Berenguer v. SATA Internacional – Azores Airlines, S.A.

Berenguer v. SATA Internacional – Azores Airlines, S.A.
Court (s) Database
Federal Court Decisions
Date
2021-05-03
Neutral citation
2021 FC 394
File numbers
T-1517-18
Decision Content
Date: 20210503
Docket: T-1517-18
Citation: 2021 FC 394
Ottawa, Ontario, May 3, 2021
PRESENT: The Honourable Mr. Justice Lafrenière
PROPOSED CLASS PROCEEDING
BETWEEN:
DORA BERENGUER
Plaintiff
and
SATA INTERNACIONAL – AZORES AIRLINES, S.A.
Defendant
ORDER AND REASONS
[1] There are two motions before the Court. In the first one, Dora Berenguer [the Plaintiff], moves pursuant to Rule 334.12(2) of the Federal Courts Rules, SOR/98-106 [Rules], to certify the underlying action seeking compensation for delayed flights against SATA Internacional – Azores Airlines, SA [the Defendant or SATA], as a class proceeding and to appoint the Plaintiff as the representative to act on behalf of affected passengers. The second one is brought by the Defendant for an order striking the Amended Statement of Claim, without leave to amend, and dismissing the proceeding on the ground that the pleadings do not disclose a viable cause of action.
I. Overview
[2] I set out below a brief overview of this dispute in order to provide some context to the analysis that follows.
[3] The Plaintiff is an Alberta resident. She commenced the within proposed class proceeding by way of a Statement of Claim issued August 14, 2018.
[4] The Defendant is a company incorporated pursuant to the laws of Portugal, with a principal place of business in Portugal. It operates as a commercial airline that schedules flights to and from various cities in Canada.
[5] The claim was initially brought against a second commercial airline, WOW Air ehf; however it was discontinued after the company ceased operations in March 2019.
[6] The Plaintiff’s claim, as amended on January 14, 2019, relates to the alleged failure by the Defendant to pay compensation in accordance with European Union Regulation (EC) No. 261/2004 [EU 261] to passengers who experienced delays on flights operated by the Defendant to and/or from Canada and arrived at the final destination more than three hours after the scheduled arrival time. EU 261 is a consumer protection measure adopted by the European Parliament and the Council of the European Union in 2004 that establishes common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights.
[7] The Plaintiff seeks a declaration that the Defendant breached the express and/or implied terms of its contract of carriage to pay cash compensation in accordance with EU 261 and an order that the Defendants pay compensation to each Class Member.
[8] The Plaintiff defines the proposed class as follows:
This Action is brought on behalf of members of a class consisting of the Plaintiff and all individuals anywhere in the world who, from August 14, 2012, have travelled on an aircraft (or two aircrafts in the case of direct connections) operated by a Defendant (including those where the Defendant maintains commercial control) to and/or from Canada and arrived at the final destination more than three hours after the scheduled arrival time, but excluding individuals who already received full cash compensation from the respective Defendant in accordance with EU 261/2004.
II. Factual Background
[9] The parties’ motions were argued together as many of the issues overlapped and are largely intertwined: Berenguer v. WOW Air ehf, 2019 FC 407.
[10] The Defendant’s motion raises a threshold jurisdictional issue. The Defendant submits that this Court has no jurisdiction to hear the action, whether viewed as one seeking relief directly under EU 261 or on the basis of a breach of an alleged contractual obligation to comply with it, as it is plain and obvious that the relief claimed is not sought “under an Act of Parliament or otherwise” as required by s. 23(c) of the Federal Courts Act, RSC 1985, c. F-7 [FCA].
[11] For her part, the Plaintiff submits that jurisdictional objection is premised on a mischaracterization of the basis of her claim. She maintains that there is a strong argument that the claim is recognized, created, and/or determined to some material extent by federal law and that accordingly, at this preliminary stage, the jurisdictional objection ought to be rejected. The Plaintiff further argues that the criterion set out in section 334.16(1)(a) of the Rules has been met. She says that on a plain and ordinary reading of the Amended Statement of Claim, there is an arguable case that the Defendant expressly, or by necessary implication, contractually agreed to apply EU 261.
