance with immunity after the landing of aircraft. In Zikry, the court confirmed, “it is obvious that all the events are connected to the flight. The Warsaw Convention applies also to the embarkation and disembarkation and to all the activities following that were links in one chain.”
The court in Eid had concluded that the issue of whether the pilot’s decision to require the plaintiffs to deplane, and the refusal to allow the plaintiffs to continue the flight after they had been cleared for flight by the local police, was reasonable and should be determined in the context of a trial as disputed facts were in issue.
The issue of the reasonableness of the conduct of the pilot and the interpretation of the Tokyo Convention were not pleaded or raised by the plaintiff in the present case.
The Court then concluded that the defendant had met the first branch of the test as to whether the Convention applied. The “injury-causing incident” occurred onboard the aircraft during the flight and in the course of disembarkation and continued during the confinement.
Was there an “Accident” pursuant to Article 17?
The second question to be determined was whether the injury-causing incident met the definition of an “accident”, within the meaning of Article 17 of the Convention.
The term “accident” used in Article 17 of the Convention has been consistently interpreted to mean “an unexpected or unusual event or happening that is external to the passenger”. Air France v. Saks 470 U.S. 392 (1985), Quinn v. Canadian Airlines International, 1994 CanLII 7262 (ON SC), (1994) 18 O.R. (3d) 326. The Court quoted Justice Sharpe in Naval-Torres v. Northwest Airlines Inc. supra who stated that “accident” in the context of the Convention is a “term of art” and should be interpreted broadly to include intentional acts of wrongdoing:
20 The word “accident” in Article 17 is a term of art with a meaning particular to the Convention. Reading the Convention as a whole, it is apparent that “accident” in Article 17 must be interpreted to embrace intentional acts of wrongdoing. Article 17 is the sole source of liability imposed upon a carrier by the Convention for bodily injury to passengers. It follows that if “accident” were interpreted to include only inadvertent or negligent acts by a carrier, it would lead to the extraordinary result that the Convention provides a remedy for inadvertence or negligence but fails to provide any remedy for deliberate wrongdoing. It is clear, however, that this is not the case. Article 25, discussed in greater detail below, limits defences or limits on liability for where the carrier is guilty of wilful misconduct, thereby plainly indicating that deliberate wrongdoing is actionable under the Convention. (Emphasis added)
As confirmed in Navel-Torres, above, an act or omission by a flight attendant that is part of the chain of causation of injury or death of a passenger has been interpreted to be an “accident” within the meaning of the section.
In Balani v. Lufthansa, 2010 ONSC 3033, the flight attendant refused to provide a wheelchair during disembarkation. The passenger was injured in the terminal. The Court concluded that the incident was an accident within the meaning of the Convention using the chain of causation analysis.
In this case, the allegedly high-handed conduct of the flight attendants, including their refusal to provide heat or a blanket and their reporting the plaintiff to the police, caused the plaintiff to be escorted from the aircraft and detained. The conduct of the attendants that began on board was part of the chain of causation of the injuries sustained, therefore constituting an “accident” within the meaning of the case law.
The Court found that the injury-causing incident was an “accident” by applying the “term of art” broad, flexible scope of the definition of “accident” to include intentional acts by the carrier’s staff in a chain of causation. This made sense in light of the limits of recovery stipulated in the Convention and was consistent with the case law.
The court then concluded that, because the incident was an accident, there were no facts in dispute requiring a trial.
Damages and the ability to recover for psychological injury arising out wrongful confinement in light of Article 29 and law
The third and final issue was whether there could be recovery for damages for psychological injuries, not bodily harm, for wrongful confinement.
The pleadings in this case included a claim for aggravated and punitive damages. The Court found that Article 29 made it clear that such claims were not recoverable if a claim was made under the Convention, or in contract or tort:
Article 29-Basis of Claims
In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under the Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable. (emphasis added)
As Dovell J. noted in Walton, noted below, the wording of Article 29 is “clear and obvious… Any claim for damages of a passenger of an international flight against a carrier, contracting carrier or employee of either carrier can only be brought within the ambit of the Montreal Convention of 1999.”
Further, the Court found that the Canadian and international case-law interpreting the intended scope of the Convention was clear that damages for psychological harm, without accompanying bodily injury, are not recoverable under the Convention.
The House of Lords in Sidhu v. British Airways Plc; Abnett v. British Airways Plc  1 All E.R. 193 at 201, 207 made it clear that damages for psychological injury could not be maintained under section 17 of the Convention.
