Ontario appeal court rules 2 year limitation period under Warsaw Convention is procedural

Are limitation periods under international treaties and conventions, substantive or procedural, in nature?
According to the Court of Appeal for Ontario, which today released its decision in  Mosregion Investments Corporation v. Ukraine International Airlines 2010 ONCA 715 [“Mosregion“], the answer is: procedural.  This result is surprising given that the Ontario Limitations Act, 2002 deems that limitation periods under conflict of laws are substantive. Moreover, it is arguable that extending time for service of process after a limitation period under an international treaty has tolled, is anathema to the goal of uniformity that underpins international treaties and conventions, generally.
In Mosregion, the plaintiffs/respondents on appeal, issued a notice of action against the defendant/appellant, Ukraine International Airlines, and others regarding the destruction of documents contained in an Air France jet that overran the runway and caught fire at Pearson International Airport.
The appeal concerned the interpretation of the Carriage by Air Act, R.S. 1985, c. C-26, implementing the Convention for the Unification of Certain Rules Relating to International Carriage by Air, 12 October 1929, 137 L.N.T.S. 11 (the “Warsaw Convention”), which regulates liability for the international carriage of persons and property by air.  The notice of action was issued in Ontario within the two-year limitation period under Article 28 and Article 29 of the Warsaw Convention (as implemented in the Carriage by Air Act), reads as follows:
Article 28
(1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties…
(2) Questions of procedure shall be governed by the law of the Court seized of the case.
Article 29
(1) The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.
(2) The method of calculating the period of limitation shall be determined by the law of the Court seized of the case.
However, the respondents were unable to serve the claim on the appellant within the six-month period provided in Ontario’s Rules of Civil Procedure pursuant to Rule 3.02 of the Rules, which allows for the extension of time for service if the motion is brought either before or after the time for service has expired. The plaintiff/respondent in appeal thereafter brought an ex parte motion before Master Sproat for an order extending the time for service.  Master Sproat adjourned the motion for notice to be served on the appellant and the other defendants who had not yet been served.  The motion later returned for hearing before Master Hawkins, who granted the extension of time, nunc pro tunc.  The appellant did not appear before Master Hawkins, but afterward brought a motion for reconsideration before Master Dash, arguing lack of notice, or alternatively, failure to attend through mistake or insufficient notice.  Master Dash confirmed the decision, and a further appeal to the Divisional Court was dismissed
At the Court of Appeal, the appellant argued that the “extension of time was improper because the statement of claim had expired due to the failure to effect service before the extension was obtained and that given the language of article 29, the claim had expired and could not be revived.” (at para. 7).
Master Hawkins had applied the decision in Brown v. Humble, [1959] O.R.  586 (C.A.) which dealt with a statutory limitation period.  According to the per curiam opinion (per Sharpe, Blair and Rouleau, JJA):

“…In common law jurisdictions, the expiry of a statutory limitation period does not extinguish the underlying claim, but rather creates a procedural bar to proceeding with the claim.  The appellant submits that the two-year period laid down by the article 29 has a fundamentally different character and that after two years, the claim is extinguished.  It follows, in the appellant’s submission, that when the statement of claim expired for want of service after the two year prescription in article 29 had expired, the Warsaw Convention claim was extinguished and there was nothing to revive.

[9]               We disagree.  In our view, once a claim is issued within the two-year limitation period, article 29 of the Warsaw Convention has been satisfied and the claim then falls to be governed by the procedure in the jurisdiction where the claim has been issued.  Any subsequent procedural requirements, including those relating to the time for service or renewal of the statement of claim, are governed by the Rules.  This is apparent from article 28(2) of the Warsaw Convention, which specifically provides that the procedure of the court seized of the claim governs.  Indeed, the very requirement that service must be effected within six months is provided for by the Ontario Rules, not by the terms of the Warsaw Convention.