[12] In deciding whether a reasonable cause of action is disclosed, the Court must assume that the facts pleaded are true, unless they are manifestly incapable of being proven: Operation Dismantle Inc. v. The Queen, [1985] 1 SCR 441, at p 455.
[13] Bare allegations and conclusory legal statements based on assumption or speculation are not material facts; they are incapable of proof and, therefore, they are not assumed to be true for the purposes of a motion under Rule 221(1)(a) or Rule 334.16(1)(a).
[14] Rule 174 requires that every pleading “contain a concise statement of the material facts on which the party relies”. However, the Plaintiff’s pleadings are replete with conclusory statements that allege a cause of action as if it was a material fact or that provide opinions and speculations as if they were proven material facts. They read more like a factum than a statement of claim.
[15] Examples of conclusory and argumentative allegations in the Amended Statement of Claim are reproduced below:
18. Each of the Defendants incorporated EU 261/2004 into their respective contracts of carriage for passenger flights to/from Canada and have contractually agreed to apply EU 261/2004 in the event of long flight delays.
21. EU 261 /2004 cannot be contracted out of, limited, or waived, as provided in Article 15 - Exclusion of Waiver under EU 261 /2004:
1. Obligations vis-à-vis passengers pursuant to this Regulation may not be limited or waived, notably by a derogation or restrictive clause in the contract of carriage.
2. If, nevertheless, such a derogation or restrictive clause is applied in respect of a passenger, or if the passenger is not correct/y informed of his rights and for that reason has accepted compensation which is inferior to that provided for in this Regulation, the passenger shall still be entitled to take the necessary proceedings before the competent courts or bodies in order to obtain additional compensation.
22.1 EU 261/2004, even without resorting to incorporation principles under contract law, applies to each of the Defendants by virtue that EU 261 /2004 has been adopted in (or extended to) the laws of each of Defendants' respective countries.
22.2. Considering EU 261/2004 applies to each of the Defendants (for all flights regardless where their flights depart from), and EU 261/2004 specifically provides that, by law, rights under EU 261/2004 cannot be derogated or limited, any attempt by a Defendant (such as WOW Air) to exclude within their contract of carriage some portions of EU 261/2004 protection is void and/or otherwise unenforceable…
III. The Montreal Convention Reinforces Contractual Application of EU 261/2004
23. The Convention for the Unification of certain Rules for International Carriage by Air (also known as the Montreal Convention) is an international treaty in respect of an airline's liability for international transport that is incorporated into Canadian law by virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26.
24. Article 27 of the Montreal Convention reiterates the freedom to contract principle and provides that airlines may enter into a contract of carriage that exceeds the minimum requirements under the Montreal Convention.
25. By voluntarily incorporating EU 261/2004 into their own contracts of carriage, the Defendants contractually agreed to apply EU 261/2004, as permitted under Article 27 of the Montreal Convention.
IV. Interpretation of EU 261/2004
26. The European Court of Justice (CJEU), the highest court of the European Union in respect of all matters under European Union law, including EU 261/2004, has provided guidance on the proper interpretation of EU 261/2004 in a number of decisions. Decisions of the CJEU are binding interpretations of EU law.
27. The amount of cash compensation each passenger shall receive under Article 7 of EU 261/2004 is measured by the delay between the passenger's scheduled arrival time at the "final destination" and the time the subject aircraft's door is opened for disembarkment at the "final destination": ·
a. Delay between three to four hours: 300 euros to each Class Member.
b. Delay greater than four hours: 600 euros to each Class Member.
28. The CJEU confirmed that the arrival time for purposes of EU 261/2004 is not the time the aircraft "touched down" but rather the time the first aircraft door is opened (Germanwings GmbH v Ronny Henning (C-452/13)).
29. In the case of two directly connecting flights, a passenger's "final destination" is the destination of the last flight as provided under Article 2(h) of EU 261/2004 (Air France v Folkerts (C-11/11) and re-confirmed recently by the England and Wales Court of Appeal (Gahan v Emirates [2017] EWCA Civ 1530).
