Client wont pay, advice required

Gloomtastic!

^ Can't believe your mate returned shoes after two days because they gave him blisters. New shoes always give blisters!

Turned into an interesting little thread. Owing and been owed money is one of the more unpleasant sides of business. As I mentioned earlier, the last company I was involved in survived being insolvent for six years because we were masters at getting the money in and very good at dodging payment til the very last minute. Little story.....

The litigation lawyers we used throughout, I had an excellent working relationship with and in seven years we never lost a case. One day I got a call from one of their partners. They'd finally realised that over all the years working together, we'd never paid one of their invoices!

Company is still going - very successful by all accounts, so if you are in a similar position remember one of the golden rules of business - Do it to them, before they do it to you!

Peterdalkey

Gloomtastic’s story demonstrates exactly why debt collection is so difficult in Ireland, especially for SMEs. It takes many many months to get anywhere near a court and the debtors know that. It is definitely a case of justice delayed is justice denied. Delinquent debtors use the system to delay and obfuscate, creditors must be innovative and persistent to find a way of making them pay up. Both ISME and the SFA have long campaigned for a fast access debtors court system for SMEs, as obtains already in the UK.

There are a huge variety of tactics that can be employed and we have had many of them listed in this thread already.
There is no one-size-fits-all solution, the objective is to get the money paid as quickly as possible at the minimum cost/effort to you. What is quite clear from all published data, is that the longer a debt is outstanding the less likely it is to ever be recovered. It is not at all uncommon for the debtor to have gone bust by the time your claim gets before a court.
Debt collection is best carried out by a system of persistent and escalating actions with the intention of making it more attractive to the debtor to pay up rather than have to tolerate and fend off your endeavours. By becoming a serious pain in the **ss, they are much more likely to pay you and ignore the more timid creditors.

1. Make regular phone calls demanding payment.
2. Make robust/conspicuous personal visits seeking to collect the debt.
3. Send a 7 day final notice ( you can buy these preprinted) by registered post for maximum impact.
4. If none of the above have worked, your next step will probably depend on the amount of the debt. You might go to a debt collection agency or a solicitor, but you are now into incurring further costs and could be a case of throwing good money after bad.
5. You still have some low cost options. You can raise your own summons as outlined in an earlier post. Or you could issue a 21 day notice under sections 213/214 of the Companies Acts advising them that you will seek to have them liquidated as insolvent, must be by registered post. . You are absolutely entitled to issue such a notice (I have taken legal advice on exactly this point). However, to ACTION it, you must meet the stated debt value criteria. My experience over a long number of years is that if this fails, the debtor usually goes bust, or you get the money.

The game is about breaking down the debtor to get him to pay up and whichever course of measures get him to do that is the correct one, none is right or wrong, they are either effective for that debtor or not.

One point raised in this thread stated that anyone employed by a company is capable of binding that company to a contract, that is not always correct, they need to be authorised specifically, generally done by way of the role and norms of their position. An office cleaner ordering engineering supplies on their own initiative would be quite different to them ordering janitorial supplies. I won’t even go there in respect of people fraudulently ordering goods/services for personal use to be billed to the company.

In this particular case, the OP may well have recourse to the individual restaurant managers who actually engaged the OP in my opinion, if they knowingly acted outside their purchasing authority. This might be usefully leveraged in getting the company to pay up!

Cheers

Peter

NoQuarter

Peterdalkey wrote: »

Or you could issue a 21 day notice under sections 213/214 of the Companies Acts advising them that you will seek to have them liquidated as insolvent, must be by registered post. . You are absolutely entitled to issue such a notice (I have taken legal advice on exactly this point). However, to ACTION it, you must meet the stated debt value criteria.

No, you are not entitled to issue this notice to collect a debt. This procedure, as I have said earlier, is not a debt collection procedure. This process is to liquidate a company because they cant pay you. It is NOT to force money out of someone. There is a distinct difference and a huge difference and one that the courts have ruled on many times. I'm answering this point again for clarity for the tens of people who will read this thread in the future and consider taking Peter's advice which could land them in serious trouble.