The Supreme Court of the United States in Tseng, the plaintiff, alleged psychic and psychosomatic injuries, but no “bodily injury” as that term is used in the Convention and had no remedy available under the Convention or the common law. The US Supreme Court reaffirmed its decision in Eastern Airlines, Inc. v. Floyd, 499 U.S. 530 (1991) to the effect that “mental or psychic injuries unaccompanied by physical injuries are not compensable under Article 17 of the Convention.”
Canadian decisions have consistently followed the approach in Sidhu, above, and Tseng, above confirming that psychological harm, unless it is connected with bodily injury is not recoverable under the Convention. See Plourde v. Service aérien FBO inc. (Skyservice) 2007 QCCA 739 (CanLII), 2007 QCCA 739, at paras. 52-54; Walton v. Mytravel Canada Holdings Inc. 2006 SKQB 231 (CanLII), 2006 SKQB 231, at para. 43; Chau v. Delta Airlines (2003) CanLII 41999.
In Plourde, noted above, the Québec Court of Appeal considered whether the Montreal Convention altered the treatment of psychological injuries under the former Warsaw Convention. Justice Thibault noted, at para. 52, that when the Montreal Convention was being developed, “the question of compensation for psychological harm was specifically addressed… and clearly rejected.” The court confirmed, at para. 30, that the notion that the Montreal Convention altered the treatment of psychological harm from the Warsaw Convention “is not supported by legal scholarship or case law, which have concluded that, with regard to this aspect of the law, there was no change from what prevailed under the Warsaw Convention.”
Article 17 was held to apply to the facts of this case as an “accident” during flight and disembarkation and that the Convention applied. The Court concluded that the plaintiff could not advance a claim for psychological damages or any claim for punitive or exemplary damages based upon the Canadian and international case-law, and by the clear wording of Article 29 of the Convention.
Therefore all aspects of the plaintiff’s claim for damages for psychological harm, including punitive and exemplary damages, were struck. The claim for general damages for bodily injury regarding bronchitis was permitted to continue.
The Court commented, at paragraph 71, that “It appears that courts worldwide are taking a consistent view that the Convention prescribes the limits of recovery in international travel. If a plaintiff cannot recover under the Convention for psychological injury, remedies under local jurisdictions where actions are commenced cannot assist. Both Sidhu, supraand Tseng, supra have taken a strong, clear approach to the exclusive application of the Convention, also known as the “preemptive approach.”
The Court further commented that the question of the exclusive application of the Convention had not been considered in a meaningful way in Canada by an appellate court as yet and noted that to allow recovery for psychological damages under the common law, if Article 17 does not apply, would undermine the principles of consistency and uniformity in processing claims involving international travel.
The Court found, in the alternative, that if the Convention did not apply, the plaintiff was precluded by the clear words of Article 29 from claiming exemplary or punitive damages for any alleged harm from this incident.
The arguments of the defendants that the plaintiff experienced an “accident” during flight and disembarkation giving rise to a claim for bodily injury of alleged severe bronchitis were ultimately successful. Any claim for psychological injuries or mental distress flowing from the detention of the plaintiff during the disembarkation and thereafter were struck pursuant to the case law interpreting Article 17 of the Convention. As well, Article 29 was found to be clear and all claims advanced for punitive and exemplary damages were struck.
The Court concluded that the “injury causing incident” occurred on board the aircraft during the flight and in the course of disembarkation and continued during the confinement. The Court concluded that the “injury causing incident” was an “accident”; however, the claims for psychological injuries of mental distress could not succeed under the Convention based upon Article 29 of the Convention and the case-law interpreting the Convention.
Therefore, apart from the claim for damages for the bronchitis, which was acknowledged by the defendants to be bodily injury falling within the definition of “accident”, the balance of the plaintiff’s claim was struck.
Kim E. Stoll
4. Infractions, Charges and the Highway Traffic Act: Is it Enough if the Charge is “Close” to the Mark?
“Getting off on a technicality” has developed a negative connotation over the years, invoking the notion that justice has some how been defeated at the hand of an enterprising lawyer or a clever accused. Sometimes a technicality is, however, not just a technicality. There are social and policy reasons to support the argument that the “state” has to get things “right” when laying a charge. An accused has the fundamental right to know what case it has to meet in its defence. This goes not only to the date and location of the alleged infraction, but requires an adequate description as to the exact nature of the offence.
The case of Ontario (Transportation) v. Don’s Triple F Transport Inc. (*1) is an interesting illustration of the court’s disposition of a dispute concerning the sufficiency of a “charge” alleging an infraction under the Highway Traffic Act (the “H.T.A.”). In this case, three judges of the Ontario Court of Appeal each had different ways of disposing of the matter.