30. The CJEU confirmed that the standardized cash compensation in Article 7 of EU 261/2004 applies to flights that are delayed more than three hours because long delays of more than three hours amounts to a "cancellation":
Sturgeon v Condor, and Bock v Air France (C-402/07 and C-432/07) - November 19, 2009
2. Articles 5, 6 and 7 of Regulation No 261/2004 must be interpreted as meaning that passengers whose flights are delayed may be treated, for the purposes of the application of the right to compensation, as passengers whose flights are cancelled and they may thus rely on the right to compensation laid down in Article 7 of the regulation where they suffer, on account of a flight delay a loss of time equal to or in excess of three hours, that is, where they reach their final destination three hours or more after the arrival time originally scheduled by the air carrier. Such a delay does not, however, entitle passengers to compensation if the air carrier can prove that the long delay was caused by extraordinary circumstances which could not have been avoided even if ail reasonable measures had been taken, namely circumstances beyond the actual control of the air carrier.
Nelson v Deutsche Lufthansa AG and R (TU/ Travel, British Airways, easyJet and IATA) v Civil Aviation Authority (2012) C-581/10 and C-629/10
1. Articles 5 to 7 of Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91, must be interpreted as meaning that passengers whose flights are delayed are entitled to compensation under that regulation where they suffer, on account of such flights, a loss of time equal to or in excess of three hours, that is, where they reach their final destination three hours or more after the arrival time original/y scheduled by the air carrier. Such a delay does not, however, entitle passengers to compensation if the air carrier can prove that the long delay is caused by extraordinary circumstances which could not have been avoided even if ail reasonable measures had been taken, namely circumstances beyond the actual control of the air carrier.
31. The Defendant airlines can avoid paying compensation only if the Defendants themselves can establish that the delay for the subject flight was due to "extraordinary circumstances". The Defendants bear the burden to prove the "extraordinary circumstances" as provided in Article 5(3) of EU 261/2004:
3. An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if ail reasonable measures had been taken.
32. "Extraordinary circumstances" does not include technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance (Wallentin-Hermann v Alitalia-Linee Aeree ltaliane SpA (Case C-549/07)).
32.1. Nor does a labour disruption (i.e. strike) automatically constitute an "extraordinary circumstance", which remains the burden of the airline to establish on a case-by-case basis (Krüsemann v. TUlfly GmbH, (Case C-195/17)).
33. The express provisions of EU 261/2004 do not require a Class Member to make a demand directly with a Defendant airline or to file a complaint with the aviation regulators before being entitled to receive cash compensation.
…
49. Section 23(c) of the Federal Court Act [sic] provides that the Federal Court has jurisdiction.
50. The members of the Class are within the territorial jurisdiction of this Court as the respective flights originate from Canada or have Canada as its destination and there is a “real and substantial connection” with Canada.
[16] While Rule 175 of the Rules provides that a party may include in their pleading allegations as to the law, they never bind the Court on such issues: Harmony Consulting Ltd. v. G.A. Foss Transport Ltd., 2012 FCA 226, at para 41. For the purposes of the present motions, the Court is therefore not obliged to accept as a proven material fact the conclusion that there is a cause of action. Rather, the Court must examine whether the genuine material facts, which are not argument or conclusory statements, disclose a reasonable cause of action. I have set out those facts below.
[17] Paragraph 17 of the Amended Statement of Claim pleads that EU 261 “is a consumer protection measure that provides standardized levels of cash compensation for various matters including flight delays and/or denied boarding.”
[18] At paragraph 19, the Plaintiff sets out Rule 16 of the Defendant’s contract of carriage entitled “Responsibility for Schedules and Operations”:
Applicable to/from Canada, the carrier fully complies [word missing in original] EC Regulation 261/2004 dated 11th February 2004, published in the 17th February 2005, in what concerns rules for indemnity and assistance to passengers in case of denied boarding and cancellation or considerable flight delays.
[19] At paragraphs 23 and 24, the Plaintiff refers to the Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on May 28, 1999, being Schedule VI to the Carriage by Air Act, RSC 1985, c. C-26, Art 27 [Montreal Convention]. The Plaintiff relies on Article 27 of the Montreal Convention that provides that “airlines may enter into a contract of carriage that exceeds the minimum requirements under the Montreal Convention.”