I've checked the charter and it doesnt prohibit giving legal advice so consider that legal advice.

srsly78

I am close to filing a claim on http://www.moneyclaim.gov.uk (official HM court service website)

Very handy for chasing dodgy UK customers (edit: england and wales, not scotland, not sure about NI). The amount you pay depends on how big the claim is: e.g. £210 for £8000. Would be very handy if we had a similar government-run website here.

repsol

Pabmac wrote: »

TBH this is something students on a summer / casual job might do, not somebody genuinely trying to build up a business.
Bad press is a two way street.
Far better to be known as a business who does a good job but will resort to the law if not paid on time than be seen as petty and unprofessional.

"resort to the law" for a grand? It won't even cover the solicitors fee.The restaurant know OP cannot afford to take them on and are playing hardball.I don't think what sounds like a one man business needs to worry about "bad press".Nice guys get paid last or not at all.

Peterdalkey

NoQuarter wrote: »

No, you are not entitled to issue this notice to collect a debt. This procedure, as I have said earlier, is not a debt collection procedure. This process is to liquidate a company because they cant pay you. It is NOT to force money out of someone. There is a distinct difference and a huge difference and one that the courts have ruled on many times. I'm answering this point again for clarity for the tens of people who will read this thread in the future and consider taking Peter's advice which could land them in serious trouble.

I've checked the charter and it doesnt prohibit giving legal advice so consider that legal advice.

What a load of quasi legal waffle and arrant nonsense. As for your free legal advice, it is fully priced and fully valued.
I have taken specific legal advice in this matter and had vastly experienced corporate lawyers draw up the wording. I don't take legal advice from some punter on a forum, and nor should anyone else. You fail to substantiate your contention in any way. It may not be your version of the Queensbury Rules but the delinquent debtor gave up his rights to gentlemanly fair play by refusing to pay. If you have any actual law that would be broken, specify it or withdraw your remarks.
A knife was never designed or intended to be used as a screwdriver, but when needs must, it often is. In such matters it is the actual law that matters, not notions of what might have been intended. Such innovation is the lifeblood of the small business community, making the best of limited and finite resourses.

The Sir Humphry-esq " I can foresee unforeseen difficulties" argument you proffer simply does not wash.

You are perfectly entitled to write to any debtor, threatening whatever future action including seeking liquidation or many other forms of action, as long as it does not include any form of physical violence or intimidation. The debtor always has the opportunity to terminate any action by simply paying the outstanding amount.

I you can stand up your contention with specifcs as outlined above, I will donate Euro100 to the charity of your choice.

Gloomtastic!

Can we take side bets?

I'll have a tenner on..........

NoQuarter

Peterdalkey wrote: »

I you can stand up your contention with specifcs as outlined above, I will donate Euro100 to the charity of your choice.

Ok:-

Re Goode Concrete [2012] 11 JIC 0201

AIB had refused to support the Petitioner's motion because as a secured creditor, they felt there would be more chance of recovering the debt owed to them if the Competition Proceedings were given the best possibility to proceed to finality. These factors allowed the Court to draw an inference that the Petitioner and co-defendants did indeed have an ulterior motive as alleged and therefore, it was decided a winding up order was not appropriate.

Truck and Machinery Sales Ltd. v. Marubeni Komatsu Ltd. [1996]1 I.R. 12

"It is clear that where the company in good faith and on substantial grounds, disputes any liability in respect of the alleged debt, the petition will be dismissed, or if the matter is brought before the court before the petition is issued, its presentation will in normal circumstances be restrained. This is on the ground that a winding-up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed.

The response dated 26th July, 2011 from Eversheds O'Donnell Sweeney was to the effect that that firm had authority to accept service of any proceedings issued, but it was stated that Hammond Lane would be seeking security for costs against the Company and that they had instructions to pursue the Company and its directors (in their personal capacity) for any loss and damage and legal costs incurred by Hammond Lane, including, but not limited to, damages for malicious abuse of the civil process of the courts.

