NSW Penalties for late re-payment instalments

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SpixnSpex

Active Member
29 June 2015
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Hi.

For the last 2 months, Ive been chasing payment of $1K from a business I performed a service for. In multiple email replies, they have refused to pay.

I have a signed contract which contradicts their arguments and upon reminding them of the clauses that protect me & the final threat of legal action (plus fees and interest), this has made them respond in spite and suggest payment of $25/wk. This is a business who during these trying times, are making record sales and promoting them across social media.

I know that they will fail to make these regular payments.

Is there anything i can do to force them to pay the full amount or penalise the late payment instalments? I have clauses that discuss interest charged, legal costs associated with chasing etc but they don't specifically address payment by instalments and the penalties around this as they are already 3 months over.

Thanks a lot for your advice
 
Last edited:

Rob Legat - SBPL

Lawyer
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16 February 2017
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Gold Coast, Queensland
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Force them to pay? Possibly yes, but it’s difficult during Covid-19 measures. What you’d be looking to do is to demand payment in terms of your usual payment arrangements. Then, assuming they don’t pay up, start legal proceedings against them. While this doesn’t make them pay per se (and getting a judgment would usually usually end up with a similar payment arrangement in practical terms), what you’re looking for is the judgment to be registered against their credit file by the court. That could ruin their terms of credit with any suppliers who search credit files for 5 years.

The debt isn’t big enough to worry about bankruptcy/liquidation angles, not that you can effectively employ them at the moment anyway. Covid-19 has made these effectively unworkable.

Penalising the late payment instalments? No. You’re entitled to a reasonable interest charge to offset your losses in having to wait, so long as that is already a part of your contract - or they agree to it in the negotiation of the deferred payment terms. You can’t unilaterally impose it now. In any case, it cannot be a penalty as those are not allowed. Any additional charge, as well as being supported by the contract, should be a reasonable estimation of the cost/loss you’re enduring; not a punishment for failing to pay on your terms.
 

SpixnSpex

Active Member
29 June 2015
8
0
31
Hi Rob.
I took yours and others advice and accepted the payment arrangement of $25/wkly. I outlined terms in a document that said that i expected the money to be in my account each Thursday with the first payment landing in my account yesterday ( a week after sending the terms) and that the debt will continue until the full amount is paid. If they default this arrangement, then we will begin legal proceedings etc. I asked them to sign the document and return.

So far, no document has been returned and payment has not been made.

It's with a Real Estate & I know they have the money to pay me. How do you avoid a cat and mouse game?
Thanks once again.
 

Rob Legat - SBPL

Lawyer
LawTap Verified
16 February 2017
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Gold Coast, Queensland
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When you figure out how to avoid it, tell me so we can both know.
 

SpixnSpex

Active Member
29 June 2015
8
0
31
😅
Yeah sorry. Silly question really.
But how long is reasonable to give a business who is just out to screw you around, before i should take it down the legal pathway.
And also, if they decide next week to begin paying the minimum amount and do not return the terms sheet, does the payment deem acceptance to the terms?
 

JazKaz

Well-Known Member
11 April 2020
37
1
124
Regarding the matter of acceptance,
does the payment deem acceptance to the terms? Probably not.

They haven’t accepted your terms by signing and sending back written acceptance. ‘Battle of the forms’ kinda thing see Butler Machine Tool Co v Ex-cell-o Corp (England) [1979] 1 All E.R. 965
Same applies in Australia.

I wouldn’t think that sending a payment means acceptance of your terms but rather they are fulfilling their end of the agreement because you agreed to the minimum of $25. You both have agreed to the min of $25 so that stands. The rest of the terms is questionable.
 

SpixnSpex

Active Member
29 June 2015
8
0
31
OK. But surely there has to be terms accepted around frequency of what happens when a payment(s) is not made. I can't just leave it up to them. This is a game now for them.

It's been 2 weeks now and they have not paid the minimum. If I commence filing for the small claims court and pay the fees to get this started, and they then begin payment next week, do I add this additional cost on (in my contract I said I would chase all legal costs to recover whats owed) or in your experience is it best to follow through with proceedings & let the judge sort it out? I'm guessing the filing costs on commercial issues like this are greater than the amount I'm chasing, so I'd like to know if I'm covered.
 

JazKaz

Well-Known Member
11 April 2020
37
1
124
But surely there has to be terms accepted around frequency of what happens when a payment(s) is not made. I can't just leave it up to them. This is a game now for them

Yes you should be able to reclaim what is owed to you. In short, you provided services, you want to close your accounts receivable by making them pay up the amount owed for services.

As for terms about ‘what happens’, well what are the terms in the contract for your services? Essentially, you appear to have a claim in equity to claim what is yours as the other party has benefited by not paying for your services.

It's been 2 weeks now and they have not paid the minimum. If I commence filing for the small claims court and pay the fees to get this started, and they then begin payment next week, do I add this additional cost on (in my contract I said I would chase all legal costs to recover whats owed) or in your experience is it best to follow through with proceedings & let the judge sort it out? I'm guessing the filing costs on commercial issues like this are greater than the amount I'm chasing, so I'd like to know if I'm covered.
hmm as for chasing and adding legal cost to the outstanding amount, I don’t see how this will work and if it is enforceable... perhaps someone more knowledgeable will comment here.

... as far as I know, you could have the other party pay for the legal proceedings if you actually do take them to court and you request that in addition they pay for legal proceedings if you win the case.
 

SpixnSpex

Active Member
29 June 2015
8
0
31
Thanks for responding JazKaz.
My contract says that if they do not pay the amount due by the specified date, they must pay interest on overdue from the due date until paid in full and any fees, costs, expenses, charges incurred as a result of not being paid. The contract has been signed by them.

By saying they would pay a minimum weekly amount and then not paying, are they using a loophole somewhere? In effect challenging me to pay for filing costs that are more than the debt. As you can see, I have no experience in chasing money.