[20] The Plaintiff sets out her personal circumstances that give rise to her claim for compensation at paras 35 to 39 of the Amended Statement of Claim. She alleges that she held a confirmed reservation and a boarding pass for a flight operated by the Defendant departing on September 1, 2017 from Toronto, Ontario, to Ponta Delgada, Azores, Portugal. The Plaintiff’s flight was scheduled to depart at 9:00 PM, but was delayed and rescheduled to depart the next day on September 2, 2017 at 7:30 AM. The Plaintiff was ultimately transported to her final destination, arriving more than four hours after the originally scheduled arrival time. The Plaintiff alleges that the delay was not due to exceptional circumstances. She wrote to the Defendant demanding compensation of 600 euros regarding the delay in accordance with EU 261. The Defendant refused to pay any compensation.
[21] The Plaintiff further alleges at paras 40 to 46 of the Amended Statement of Claim that other individuals have experienced flight delays of more than three hours on flights operated to or from Canada by the Defendant and have not been paid the standardized cash compensation she alleges they are entitled to receive.
[22] Paragraph 51 sets out the relief sought on behalf of the Plaintiff and other members of the proposed class. At the core of the claim are the requests for: (a) a declaration that the Defendant breached the express and/or implied terms of its contract of carriage to pay cash compensation in accordance with EU 261 and (b) an order that the Defendant pay compensation to each Class Member in the form of standardized and/or liquidated damages.
[23] Finally, the Amended Statement of Claim sets out the basis for the Federal Court’s jurisdiction at paragraphs 48 through 50:
48. This Action concerns aeronautics with a subsisting body of federal laws including:
a. Aeronautics Act, RSC, 1985, c. A-2
b. Carriage by Air Act, RSC, 1985, c. C-26
c. Canada Transportation Act, SC 1996, c. 10
d. Air Transportation Regulations, SOR/88-58
e. Federal common law, including the law relating to breach of contracts
III. Issues to be Determined
[24] On the one hand, the Plaintiff seeks to certify this action as a class proceeding pursuant to Part 5.1 of the Rules. On a motion for certification, the Court must examine if the conditions for certification provided at Rule 334.16(1) have been met. The first condition is whether “the pleadings disclose a reasonable cause of action”: subsection 334.16 (1)(a).
[25] On the other hand, the Defendant seeks an order striking the Amended Statement of Claim and dismissing the action pursuant to Rule 221(1)(a). The test for striking out a statement of claim for failing to disclose a reasonable cause of action is whether it is “plain and obvious” that the claim must fail.
[26] The test to be applied under Rule 334.16(1)(a) is the same as that on a motion to strike brought under Rule 221(1)(a). As stated by the Federal Court of Appeal in Brake v. Canada (Attorney General), 2019 FCA 274, at para 54: “the party seeking certification need only show that the cause of action is not doomed to fail. Put another way, it must not be “plain and obvious” that the cause of action as pleaded will fail…” The only difference is that, in a motion to certify, the burden is on the plaintiff whereas, in a motion to strike, the burden is on the defendant: Momi v. Canada (Minister of Citizenship and Immigration), 2006 FC 738 at para 34.
[27] Given that the certification motion and the motion to strike require the Court to determine whether a reasonable cause of action is disclosed in the Plaintiff’s pleadings, and that this particular question is vital to the final determination in both motions, I propose to deal with this matter first before addressing the four other certification issues set out in Rule 334.16 in a substantive way.
[28] The issues before me may therefore be simply stated as follows:
A. Whether it is plain and obvious that the Amended Statement of Claim does not disclose a reasonable cause of action.
If the Court answers the first issue in the negative, whether the class action proceeding should be certified based on the other factors set out in Rule 334.16(1) of the Rules.
IV. Analysis
A. Whether it is plain and obvious that the Amended Statement of Claim does not disclose a reasonable cause of action.
[29] Unlike motions for summary judgment or summary trial, motions to strike pleadings pursuant to Rule 221(1)(a) may not rely on any evidence. An exception is made where the motion is based upon a want of jurisdiction: Mil Davie Inc. v. Société d'Exploitation et de Développement d'Hibernia Ltée, [1998] FCJ No 614 (CA).
