Röhlig (UK) v Rock Unique
English Court of Appeal
Röhlig (UK) Ltd v Rock Unique Ltd: Court of Appeal, Sedley, Moore-Bick and Aikens LJJ.: 20 January 2011:  EWCA Civ 18
Mr. George Bompas Q.C. and Mr. Alexander Cook (instructed by Stewarts Law ) for the appellant, Rock Unique
Mr. Paul Toms (instructed by Pysdens Solicitors) for the respondent, Röhlig
INTERNATIONAL CARRIAGE OF GOODS: BIFA CONDITIONS: WHETHER NO SET-OFF AND TIME BAR PROVISIONS REASONABLE UNDER UNFAIR CONTRACT TERMS ACT 1977
A freight forwarder was entitled to summary judgment in respect of its charges where the no set-off and time bar provisions of the British International Freight Association terms prevented the customer from setting up cross-claims.
This note is based on a press release issued on 20 January 2011 by Pysdens Solicitors, who represented Röhlig in this case
Rock ran a garden centre which supplied, among other things, sandstone paving imported from India which is bought from the suppliers on f.o.b. terms. Rock engaged, Röhlig, a freight forwarder, to arrange the carriage of the stone from the port of loading in India to its destination in this country. The two companies began doing business together in 2002 and apart from a short interlude between 2004 and 2005 continued to do so until about November 2008 when the present dispute erupted. Röhlig started these proceedings in January 2009 seeking to recover charges in excess of £100,000 in respect of the carriage and importation of various parcels of stone between April and December 2008.
Rock defended the claim, maintaining that invoices were incorrect and that BIFA 2005 Conditions had not been properly incorporated or, if they had been, that the invoices were not due and owing under clause 21(A) (fn.1). Rock also claimed the right to set off the claim against a counterclaim it alleged to be in the region of £300,000 to £400,000.
Röhlig denied liability for the counterclaim and, in addition, maintained it was time-barred under clause 27(B)(fn.2) of the BIFA Conditions , since almost the entire alleged counterclaim was over nine months old. It also sought summary judgement for virtually the whole of the debt and sought to strike out almost all the counterclaim on the basis of time bar. Rock defended the application, claiming that the no set-off and time bar clauses were unfair under the Unfair Contract Terms Act (“UCTA”) 1977 and so should not apply to defeat the counterclaim or right of set-off.
At first instance, HHJ Mackie Q.C. granted Röhlig summary judgement of £100,000 and ordered Rock to pay the remaining debt into court. He also struck out the counterclaim that was more than nine months old, upholding the incorporation of the BIFA 2005 Conditions and the fairness of Conditions 21(A) and 27(B) under the reasonableness test of UCTA.
Rock was given leave to appeal concerning the construction of and the reasonableness of clauses 21(A) and 27(B), having conceded incorporation. The matter came before the Court of Appeal in November 2010.
Moore-Bick LJ gave the unanimous judgment of the Court.
Dealing first with clause 21(A), the Court of Appeal accepted that the purpose of the clause was to ensure that sums falling due were paid promptly in order to ensure that cash flow - described as “the life-blood of the business” - was not interrupted. Moore-Bick LJ found that the clause was clear in its effect. It did not preclude the customer making claims it had against the forwarder but it did prevent the customer from witholding payment pending satisfaction of its claims. Counsel for Rock had argued that the summary judgment given at first instance could not stand, because, as the invoices were contested, they were not “due” within the meaning of the clause. Moore-Bick LJ concluded that the invoices showed no more than about £15,000 was contested and “To the extent that the amounts claimed in the invoices were not, or could not properly be, contested, they were “due” in any sense of the word.” The Court declined to accept the suggestion made by Rock that if any part of an invoice or invoices could be contested, then nothing in the invoice or invoices could be construed as “due”. The court held that such a construction was not consistent with what the clause said, neither was it consistent with “the ordinary use of language”.
In respect of UCTA, the Court held that, although Schedule 2 of UCTA was not definitive, it gave an indication of the type of factors likely to be considered when deciding on the reasonableness of a clause. These were the relative bargaining strength of the parties; whether the customer should have had knowledge of the clause and the customer’s ability to enter into a contract with other service providers. The Court listed the findings made by the court below and concluded that it had enough material to enable it to decide on the issue of reasonableness. It also concluded that a finding that clause 21(A) was reasonable was a finding plainly open to the court below, given the evidence before it. It was, therefore, “fully justified” in reaching a decision on reasonableness.
Moore-Bick LJ concluded that “where standard terms of this kind have been negotiated between representatives of suppliers and customers (as is the case with the BIFA Conditions – see Schenkers Ltd v Overland Shoes Ltd (fn.3) ) they are likely to represent a fair balance of competing interests”. He also found that Rock could be expected to have been aware of the BIFA Conditions used by Röhlig, given the length of time they had been trading together. It was in these circumstances that the Court found that Rock was most unlikely to succeed in persuading a court that the reasonableness requirement of this clause in this case had not been met.
Moving onto the time bar clause, the Court found the effect of this clause to be purposefully framed in wide terms with the intention of discharging the company “from all liability.” The clause had to be read in its commercial context, applying the ordinary meaning given to the words used. The court found that the purpose of the clause was clear – to discharge all liability and, given its close resemblance to the wording of Article III of the Hague-Visby Rules, it was clear “that the expiry of the time-bar was intended to provide a complete discharge from all liabilities, whether known or unknown.”
Another important finding of the Court was that the reasonableness of the clause was to be judged by reference to the circumstances of the particular case in question “but the meaning of the words used, albeit in an earlier edition of the conditions, must be taken to be the same in the absence of any reason to conclude otherwise”. In other words, clause 30(B) of the BIFA 2000 Conditions being the same as clause 27(A) in the BIFA 2005 Conditions meant that the court could – when considering clause 27(A) - pay heed to the findings of courts in relation to clause 30(B), such as Granville Oil v Davies Turner (fn.4).
The Court found that the court below was right to find the clause to be reasonable given the finding in Granville Oil, where Tuckey LJ had explained why in his view clause 30(B) was reasonable “having regard to the nature of the business that freight forwarders undertake and the prevalence of time-bar clauses in contracts of carriage of all kinds.” The Court held that the circumstances in which the contract was entered into in this case did not differ significantly from those in the Granville Oil case. Whilst the facts giving rise to the claim differed, the basis of liability was not significantly different. The Court did not agree with the suggestion of Counsel for Rock that the substance of the Unfair Terms in Consumer Contracts Regulations 1999 added anything significant to the effect of Schedule 2 of UCTA.
The appeal of Rock was accordingly dismissed.
This is a pleasing judgment from the Court of Appeal upholding two of the most important clauses in the BIFA Conditions 2005 and, more importantly, paving the way for forwarders to rely on past cases in support of a contention of reasonableness, even though they may have been under different editions of the trading terms, as long as the wording was the same.
Forwarders should be heartened by the court’s robust defence of the BIFA Conditions and also by BIFA’s continuing commitment to updating these terms when necessary on a legal basis.
1. Clause 21(A) reads: “The Customer shall pay to the Company in cash, or as otherwise agreed, all sums when due, immediately and without reduction or deferment on account of any claim, counterclaim or set-off.”
2. Clause 27(B) reads: “…., the Company shall in any event be discharged of all liability whatsoever and howsoever arising in respect of any service provided for the Customer, or which the Company has undertaken to provide, unless suit be brought and written notice thereof given to the Company within nine months from the date of the event or occurrence alleged to give rise to a cause of action against the Company”
3.  1 Lloyd’s Rep 498
4.  EWCA Civ 570