The Court of Appeal concludes:

[11]          Applying the Rules of Civil Procedure and this court’s decision in Brown v. Humble does not violate any of the provisions of the Warsaw Convention – once the respondents complied with the requirement in article 29 that a claim be issued within the two-year period, they brought themselves within Ontario’s Rules.  Pursuant to those Rules and the jurisprudence governing them, the nunc pro tunc extension to the time for service did not amount to the bringing of a new claim; the claim had already been “intentée” and the time for service  of the existing claim was extended in accordance with Ontario procedure.  Accordingly, we see no error in the master’s application of the Ontario Rules, as interpreted by decisions of this court.
Recall that Article 29(2) of the Warsaw Convention states that: “The method of calculating the period of limitation shall be determined by the law of the Court seized of the case.”
However, section 23 of the Limitations Act, 2002, S.O. 2002, chapter 24, Schedule B, reads as follows: 
Conflict of laws
23. For the purpose of applying the rules regarding conflict of laws, the limitations law of Ontario or any other jurisdiction is substantive law.” 2002, c. 24, Sched. B, s. 23.
Section 23 of the Limitations Act, 2002, codifies the Supreme Court of Canada’s ruling in Tolofson v. Jensen; Lucas (Litigation Guardian of) v. Gagnon, [1994] 3 S.C.R. 1022 (S.C.C.) where the majority of the Supreme Court rejected the traditional common law position that characterized limitation periods as procedural in nature and held that, generally, limitation periods in the conflict of laws context should be treated as substantive in nature. 
Furthermore, the House of Lords in Sidhu v. British Airways, [1997] 1 All E.R. 193 preferred a uniform and exclusive approach to interpretation under the Warsaw Convention, noting at p. 212 that:
“The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international code, which could be applied by the courts of all the High Contracting Parties without reference to the rules of their own domestic law. The convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals—and the liability of the carrier is one of them—the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law.”
A similar approach was taken in another recent Ontario decision in Ashad v. Deutsche Lufthansa Aktiengesllschaft (Lufthansa German Airlines), 2009 CanLII 64820 (ON S.C.) which involved a motion by the defendant for dismissal or a stay of the action on the grounds that this court has no jurisdiction over the subject matter of the action. On or about April 20, 2006, the plaintiff was a passenger on the defendant’s Flight 503 from Sao Paulo, Brazil to Frankfurt, Germany. The plaintiff alleged that he suffered personal injuries as a result of unintentionally swallowing pieces of shredded glass that were in a fruit bowl served to him on board the flight.  The plaintiff commenced  (“brought”) the action on April 18, 2008, but served the defendant after the 2 year limitation period had expired. On May 30, 2008, the defendant delivered a statement of defence challenging the jurisdiction of the court.
In obiter, Pitt, J., writes,
“[59] The plaintiff waited until two days before the expiry of the limitation period to issue his claim. There is no evidence that the defendant conducted itself in any way prejudicial to the plaintiff’s position. As the statement of claim was served after the expiry of the limitation period, nothing the defendant did could have any impact on the limitation issue. That said, I am not persuaded that the plaintiff is without remedy. I note that he was represented by a solicitor in issuing the claim (who was not counsel on the motion).”
Nudge, nudge, wink, wink. In other words, sue your lawyer for missing the limitation period.
In another English case, Hall v. Heart of England Balloons Limited [2010] 1 Lloyds Rep 373, the defendant brought an application to strike out the pleading on the basis that once the right to damages under the Montreal Convention  (the successor to the Warsaw Convention) is extinguished, it cannot be resurrected by the application of a rule of civil procedure. In the Hall case, the plaintiff moved to correct a misnomer incorrectly naming the defendants. Just before the two-year limitation period expired, the defendant was named as “Heart of England Balloons Limited”. This defendant applied  to strike the proceedings, arguing that it could not be liable for the claimant’s accident, since it did not exist when the claimant suffered her accident on September 17 2006.

On 13 October 2009, the claimant applied for permission to amend the Particulars of Claim to name “Mr Gabb t/a Heart of England Balloons” as the defendant in the limited company’s stead. However, the limitation period under the Montreal Convention had expired by then. While the Civil Procedure Rules in England and Wales (CPR Part 17.4(3) and CPR 19.5) allows for amendment to a party’s statement of case or a change of name of a party after expiry of a limitation period, the court held that the limitation defense under the Montreal Convention was substantive, and that procedural rules cannot normally be used to remove substantive rights.Under these circumstances, to allow a procedural amendment would be in conflict with the express provision of the Montreal Convention.

The Mosregion decision is the rare instance where the adage “better late than never” actually applies.

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