[30] The Defendant proffered the Affidavit of Rodrigo Vasconcelos de Oliveira in response to the motion for certification. Mr. de Oliveira is a lawyer licensed to practise law in Portugal who purports to provide expert opinion evidence related to EU and Portuguese law, and how they apply to EU 261.
[31] The Plaintiff objects to the admissibility of the expert evidence on various grounds. However, the Defendant concedes that the affidavit is not relevant nor necessary to the determination of whether the Plaintiff has pleaded a reasonable cause of action. I will therefore defer dealing with the Plaintiff’s objection at this time.
(1) Test to be applied on a motion to strike
[32] The Defendant bears the burden of proving that it is plain and obvious – accepting the facts as pleaded – that the Federal Court has no jurisdiction to hear this matter. The onus of proof on the Defendant is a heavy one, as the Court must be satisfied “beyond doubt that the allegation cannot be supported and is certain to fail at trial because it contains a radical defect” (Hunt v Carey Canada Ltd., [1990] 2 SCR 959 at paras 32-34).
[33] A claim should not be struck simply because it is complex, or because a plaintiff puts forward a novel cause of action. The focus instead is on whether the allegations of material facts in the claim, construed generously, give rise to a cause of action: Conohan v. Cooperators, 2002 FCA 60, at paragraph 15.
(2) Jurisdiction
[34] The motions presented by the parties raise the always delicate and thorny issue of jurisdiction of this Court. It must be borne in mind from the start that the Federal Court is a statutory court and can only exercise jurisdiction under a statutory grant of power.
[35] The Supreme Court of Canada set out in ITO - International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 SCR 752 [ITO] the seminal test establishing the essential requirements to support a finding of jurisdiction in the Federal Court. For this Court to have jurisdiction to hear a matter, three conditions must be met:
There must be a statutory grant of jurisdiction by the federal Parliament.
There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
The law on which the case is based must be “a law of Canada” as the phrase is used in s. 101 of the Constitution Act, 1867 (ITO, at para 11).
(i) Essential Nature of the Plaintiff’s Claim
[36] In 744185 Ontario Inc. v. Canada, 2020 FCA 1 [Air Muskoka] at para 31, the Federal Court of Appeal stated that in analyzing whether a claim falls within the Federal Court’s jurisdiction, it is first necessary to characterize the claim to determine its essential nature, or to ascertain the “pith and substance” of the claim, referencing the decision of the Supreme Court of Canada in Windsor (City) v. Canadian Transit Co., 2016 SCC 54 [Windsor] at paras 26-27:
[26] The essential nature of the claim must be determined on “a realistic appreciation of the practical result sought by the claimant” (Domtar Inc. v. Canada (Attorney General), 2009 FCA 218, 392 N.R. 200, at para.28, per Sharlow J.A.). The “statement of claim is not to be blindly read at its face meaning” (Roitman v. Canada, 2006 FCA 266, 353 N.R. 75, at para.16, per Décary J.A.). Rather, the court must “look beyond the words used, the facts alleged and the remedy sought and ensure . . . that the statement of claim is not a disguised attempt to reach before the Federal Court a result otherwise unreachable in that Court” (ibid.; see also Canadian Pacific Railway v. R., 2013 FC 161, [2014] 1 C.T.C. 223, at para. 36; Verdicchio v. R., 2010 FC 117, [2010] 3 C.T.C. 80, at para. 24).
[27] On the other hand, genuine strategic choices should not be maligned as artful pleading. The question is whether the court has jurisdiction over the particular claim the claimant has chosen to bring, not a similar claim the respondent says the claimant really ought, for one reason or another, to have brought.
[37] The Plaintiff has framed her pleadings as a claim for breach of contract. She alleges that the Defendant, within its own contract of carriage, contractually incorporated and agreed to comply with the flight delay/cancellation rules under EU 261. The action seeks to enforce the Defendant’s contractual obligation to pay compensation. The Defendant agrees with this view.
[38] While both parties agree that at its heart this proceeding is a contractual dispute, they disagree on whether the relief claimed is sought “under an Act of Parliament or otherwise” as required by s. 23 of the FCA and the Supreme Court of Canada’s interpretation of this provision.
