Claims for freight charges are an exception to the general rule that all claims between parties must be resolved in one action. A claim for freight cannot be a claim ‘on the same grounds’ as a counter-claim for loss or damage arising out of the carriage, for there is no set off against freight. The purpose of providing for discharge of claims under the rules after 12 months meets an obvious commercial need, namely to allow shipowners after that period to clear their books. The underlying cause of action was extinguished and could not be revived.
Lord Wilberforce said: ‘The contract contemplates the possibility of a cross-claim by the charterers in respect of loss or damage to the cargo and it expressly provides by incorporation of article III, r.6 of the Hague Rules that the carrier and the ship shall be discharged unless suit is brought within one year after the date of delivery or the date when delivery should have been made. This amounts to a time bar created by contract. But, and I do not think that sufficient recognition to this has been given in the courts below, it is a time bar of a special kind, viz., one which extinguishes the claim (cf. article 29 of the Warsaw Convention 1929) not one which, as most English statutes of limitation (e.g. the Limitation Act 1939, the Maritime Conventions Act 1911), and some international conventions (e.g. the Brussels Convention on Collisions 1910, article 7) do, bars the remedy while leaving the claim itself in existence.’ and
‘One thing is certainly clear about the doctrine of equitable set-off – complicated though it may have become from its involvement with procedural matters – namely, that for it to apply, there must be some equity, some ground for equitable intervention, other than the mere existence of a cross-claim (see Rawson v. Samuel (1839) Cr. and Ph. 161, 178 per Lord Cottenham L.C., Best v. Hill (1872) L.R. 8 C.P. 10, 15, and the modern case of Hanak v. Green But in this case counsel could not suggest, and I cannot detect, any such equity sufficient to operate the mechanism, so as, in effect, to over-ride a clear rule of the common law on the basis of which the parties contracted.’
Judges:
Lord Wilberforce, Lord Simon of Glaisdale
Citations:
[1977] 1 WLR 185, [1977] 1 All ER 398
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Hanak v Green CA 1958
A builder was sued for his failure to complete the works he had contracted for. The buider sought a set-off against that claim of three of his one claims. One, under the contract, was for losses from the defendant’s refusal to allow his workmen . .
Cited – Rawson v Samuel 15-Apr-1841
Cottenham LC said: ‘We speak familiarly of equitable set-off as distinguished from set-off at law, but it will be found that this equitable set-off exists in cases where the party seeking the benefit of it can show some equitable ground for being . .
Cited – Best v Hill CCP 14-Nov-1872
To a declaration for money lent and paid and commission the defendant pleaded for a defence on equitable grounds, that it was agreed between the plaintiffs and himself, on the following terms, viz., that he should consign certain rice to the . .
Cited by:
Cited – Trafigura Beheer Bv v Golden Stavraetos Maritime Inc CA 15-May-2003
The owners of cargo claimed damages from the carriers for a cargo of jet oil rejected at the port of destination because of contamination suffered on board.
Held: In interpreting the rules, the court must adopt a process of construction which . .
Cited – Schenkers Limited v Overland Shoes Limited and Schenkers International Deutschland Gmbh v Overland Shoes Limited CA 12-Feb-1998
A clause in a shipping freight contract using the standard British International Freight Association terms disallowing a set-off was not unreasonable. The clause read ‘The customer shall pay to the company in cash or as otherwise agreed all sums . .
Cited – Mellham Ltd v Collector of Taxes CA 17-Jan-2003
Buxton LJ: ‘The issue therefore is one of simple statutory construction. Can the expression ‘payment’ when used in section 87 of the 1970 Act, or ‘pays’ when used both in section 246N(2) of the 1988 Act and section 239 of the 1988 Act, encompass a . .
Cited – Burton (Collector of Taxes) v Mellham Ltd HL 15-Feb-2006
The claimant sought interest on an overpayment of Advance Corporation Tax. The tax itself had been paid late, and the Collector claimed a set off.
Held: The claim to DTR could not be described as an attempt at self-help. It had a statutory . .
Cited – Laroche v Spirit of Adventure (UK) Ltd CA 21-Jan-2009
Hot Air balloon was an aircraft: damages limited
The claimant was injured flying in the defendant’s hot air balloon. The defendant said that the journey was covered by the 1967 Regulations and the damages limited accordingly. The claimant appealed against a decision that the balloon was an . .
Cited – Inveresk Plc v Tullis Russell Papermakers Ltd SC 5-May-2010
The parties had undertaken the sale of a business (from I to TR) with part of the consideration to be payable on later calculation of the turnover. The agreement provided for an audit if the parties failed to agree. TR issued a figure. I argued that . .
Cited – Inveresk Plc v Tullis Russell Papermakers Ltd SC 5-May-2010
The parties had undertaken the sale of a business (from I to TR) with part of the consideration to be payable on later calculation of the turnover. The agreement provided for an audit if the parties failed to agree. TR issued a figure. I argued that . .
Cited – Geldof Metaalconstructie Nv v Simon Carves Ltd CA 11-Jun-2010
The parties contracted for the supply and installation of pressure vessels by Geldof (G) for a building constructed by Simon Carves (SC). The contract contained a clause denying the remedy of set-off. G sued for the sale price, and SC now sought an . .
Lists of cited by and citing cases may be incomplete.
Transport, Contract
Updated: 23 March 2022; Ref: scu.185987