On October 11, 2009, a tractor-trailer owned by Don’s Triple F Transport Inc. (“Triple F”) was travelling westbound on Highway 401 when it entered a Ministry of Transportation Inspection station in Thames Centre Township. The truck was inspected by a Ministry of Transportation enforcement officer, which inspection included a check of the speed-limiting system on the truck.
Under Section 68.1 of the H.T.A., no person “shall drive, or permit the operation of a commercial motor vehicle on a highway unless the vehicle is equipped with a speed-limiting system that is activated and functioning in accordance with the regulations”. A regulation enacted under the H.T.A. pertaining to “Equipment” (*2) is an important element of this case. This regulation requires that the speed-limiting system of a commercial motor vehicle shall be “properly set at a maximum speed of 105 kilometres per hour”, being the equivalent of 65 miles per hour.
In order to check the speed-limiting system on the truck, the Ministry of Transportation enforcement officer used a device known as an “EZ-Tap Cube”, which indicated to him that the speed-limiting system of the truck was in fact set at 75 miles per hour. The enforcement officer accordingly served Triple F with a Certificate of Offence, charging that it committed the offence of “permitting the operation of a commercial motor vehicle not equipped with a working speed-limiting system“. The Certificate cited Section 68.1 of the H.T.A. and included the correct set fine for infractions under that section.
At the Trial: “Strike One”
A trial on the charge was held before a Justice of the Peace. The enforcement officer was called as a witness, who testified for the prosecution about his inspection of the truck. The enforcement officer was cross-examined by counsel for Triple F about the technical workings of the EZ-Tap Cube. At the end of a short trial the Justice of the Peace acquitted Triple F of the charge on two bases:
1. The charge was that Triple F did not have a “working speed-limiting system”. There was, however, in fact a system on the vehicle that was working – it had just not been set at the correct maximum speed. Accordingly, the charge as laid “should not stick”.
2. The Justice of the Peace also noted that there was a lack of evidence that the EZ-Tap Cube system was working properly at the time of the inspection of the truck. This created a basis for a reasonable doubt on the charge. The justice of the peace also ‘threw out’ the charge on this alternative basis.
On appeal to the Ontario Court of Justice: “Strike Two”
The Province of Ontario appealed the dismissal of the charge to a judge at the Ontario Court of Justice. This judge upheld the acquittal of Triple F by simply dealing with the first basis cited above by the Justice of the Peace. The judge on appeal ruled that:
“…this is an appropriate dismissal by the Justice of the Peace because the charge was not correctly laid. If we had to ask everybody who was charged with something that they read all the legislation and infer that they are supposed to note things, that isn’t the way that these matters work as far as I am concerned so the appeal is dismissed”.
In essence, a party charged with an offence should know exactly the case that they have to meet and of what they are specifically being accused.
Unrelentingly, the Province of Ontario filed a further appeal to the Ontario Court of Appeal.
At the Court of Appeal of Ontario: “Strike Three – but not by much…”
At the Court of Appeal, the province raised the following arguments in support of a conviction on the charge:
1. The appeal judge failed to recognize that the Certificate of Offence had in fact correctly set out the charge on the basis that the language used was in accordance with the “prescribed short form wording” for such an offence under the Highway Traffic Act, as established by schedule under the “Provincial Offences Act“(*3) (Lo and behold, there are in fact “short-form wordings” for certain offences that can be used as set by this statute).
2. The appeal judge failed to appreciate that “ignorance of the law” is no defence for Triple F (which knew or should have known what it was, in fact, being charged for).
The three judges forming the panel at the Court of Appeal each gave different reasons and offered different analysis of the issues. Justices Armstrong and Himel came to a finding that the acquittal should stand, for different reasons. Justice Feldman dissented, ruling that the acquittal should be set aside in favour of a new trial on the charge.
a) Mr. Justice Armstrong
Mr. Justice Armstrong addressed whether Triple F was correctly “charged” discerning between a charge of failing to have a working speed-limiter system (the charge laid, at least in a literal sense) and the failure to have the same set with the prescribed maximum speed (as was found on the inspection) as merely technical, or would this support an acquittal?
Under the Provincial Offences Act (which frames the procedure by which such charges are laid), proceedings in respect of offences under provincial legislation may be commenced by filing a Certificate of Offence or by laying an “information” under that statute. A regulation enacted pursuant to the Provincial Offences Act contains various permitted short forms of language that may be used to describe offences on a Certificate of Offence. In effect, enforcement officers are thus provided with various short-form wordings for the purposes of laying charges for offences under the H.T.A. This list of permitted short form phrases includes language to charge an accused under Section 68.1 of the H.T.A. The specific language is exactly that which appears on the Certificate of Offence in this case: i.e. “… permit operation of a commercial motor vehicle not equipped with a working speed-limiting system”.