In the matter of Silverhold Limited and the Companies Act 1963-2009 [2010] 4 JIC 1201

Abuse of process 34. Mr. McKenna in his affidavits has asserted that the presentation of the petition was an abuse of process. Ms. Friel, understandably, has taken umbrage at that assertion and has described it as being "glib and unwarranted". The evidence establishes that Ms. Friel first heard from an official of the company's bank, Ulster Bank, that the fees were being disputed on 4th March, 2009. Despite the raft of correspondence, which I have itemised earlier, from the petitioner and its solicitors to the company and its solicitors, the nature and basis of the dispute was never raised by the company with the petitioner until Mr. McKenna swore his first affidavit three weeks after the petition issued. In taking an overview of the matter, I am satisfied that issuing the petition was not an abuse of process, even though I consider that it should be dismissed for the reasons stated earlier.
Order
35. There will be an order dismissing the petition.

Cotton Box Design Group Ltd (plaintiff/the company) v Earls Court Company Ltd [2009] 5 JIC 2504

The proceedings arise out of plenary proceedings by the defendant seeking an order that the company be wound up by reason of non -compliance with a statutory demand under s214 of the Companies Act 1963, the company was insolvent. The plaintiff sought injunctions to restrain defendants from advertising or proceeding with petition to wind up the company. The plaintiff also sought an order dismissing or striking out the petition as being an abuse of the winding up procedure of the Court. The plaintiff contended that is not indebted to the petitioner in any sum and alleged it has an action against the petitioner for damages for breach of contract which gave rise to the debt. Held by Laffoy J in dismissing the petition; there is a bona fide and substantial dispute as regards the company's alleged indebtedness to the petitioner and also a bona fide case has been established that the prosecution would constitute an abuse of process.

Donal Rigney Limited v. Empresa de Construcoes Amandio Carvalho SA & others [2009] 11 JIC 2702

The undoubted power of the courts to restrain proceedings which are an abuse of process is one which should not be lightly exercised. In the context of winding-up petitions, I have no doubt that it should be exercised only when the plaintiff company has established at least a prima facie case that its presentation would constitute an abuse of process. In many cases, a prima facie case would be established where the plaintiff adduces evidence which satisfies the court that the petition is bound to fail or, at the least, that there is a suitable alternative remedy.

The original case:

In re A Company [1894] 2 Ch 349

Where a petition against a company is presented ostensibly for a winding-up order, but really for another purpose, such as putting pressure on a company, the Court has an inherent jurisdiction to prevent such an abuse of process, and will do so, without requiring an action to be commenced, by restraining the advertisement of the petition, and staying all proceedings upon it.

One more for the road:
Mann v. Goldstein [1968] 1 WLR 1091

It is well established that this court has jurisdiction to restrain the presentation or advertising of a winding-up petition and restrain all further proceedings on it. That jurisdiction is a facet of the court's inherent jurisdiction to prevent an abuse of the process of the court. It will be exercised where a winding-up application is presented or prosecuted otherwise than in accordance with the legitimate purpose of such process. (See, for example, In re A Company.

http://www.ispca.ie/

Donate button is top right.

Gloomtastic!

A quick Google on the matter brought this up http://www.tsplegal.com/services_for_business/corporate_commercial/using_a_winding_up_petition_to_chase_debts which states that yes, you can, but in the OP's case, it would be ill-advised.

However, I also sought advice from the highest authority in the land, Mrs Gloomster, who incidentally is one of Europe's top Credit Managers and is responsible for getting money in at one of Ireland's biggest law firms. I asked her 'can you use a Winding-up Order to chase money?'. She replied, 'No, not unless you have a judgment against the company first'.