[39] Before embarking on an analysis of the parties’ arguments, it is important to note that my task is not to decide whether or not this Court has jurisdiction to entertain the claim. Rather, at this preliminary stage, I am simply required to determine whether it is plain and obvious that it does not have jurisdiction.
(ii) The ITO Test
[40] With respect to the first part of the ITO test (statutory grant of jurisdiction), the Plaintiff principally relies upon subsections 23(b) and 23(c) of the FCA:
23. Except to the extent that jurisdiction has been otherwise specially assigned, the Federal Court has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under an Act of Parliament or otherwise in relation to any matter coming within any of the following classes of subjects:
(a) […]
(b) aeronautics; and
(c) works and undertakings connecting a province with any other province or extending beyond the limits of a province.
23. Sauf attribution spéciale de cette compétence par ailleurs, la Cour fédérale a compétence concurrente, en première instance, dans tous les cas — opposant notamment des administrés — de demande de réparation ou d’autre recours exercé sous le régime d’une loi fédérale ou d’une autre règle de droit en matière:
(a) […]
(b) d’aéronautique;
(c) d’ouvrages reliant une province à une autre ou s’étendant au-delà des limites d’une province.
[41] For the purpose of the two motions, I am satisfied the Plaintiff’s claim falls arguably under the field of aeronautics or works and undertakings as defined in section 23 of the FCA. Moreover, no argument has been advanced that jurisdiction over the claim for relief has been otherwise specially assigned to another court.
[42] The jurisdictional dispute is focused instead on whether the second and third elements of the ITO test, which hinge upon the existence of “a body of federal law” and “law of Canada”, as well as the requirement in section 23 of the FCA that the claim for relief be made or a remedy be sought “under an Act of Parliament or otherwise”, have been met.
[43] The Defendant acknowledges that the Montreal Convention is part of Canadian federal law by virtue of the Carriage by Air Act and that this Court has jurisdiction to hear and decide carriage by air disputes. This is consistent with the conclusion of the Federal Court of Appeal in Prudential Assurance Co. v. Canada, [1993] 2 FC 293 (CA) [Prudential Assurance], recognized in Windsor at para 44.
[44] However, the Court’s jurisdiction over carriage by air disputes is contingent upon the claim being founded on the Montreal Convention: Donaldson v Swoop, 2020 FC 1089 at para 30 [Donaldson]; Bensol Customs Brokers Ltd v Air Canada, [1979] FCJ No 73, [1979] 2 FC 575 (CA) [Bensol] at para 10.
[45] In Thibodeau v. Air Canada, 2014 SCC 67 at paras 37-38 [Thibodeau], the Supreme Court of Canada explained that the Montreal Convention codifies the scope and nature of various civil obligations arising during the course of international carriage by air:
[37] The Montreal Convention makes clear that it provides the exclusive recourse against airlines for various types of claims arising in the course of international carriage by air. It provides that all “action[s] for damages” in the carriage of passengers, baggage and cargo are subject to the conditions and limitations of liability set out in its provisions. The provision could hardly be expressed more broadly; it applies to “any action for damages, however founded”. This breadth is equally reflected in the French text: “. . . toute action en dommages-intérêts, à quelque titre que ce soit . . . .”
[38] This exclusivity principle is expressed even more clearly in the Montreal Convention than it was in the Warsaw Convention. Article 24 of the Warsaw Convention introduces its exclusion of other claims by referring to “the cases covered by” Articles 17 to 19. Article 29 of the Montreal Convention, in contrast, introduces its exclusion of other claims by using the terms “[i]n the carriage of passengers, baggage and cargo”. By using this broader language, it articulates even more clearly the state signatories’ intention to exclude any actions not specifically addressed in Articles 17 to 19…
[46] The Defendant submits that the Plaintiff’s claim is bound to fail as a matter of law in that it does not respect the exclusivity principle as laid down in the Montreal Convention. Central to this argument is Article 29 of the Montreal Convention, which provides:
In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this 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.