The prosecution argued that the charge was properly worded on the Certificate of Offence, and that, while the language of the Certificate of Offence did not literally extend the charge to a breach of the maximum speed requirement (as might have been accomplished with the addition of the words “… in accordance with the regulations” or words to that effect) at the end of the language employed that this was unnecessary. The prosecution asserted that the short-form wording of the offence should be read in “harmony” with the general requirement under the H.T.A. of having a speed-limiter and with the specific maximum speed setting requirement in the regulation.
Mr. Justice Armstrong disagreed, finding that the short-form wording used did not convey “sufficient information to meet the notification objectives that a Certificate of Offence must serve”. Citing judicial authority on point, Mr. Justice Armstrong ruled that in order for a Certificate of Offence or for an “information” to be “unobjectionable”, the charging document must accomplish three objectives, which may be summarized as follows:
i) a proper identification of the offence; that is, the accused must be informed of the legal character of the allegation against him or her
ii) the provision of reasonable information with respect to the act or omission to be proven; and
iii) the proper identification of the transaction.
These three objectives are said by the court to be a reflection of the golden rule articulated by the Supreme Court of Canada in the case of R. v Cote (*4) in the context of laying an information charging an offence under the Criminal Code:
The golden rule is for the accused to be reasonably informed of the transaction alleged against him, thus giving him the possibility of a full defence and a fair trial. When, as in the present case, the information recites all the facts and relates them to a definite offence identified by the relevant section of the code, it is impossible for the accused to be misled.
Mr. Justice Armstrong found that the use of the short-form language in the Certificate of Offence served only to identify the offence, being the first objective listed above. The third objective was in turn met by the indication on the Certificate of the time, date and place of the offence. The judge however ruled that the second requirement was not met by the use of the short form language, as those words did not indicate the act or omission to be proven by the province. In this regard, Justice Armstrong reverted back to the initial finding by the Justice of the Peace that the indication on the face of the Certificate that the problem was that the commercial motor vehicle was not equipped with a working speed-limiting system whereas the prosecution sought to prove a different act or omission than was described in the Certificate of Offence. Some reference to the “Equipment” regulation in question was needed on the Certificate in order to give reasonable information to Triple F as to exactly the province planned to prove at trial.
Mr. Justice Armstrong also ruled that the concept of “ignorance of the law being no defence” had no application to this case, as the case simply concerned the language appearing on a Certificate of Offence.
b) Madam Justice Feldman
Madam Justice Feldman reached a different result than Justice Armstrong. Madam Justice Feldman would have allowed the appeal, set aside the acquittal, and ordered a new trial on the basis that the Certificate of Offence sufficiently complied with the statutory “short form” requirements. In essence, Justice Feldman ruled that the proper analysis started and stopped with whether or not there was compliance with the Provincial Offences Act. If prescribed short-form language was employed, then the court need not proceed with any further inquiry as to whether a better or more sufficient choice of language could have or ought to have been employed by the person laying the charge. Madam Justice Feldman also expressed concern that “allowing the acquittal to stand under these circumstances would cause unnecessary havoc in the enforcement of these important provisions, which are there to ensure that commercial vehicles drive at a safe speed on our highways”.
c) Madam Justice Himel
Madam Justice Himel “broke the tie” in favour of Triple F, but for different reasons than Mr. Justice Armstrong. Madam Justice Himel agreed with Madam Justice Feldman that the content of the Certificate of Offence complied with the statutory requirements and was, therefore, adequate to inform the accused of the charge being laid.
In ultimately siding with Triple F, Justice Himel referred back to the second basis for the acquittal cited by the Justice of the Peace. As the Justice of the Peace – who had heard the evidence on the trial – was not satisfied that the device used by the enforcement officer was working properly and that the enforcement officer had the necessary knowledge about its use, Justice Himel found that the defence had raised a reasonable doubt as to the charge and, accordingly, that conclusion should not be interfered with and the acquittal should stand.
Conclusion: The Province Struck Out, but it was Close
The majority of the Court of Appeal ruled that the acquittal should stand, while a ‘different’ majority of the Court of Appeal found that the use of the prescribed “short-form” language was sufficient, notwithstanding that, on a plain reading of the Certificate of Offence, the accused might not appreciate the specific offence to be dealt with at trial. A rather curious result, indeed.