NoQuarter

Gloomtastic! wrote: »

A quick Google on the matter brought this up http://www.tsplegal.com/services_for_business/corporate_commercial/using_a_winding_up_petition_to_chase_debts which states that yes, you can, but in the OP's case, it would be ill-advised.

However, I also sought advice from the highest authority in the land, Mrs Gloomster, who incidentally is one of Europe's top Credit Managers and is responsible for getting money in at one of Ireland's biggest law firms. I asked her 'can you use a Winding-up Order to chase money?'. She replied, 'No, not unless you have a judgment against the company first'.

Thats an English solicitors site and so doesnt completely represent the law here but English cases are considered in this jurisdiction too and so I have posted 2 in my earlier post. The rest are Irish High Court decisions.

But from that site:

"Abuse of process

Although a winding-up petition is a common tool in debt collection, the process was not designed for this purpose. It is possible that a court could find that you have abused the process of court and may dismiss your petition and make you liable for any of the debtor’s costs."


And what I said in my first post:

NoQuarter wrote: »

First of all, if the Courts thought that you were using this procedure as a debt collection procedure, not only would you lose the petition, but you would likely get the other sides costs awarded against you.

Peterdalkey

NoQuarter:
Pretty much what I expected. You have trotted out a reply to a question not posed in the classic mode of our beloved politicos. Lots of verbiage but sadly none of it relevant to the issue in question. You have got way ahead of yourself on this one by dealing with examples of case law reports pertaining to actual cases brought.

Not a single one refers to the writing of a 21 day letter in terms as outlined in my post regarding issuing a letter threatening winding up pursuant to Sections 213/214 of the Companies Acts. The reason is rather simple, it is not of itself a commencement of legal proceedings... it is but a letter and in my experience, a very effective one in collecting from delinquent debtors. Even the most amateur of barrack room lawyers know that to actually initiate any legal action the appropriate legal papers must be issued and served.
Lawyers write thousands of letters every day demanding all kind of actions, warning of consequences, and putting time deadlines in place. They are however just letters and are not legal proceedings. You may ignore them or any other letter but you do so at your own peril.
What is germane in your listing of court decisions, is the actual commercial outcome for those subject of the original winding up petitions, look them up, not at all good!

As Larry Gogan used to say, " Ah, the question today just did no suit you".

Gloomtastic: I will not quibble with Mrs Gloomster's reply to your actual question, but again you have asked her the wrong question. I note that you don’t state that she is a lawyer, but rather works in a lawyer’s office in the debt collection area.

Your homeschooling in this area was obviously very useful to you in trading while insolvent in your past. It appears to be a matter you seen to find amusing. I doubt your creditors of the time would share your emotion. Such tactics in the evasion of just debts are the bane of the SME sector and you do yourself no credit (pun intended). Working with children must be must less fun.

If I can find a charity dedicated to the education of indigent bar/barrack room lawyers, I will make a donation.

For the benefit of those who may read this thread in the future and in the interest of clarity. You are perfectly entitled to write to any debtor, threatening whatever future action you see fit including seeking liquidation pursuant to Sections 213/214 of the Companies Acts and/or many other forms of action, provided it does not include any form of physical violence or intimidation. The letter should be sent by registered post to the registered office of the debtor. The debtor always has the opportunity to terminate this or any other legal action by simply paying the outstanding amount. You are never obliged to issue proceedings.

Such a letter is an extremely effective debt collection tool of last resort, as the recipient never knows what you might do next. The consequences for them could be devastating and precipitate all their creditors to move against them. They ignore it at their own peril. Therein lies the power of this tool, their own fear motivates them to take the course of least consequence, make you go away by paying up.

MODS: I think we are done here, The OP’s last visit was 4 days ago. I, for one, am “un-following” this thread now.

dbran

Hi

If you are going the legal route then go and get legal advise. Or else write it off.

Dont hum an haw by posting on an online forum to get an opinion from the masses.

As this thread is getting a bit out of hand I will close it.

Best Regards

dbran