Dans le transport de passagers, de bagages et de marchandises, toute action en dommages-intérêts, à quelque titre que ce soit, en vertu de la présente convention, en raison d'un contrat ou d'un acte illicite ou pour toute autre cause, ne peut être exercée que dans les conditions et limites de responsabilité prévues par la présente convention, sans préjudice de la détermination des personnes qui ont le droit d'agir et de leurs droits respectifs. Dans toute action de ce genre, on ne pourra pas obtenir de dommages-intérêts punitifs ou exemplaires ni de dommages à un titre autre que la réparation.
[47] According to the Defendant, it is clear that the Plaintiff has consciously founded her claim on contract law, EU 261 and the European Court of Justice’s interpretation of EU 261. The Defendant maintains that to the extent that any federal law is even relevant to the Plaintiff’s claim, at best, it is a mere bystander, and is certainly not essential. For the reasons that follow, I agree.
[48] In Apotex Inc. v. Allergan, Inc., 2016 FCA 155, the Federal Court of Appeal held that contractual issues can be addressed by the Federal Court where it is “part and parcel of a matter over which the Court has statutory jurisdiction”. Justice Stratas explained at para 13:
[13] On the issue of jurisdiction, I agree with the Federal Court and substantially adopt its analysis. I would add the following. Contract law, when viewed in a vacuum, is normally under provincial jurisdiction. However, the Federal Court has jurisdiction when the contract law issue before the Court is part and parcel of a matter over which the Federal Court has statutory jurisdiction, there is federal law essential to the determination of the matter, and that federal law is valid under the constitutional division of powers: ITO-Int’l Terminal Operators v. Miida Electronics, 1986 CanLII 91 (SCC), [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641; Canadian Transit Company v. Windsor (Corporation of the City), 2015 FCA 88, 384 D.L.R. (4th) 547.
[49] However, in Windsor at para 41, the Supreme Court of Canada cautioned that the second element under section 23 of the FCA requires that the cause of action must either be “created or recognized” under federal laws:
[41] Quebec North Shore makes clear that s. 23 grants jurisdiction to the Federal Court only when the claimant is seeking relief under federal law. As I read Quebec North Shore, the implication is that the claimant’s cause of action, or the right to seek relief, must be created or recognized by a federal statute, a federal regulation or a rule of the common law dealing with a subject matter of federal legislative competence. This is what it means to seek relief “under” federal law in s. 23.
[50] The Plaintiff has not pleaded a cause of action seeking damages occasioned by delay which would be sustainable under Article 19. Instead, she seeks damages for breach of contract, pleading that the Defendant breached its Canadian tariff in not paying her compensation owed under EU261.
[51] Apparently cognizant of the pre-emptive effect of the Montreal Convention in Canada and that the damages she seeks are not recoverable under its Article 19, the Plaintiff alleges in her pleadings that Article 27 of the Convention “permits” her cause of action for breach of contract. Article 27 reads as follows:
27. Nothing contained in this Convention shall prevent the carrier from refusing to enter into any contract of carriage, from waiving any defences available under the Convention, or from laying down conditions which do not conflict with the provisions of this Convention.
27. Rien dans la présente convention ne peut empêcher un transporteur de refuser la conclusion d'un contrat de transport, de renoncer aux moyens de défense qui lui sont donnés en vertu de la présente convention ou d'établir des conditions qui ne sont pas en contradiction avec les dispositions de la présente convention.
[52] The Plaintiff submits that Article 27 of the Montreal Convention specifically recognizes the principle of freedom to contract, permitting air carriers and passengers to enter into further contractual remedies that do not conflict with the Montreal Convention.
[53] The theory and basis of the Plaintiff’s proposed class proceeding is that the Defendant has voluntarily incorporated EU 261 into its contract of carriage applicable to its international commercial air services to and from Canada, as permitted under Article 27 of the Montreal Convention. The Plaintiff intends to argue at trial that the Montreal Convention is merely a federal statute that is super-imposed on a body of common law in relation to common carriers, including contracts.
[54] This is at best a tautological argument that has no merit. The simple fact is that this Court’s jurisdiction is engaged only if the right to seek relief is created or recognized by Canadian federal law. No matter how the Plaintiff frames, labels or dresses up her claim, it remains that the compensation regime upon which she relies to support her claim is created under European law.