This case illustrates the issues that may arise in the case of a prosecution under a statute such as the H.T.A.. This case is, of course, too fact specific to serve as any precedent in and of itself, but it serves as a clear admonition that special care should be taken by the prosecution when laying of charges and in the response to the same by the accused or the accused’s counsel.
*1 2012 ONCA 536 (CanLII)
*2 R.R.O. 1990, Regulation 587, s. 14
*3 R.S.O. 1990, c. P.33
*4  1 S.C.R. 8 at p.13
5. Officers / Directors of Defunct Load Broker Liable to Carrier
In Tripar Transporation LP v. U.S. Consolidators Inc., Linda Earle-Barron and Jonathan Turner August 23, 2012 Court file SC-1100001987-0000 (Brampton) a carrier sued a load broker and its three officers and directors for a number of unpaid invoices. The broker was insolvent (but not bankrupt) and was no longer operating. The personal defendants all denied responsibility for the obligations of the broker as the broker was an incorporated company.
The claimant relied on the Supreme Court of Canada’s decision in Air Canada v. M&L Travel Ltd.,  3 S.C.R. 787. In Air Canada, the Supreme Court held that directors and officers of a corporation can be held personally liable for the corporation’s breach of trust where they either knowingly directed or knowingly assisted in the corporation’s breach of trust. Counsel relied on the statutory trust created by subsection 191.0.1(3) of the Highway Traffic Act, R.S.O. 1990, c. H-8 which stipulates that brokers must hold funds received from shippers or consignees in trust for the performing carrier.
At trial, the judge agreed with counsel for Tripar’s submissions and held that the corporate broker committed a breach of the s. 191.0.1(3) trust provision. The broker had admitted at trial that the work was performed and invoiced by the carrier, monies were received from the various shippers and deposited into a general account, but that other creditors of the corporation (hydro, payroll, rent, etc.) were paid before the carrier. The simple fact of depositing funds into a general account and not into a specifically constituted trust account was itself a breach of trust, as was dispersal of the trust funds to entities other than the beneficiary (i.e. paying the other creditors and not the carrier with funds received from the shippers in payment of the carrier’s freight charges). The broker had subsequently become insolvent and therefore no assets or monies were available to satisfy any judgment for the unpaid invoices.
The judge also agreed with Tripar’s argument that the corporate directors and officers “knowingly assisted” the corporation in its breach of trust, although only for two of the three directors. To prove “knowing assistance”, the directors and officers must have actual knowledge (or be reckless or willfully blind) of the corporation’s breach of trust and that the disbursal of trust funds is in breach of trust. If the trust is imposed by statute (as it was in this case, as per s. 191.0.1(3) of the Highway Traffic Act), then the person will be deemed to have knowledge of it, as persons are deemed to have knowledge of the law.
While noting that the directors and officers had acted without fraud, the judge nevertheless imposed personal liability upon two of the corporation’s three directors and officers for the corporation’s breach of trust. The directors and officers, by virtue of running a “closely-held” corporation, were personally aware of the corporation’s breach of the statutory trust. They were involved in the day-to-day operations of the corporation and were aware of the details of the broker corporation’s accounts.
One director had received trust funds directly from the general account (although paid pursuant to a contractual agreement) into which trust funds had been deposited. The other director had directed the corporation to pay trust funds to the broker’s other creditors, which funds were to have been held in trust for the carrier. This second director also received a salary and certain benefits that were paid from the general account. Most importantly, the second director admitted that they knew the funds received by the shippers as payment for freight were to be paid to this particular carrier, and that this particular carrier was unpaid. The directors therefore were actually aware of the broker corporation’s breach of trust, and were deemed to know (as this was a trust created by statute, the Highway Traffic Act), that such disbursal of funds was in breach of the statutory trust.
The court, therefore, agreed with Tripar’s position and imposed personal liability on these two directors and officers for the broker corporation’s breach of the Highway Traffic Actrequirement to hold funds paid by shippers to it in trust for the carrier.
This case serves as a useful illustration for how this trust requirement can be used against unscrupulous brokers (or brokers who simply do not abide by the trust requirement, even if paying other legitimate creditors) that subsequently become insolvent in order to attempt a recovery against the former directors and officers. It is also a cautionary tale to brokers to ensure that funds for carriers are held in a separate trust account and not simply deposited into a general account as this act, in and of itself, is a breach of the Highway Traffic Act trust provision. When business is going well, this is not so much of a concern, but directors and officers of such broker can open themselves up to personal liability in the event the broker cannot pay its carriers.
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