Schenker Ltd v Negocios Europa Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 06 October 2017 |
| Neutral Citation | [2017] EWHC 2921 (QB) |
| Docket Number | Case No. LM-2016-000148 |
| Court | Queen's Bench Division |
| Date | 06 October 2017 |
[2017] EWHC 2921 (QB)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AN WALES
COMMERCIAL COURT
LONDON CIRCUIT COMMERCIAL COURT
Rolls Building
Fetter Lane
London
THE HONOURABLE Mrs Justice Moulder
Case No. LM-2016-000148
In the Matter of
Mr A Dinsmore (instructed by Myton Law) appeared on behalf of the Claimant
The Defendant appeared in person
This transcript has been approved by the Judge
th October 2017, 3.44 pm – 4.07 pm
(AS APPROVED)
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In this case, the claimant seeks to recover monies which it says is due under an invoice pursuant to a contract entered into with the defendant, for the carriage of goods by air in the sum of some $58,000. This is the judgment on the preliminary issue of whether there is a common law rule which provides that there can be no set-off against air freight.
The background to this matter is that the claimant specialises in the transport of goods by road, rail, air and sea and the defendant sells, amongst other things, raw materials. The parties entered into a contract for the transportation of Chia seeds by air in October 2015. The defendant says that it was a condition of the contract that goods were delivered within seven days. In fact the goods were not delivered until early in January 2016. The defendant, therefore, denies that the freight is due or contends that the freight payable should be equal to the amount it would have paid had the goods gone by sea.
In the particulars of claim the claimant sought to rely on the British International Freight Association ("BIFA") standard trading conditions and asserted that these conditions applied to the contract. The defendant denied that the BIFA terms were incorporated into the contract in question. In its reply the claimant maintained that the BIFA terms were incorporated into the contract or, in the alternative, the claimant asserted that there is a common law rule that there can be no set-off against freight and to the extent that the defendant wishes to bring an action for alleged breach of contract, they must do so by way of a separate claim or counterclaim.
The issue of the common law rule was raised in the course of a hearing of the claimant's summary judgment application in April 2017 but the Deputy Judge took the view that it was not a point which should be decided summarily. The Deputy Judge noted that it was a point which would establish a precedent and had not been the subject of full argument, being an issue raised in the course or oral submissions. She therefore made an order that the matter should be dealt with as a preliminary issue.
In support of its case, the claimant has filed a witness statement of David Hardcastle, head of security and risk management at the claimant. The claimant has also obtained and filed an expert's report of David Frugtniet, a specialist insurance broker, dated 9 th August 2017 and the expert gave oral evidence today.
Counsel for the claimant advanced the following arguments as to why the common law rule should apply to airfreight. Firstly, he submitted that it was well established in shipping law and he referred me in particular to the case of The Brede [1974] QB 233 and The Aries [1977] 1 Lloyds Rep 334. In The Aries, the Court of Appeal declined to alter the rule which had been approved in The Brede and I was referred to the judgment of Lord Wilberforce at 337. Lord Wilberforce said:
"…a claim in respect of cargo cannot be asserted by way of deduction from the freight is a long established rule in English law. As a rule, it has never been judicially doubted or questioned or criticised. It has received the approval of authoritative text books. It is said to be an arbitrary rule and so it may be in the sense that no very clear justification for it has ever been stated but this does not affect its status in the law. It is said to be inconsistent with the rule laid down in relation to the sale of goods and contracts for work and there are two answers to this. First, the two rules have been running in parallel for over a Century without difficulty.
"As the argument for inconsistency with the rule prevailing in relation to the sale of goods, it is no part of the functions of this House or the judges to alter a well established rule or, to put it more correctly, to say that a different rule is part of our law for the sake of harmonisation with a rule operating in a different field.
"But beyond all this, there is a decisive reason here why this House should not alter the rule approved in The Brede by reversing it; that is that the parties in this case have, I think, beyond doubt contracted upon the basis and against the background that the established rule is against deduction."
Lord Salmon in his judgment in the same case at 341 referred to the rule as being a "rule of law which … has been generally accepted for over 100 years … and upon the faith of which many thousands of contracts of carriage have been made."
As well as being a rule which is well established in shipping, the rule has been applied to road haulage and I was referred to the decision of Neill J in R H & D International Ltd v IAS Animal Air Services Ltd [1984] 1 WLR 573. In that case, Neill J referred to the earlier authorities as well as the dicta of Lord Wilberforce in The Aries case. At p576 of the judgment he said, referring to the earlier cases:
"In each of these six cases the plaintiffs obtained summary judgment for unpaid freight due for carriage of goods under the CMR, despite the fact that the defendant made counterclaims for damage to or loss of the goods. In each case, the court applied the principles in Aries Tanker Corporation on the basis that it was of general application to all claims for freight …"
He went on:
"… It would be wrong for me as a judge of first instance to introduce uncertainty into this branch of the law by reaching a decision in conflict with the earlier decisions to which I have been referred and which now extend over a period of six and a half years. I have also in mind the fact that in Aries Tanker Corporation v Total Transport Ltd, Lord Wilberforce (in a passage upon which Donaldson J relied in Silver Wind v Wood Shipping) said in relation to the rule of deduction or abatement "… there is no case of its having been extended to contracts of any kind of carriage. The rule against deduction in case of carriage by sea is, in fact, as well settled as any common law rule can be."
It is clear, therefore, that the rule applied to international road haulage and in United Carriers Ltd v Heritage Food Group [1996] 1 WLR 371, May J had to consider whether to extend it to the domestic carriage of goods. In his judgment May J referred to the earlier case of R H & D International to which I have referred and he said at p375 H:
"Neill J then referred to the single sentence in Lord Wilberforce's opinion in the Aries Tanker case which I have already discussed. There are thus seven cases at first instance where the rule in the Aries Tanker case has been applied to international contracts of carriage by road …"
He went on:
"I have been provided with notes of the judgments in four of those...
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Globalink Transportation and Logistics Worldwide LLP v DHL Project & Chartering Ltd
...1 WLR 371 May J unenthusiastically decided that it extended also to carriage of goods by road domestically. Most recently, in Schenker Ltd v Negocios Europa Ltd [2018] 1 WLR 718 Moulder J decided, as a preliminary issue, that the rule extended to air freight. She said this: 22 It is not th......