[55] On its face, the parameters and meaning of Article 27 are clear: it allows the carrier to refuse to contract, to waive any of its Convention defences, or to impose conditions or requirements on passengers or shippers so long as these conditions do not conflict with any rule in the Montreal Convention. It says nothing about whether a carrier can contractually agree to apply provisions of an instrument like EU 261, nor does it allow parties to contract out of fundamental precepts of the Montreal Convention, such as Articles 19 and 29.
[56] Even if it is assumed that the alleged contractual agreement to apply EU 261/2004 is permitted by Article 27, this does not mean that the source of the Plaintiff’s claim is the Canadian law. Whatever might be said about it, Article 27 does not create a right of action.
[57] I find support for that conclusion in a judgment of the Court of Justice of the European Union (CJEU) in (C-344/04) R (o/a IATA and ELFAA) v Department for Transport [2006] ECR I-403 [IATA]. The CJEU held that the compensation that carriers subject to EU 261 are required to provide to passengers under its terms is not governed by the Montreal Convention. The Court concluded that compensation to which Article 19 applies is individual damage requiring proof of loss caused by the delay, whereas that payable under EU 261 is a standardised sum for each passenger not requiring proof of loss. Relevant portions of IATA decision central to the CJEU’s reasoning are reproduced below.
37 Article 6 of Regulation No 261/2004 provides that, in the event of a long delay to a flight, the operating air carrier must offer to assist and take care of the passengers concerned. It does not provide that the carrier may escape such obligations in the event of extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.
38 IATA and ELFAA submitted in their applications to the referring court and submit before this Court that Article 6 of Regulation No 261/2004 is accordingly incompatible with the Montreal Convention which contains, in Articles 19 and 22(1), clauses excluding and limiting the air carrier’s liability in the event of delay in the carriage of passengers and which provides, in Article 29, that any action for damages, however founded, can only be brought subject to the conditions and limits set out in the Convention.
39 As to those submissions, Articles 19, 22 and 29 of the Montreal Convention are among the rules in the light of which the Court reviews the legality of acts of the Community institutions since, first, neither the nature nor the broad logic of the Convention precludes this and, second, those three articles appear, as regards their content, to be unconditional and sufficiently precise.
40 It is to be noted with regard to the interpretation of those articles that, in accordance with settled case-law, an international treaty must be interpreted by reference to the terms in which it is worded and in the light of its objectives. Article 31 of the Vienna Convention of 23 May 1969 on the Law of Treaties and Article 31 of the Vienna Convention of 21 March 1986 on the Law of Treaties between States and International Organisations or between International Organisations, which express, to this effect, general customary international law, state that a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose (see, to this effect, Case C-268/99 Jany and Others [2001] ECR I-8615, paragraph 35).
41 It is clear from the preamble to the Montreal Convention that the States party thereto recognised ‘the importance of ensuring protection of the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution’. It is therefore in the light of this objective that the scope which the authors of the Convention intended to give to Articles 19, 22 and 29 is to be assessed.
42 It is apparent from those provisions of the Montreal Convention, which are contained in Chapter III headed ‘Liability of the carrier and extent of compensation for damage’, that they lay down the conditions under which any actions for damages against air carriers may be brought by passengers who invoke damage sustained because of delay. They limit the carrier’s liability to 4 150 SDRs for each passenger.
43 Any delay in the carriage of passengers by air, and in particular a long delay, may, generally speaking, cause two types of damage. First, excessive delay will cause damage that is almost identical for every passenger, redress for which may take the form of standardised and immediate assistance or care for everybody concerned, through the provision, for example, of refreshments, meals and accommodation and of the opportunity to make telephone calls. Second, passengers are liable to suffer individual damage, inherent in the reason for travelling, redress for which requires a case-by-case assessment of the extent of the damage caused and can consequently only be the subject of compensation granted subsequently on an individual basis.
44 It is clear from Articles 19, 22 and 29 of the Montreal Convention that they merely govern the conditions under which, after a flight has been delayed, the passengers concerned may bring actions for damages by way o