HOLLEMAN SPECIAL TRANSPORT & PROJECT CARGO S.R.L. v CO UK SHIPPING AND TRADING LIMITED

The common-law rule preventing set-off against freight applies only to payment properly characterised as freight in the narrow legal sense. It does not automatically extend to daily payments for making vehicles available throughout a contractual period, including during empty return journeys or waiting time. Such payments are closer to hire than freight. The characterisation depends on the substance of the contract, not the parties’ nomenclature or pleading. Short points of law and construction may be decided summarily where the relevant evidence is available, but construction should generally await trial where it depends materially on disputed context or industry practice.

The claimant sought summary judgment for daily transport charges, mobilisation and demobilisation costs, and ancillary expenses under a contract for transporting wind-turbine components by road in Sweden. The contract incorporated the CMR Convention, although the transport was within Sweden.

The defendant alleged that the daily rate was not payable in several circumstances and advanced a counterclaim exceeding the claimant’s claim. The issues were whether the charges were recoverable without set-off and how the daily rate provisions should be construed. The counterclaim raised factual issues requiring trial.

1. Summary judgment principles. Applying the principles in Easyair Ltd (t/a Openair) v Opal Telecom Ltd and TFL Management Services Ltd v Lloyds Bank PLC, the court could decide the no-set-off issue and the construction issue summarily because both had been fully argued. The construction issue was nevertheless left for trial where its resolution might depend on further contextual evidence and alleged industry practice.
2. Governing law. As neither party relied on the CMR Convention or adduced Swedish law, the court applied English principles of contractual construction and the English common-law set-off rule.
3. No set-off. The rule against abatement or equitable set-off applies to freight properly so called. It extends to road carriage, inland carriage, composite contracts and CMR contracts, but remains confined to freight in the narrow sense. The authorities distinguish freight from hire payable for the availability of vehicles. The claimant’s charges were daily payments for making specified vehicles available during a fixed period, including when they returned empty or waited for further loading. They were therefore closer to hire than freight. The no-set-off rule did not apply.
4. The court rejected reliance on contractual nomenclature and the pleadings. The substance of the contract had to be examined as a whole. In any event, mobilisation, demobilisation and driver-accommodation costs were at least realistically arguable not to be freight.
5. Construction issue. The court considered it likely that the per diem rate applied irrespective of whether vehicles were laden or unladen, with the standby rate applying during waiting periods. It could not safely decide that issue on the available evidence because the poorly drafted contract and alleged market practice required trial determination.
6. The claimant’s application therefore succeeded on the no-set-off issue, but the construction issue and the underlying claim remained for trial.