John Habergham, Myton Law, Hull U.K.

This case plugs a gap in case law with regard to the common law rule against set off from freight.

This rule is of some antiquity for carriage by sea and was extended to international carriage by road by RH&D International Limited v IAS Animal Air Services Limited, 1984 and then to domestic carriage by road in United Carriers Limited v Heritage Food Group in 1996. Whilst it had been assumed in many quarters that it should apply to carriage by air, there was in fact no explicit court decision which held that this was indeed the case. Until now.

This case involved the contract for a carriage of chia seeds by air from South America to China in October 2015. The defendant alleged that the consignment had arrived late causing losses. The carriage charges were unpaid.

After analysis of the history of the rule and consideration of Commonwealth cases, the court concluded that the common law freight rule providing against set off should extend to carriage by air.

The reason was, essentially, that it would be anomalous if the rule, which did apply to carriage by sea and international and domestic road haulage should not apply to carriage by air. The court accepted that were it otherwise, it would inject a great deal of uncertainty into the market especially with regard to multimodal freight contracts. The court also took note of the claimant’s submission that the rule against set off was to protect the cash flow of the forwarder or carrier and to ensure that those who provide credit were not disadvantaged by those who demanded cash up front. The court didn’t accept that this alone would justify an extension of the rule into a new area – it was the potential for an anomaly which was the real driver.

The decision will no doubt be welcomed by the freight forwarding industry.