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
- 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
- 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
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
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
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
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
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
Act incorporates 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
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
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
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
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
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
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
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.
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
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.
As Dovell J. noted in Walton, noted below,
the wording of Article 29 is "clear and obvious
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
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, supra and Tseng, supra have taken a strong, clear approach to the exclusive
application of the Convention, also known as the "preemptive
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
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
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
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
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
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 "
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
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
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
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
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
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
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 Act requirement to hold funds paid by shippers to it in trust for the
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.
This newsletter is published to keep our clients and friends informed
of new and important legal developments. It is intended for information
purposes only and does not constitute legal advice. You should not
act or fail to act on anything based on any of the material contained
herein without first consulting with a lawyer. The reading, sending
or receiving of information from or via the newsletter does not
create a lawyer-client relationship. Unless otherwise noted, all
content on this newsletter (the "Content") including images,
illustrations, designs, icons, photographs, and written and other
materials are copyrights, trade-marks and/or other intellectual
properties owned, controlled or licensed by Fernandes Hearn LLP.
The Content may not be otherwise used, reproduced, broadcast, published,or
retransmitted without the prior written permission of Fernandes