We started carrying out same day courier services for QHotels on 22nd December 2005 and had problems getting paid by them for almost every invoice we issued. Until mid-October 2006 we just received lame excuses for non-payment; ‘we don’t know what the invoices are for’, ‘we don’t know who’s authorised it’, ‘the person you need to speak to is off today’, ‘the person who needs to authorise payment is on holiday/on a course/off sick’ – the normal excuses for late payment. They always paid but they paid late. This was no problem at all, they were a substantial company, obviously well-funded and with plenty of assets – we were satisfied that they were good for the money and the rates that we were charging them weren’t exactly cut to the bone. It was very annoying to have to keep chasing them for payment several times a month, but that’s all part of business.
By mid-October 2006 we’d had enough of the excuses, or to be more accurate we’d had enough of wasting time continually chasing them for payment and then only receiving payments for the most overdue invoices; it had reached the stage where we knew we wouldn’t get paid unless we chased them continuously and we didn’t value their work enough to put the effort into continually chasing them. We informed them very politely that we may start charging them late payment penalties (that were due anyway) if they didn’t bring their account up to date and keep it that way without constant reminders. Their response was surprising for a large company, presumably run by knowledgeable businesspeople – they claimed that they’d never agreed to our payment terms (they had) and that they wouldn’t pay late payment charges because they hadn’t agreed to them. On 18th October 2006 we sent them a copy of our own information leaflet on late payment charges and a link to the Better Payment Practice Group’s User’s Guide.
At this stage we full expected either to immediately lose the account (no great loss) or that they would fall into line and start paying on time without having to be constantly chased for payment. Surprisingly they continued to use our services and continued to pay late, although they asked several times for details of all the work we had carried out for them over the previous year; presumably they were seeking quotes from other courier companies. Curiously at around the same time that this was happening the owner-driver that had carried out much of their work on our behalf disappeared without trace and stopped answering his phone when we called him. A few weeks later the work from Qhotels dried up completely without any notice from them – we drew our own conclusions and didn’t bother pursuing the work; they weren’t exactly a favourite customer after all.
A week or so after receiving the final (overdue) payment from them we raised an invoice for the accrued interest and compensation charges due under the late payment legislation. They again denied that these charges were due because they hadn’t agreed them and the exchange below occurred.
I should stress that if they had asked for extended terms from the outset, rather than lying to us and wasting hours of our time every month, then this whole situation could have been avoided and they would now be several thousand pounds better off.
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Letter from Anywhere to Q Hotels – 15th March 2007
Dear Sirs
I refer to our attached Invoice for Late Payment Charges and to the invoices itemised therein.
Payment for the invoices listed was received outside the payment terms to which your company agreed prior to our commencement of supply of services and which are clearly stated on all our invoices.
We are therefore exercising our statutory right to claim interest and compensation charges under the Late Payment of Commercial Debts (Interest) Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002. These are statutory charges and are not open to negotiation.
The sum now due is £x,xxx.xx. Please ensure that we receive full payment of this outstanding debt before 30th March 2007 or we shall commence immediate legal action for its recovery.
If you have any questions please contact your own legal advisors in the first instance, who will no doubt advise you of your legal obligations. If you have any further queries please do not hesitate to contact me.
Yours sincerely
Alec Simmons
Director
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Fax from Anywhere to Q Hotels 23rd April 2007
Dear Ms Hornes
Please find attached a copy of our invoice 13688 as requested. The original of this invoice was received by your company on 16th March 2007.
Our deadline for payment of this invoice has passed without any contact from your company and you raised no valid reasons why we should waive these legitimate charges during your conversation with Anna this morning. I must therefore inform you that if we do not receive your full payment of £x,xxx.xx by close of business on Friday 27th April 2007 we shall issue a claim against your company without further notice. No further reminders will be issued and no further delays will be tolerated.
We look forward to receiving your prompt payment.
Yours sincerely
Alec Simmons
Anywhere Limited
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Letter from Q Hotels to Anywhere 23rd April 2007
I refer to your invoice 13688 dated 15th March 2007 relating to charges for late payment fees. Please be advised that we are currently in consultations with our solicitors to establish whether these charges are legitimate, as we did not sign any contract.
If you believe that we did, then please forward a copy of the signed contract at your earliest convenience, highlighting where on the contract it states the percentage amount for late payments.
Please be aware that a payment was made to you on 03.05.06 for £126.90. This payment was made to you in error, and we never received a refund for this overpayment. Please can you investigate and confirm that you have this credit balance on Q Hotels account.
Assuring you of our best intentions at all times
Yours sincerely
Elizabeth Thornes
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Fax from Anywhere to Q Hotels 25th April 2007
Dear Ms Thornes
Thank you for your letter of 23rd April 2007.
I am delighted to hear that you are now in consultations with your solicitors, however you received notice of our charges on 16th March 2007 and we now require immediate payment if you wish to avoid legal action.
The issue of contractual interest is irrelevant, as has been explained to you on many occasions. We have a STATUTORY right to interest and compensation charges under the Late Payment of Commercial Debts (Interest) Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002. The interest rate and the amount of the compensation charges are set by law. We helpfully draw your attention to the late payment legislation by way of a notice that appears on every invoice we issue.
The payment of £126.90 received on 3rd May 2006 was in payment for our invoice 10911, dated 17/02/06, as itemised in our invoice 13688 of 16/03/07. You clearly already have a copy of this invoice as you kindly highlighted it on the schedule you have sent me, albeit with a truncated invoice number. I attach a further copy for your convenience.
We look forward to receiving your payment by close of business on Friday 27th April 2007.
Yours sincerely
Alec Simmons
Director
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Particulars of Claim in the Northampton County Court 10th May 2007
We provided courier services to the defendant between 22nd December 2005 and 11th January 2007. The defendant consistently failed to pay our invoices within the agreed 30 day terms.
On 15th March 2007 we sent the defendant an invoice for £x,xxx.xx in respect of interest and compensation charges under the Late Payment of Commercial Debts (Interest) Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002. The defendant has not paid this invoice or supplied a valid reason for non-payment.
The amount of the claim allows for an unallocated credit of 1p on the defendant’s account with us due to a previous overpayment.
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Letter from DLA Piper to Anywhere dated 8th May 2007
Dear Sirs
OUR CLIENT: QHOTELS LIMITED
We act for Qhotels ltd in connection with this matter. We have received copies of your letter dated 15 March 2007 and your fax dated 25 April 2007, together with your invoice in the sum of £x,xxx.xx.
We note your assertion that pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 (“the Act”) you are entitled to interest and compensation in respect of payments received after 30 days from the dates of your invoices. However, we wish to draw your attention to Section 5 of the Act, which states that statutory interest may be remitted where, by reason of the conduct of the supplier, the interests of justice require that this is the case.
We would point out that in each case you accepted payment of the relevant debts in full satisfaction of those debts and did not at any stage intimate that you considered that any further payment was due. In practice, by accepting payment without claiming interest you compromised any claim you had to do so in the future.
In the alternative, it is our client’s position that your failure to previously demand statutory interest and compensation created a reasonable expectation by them that payment after the 30 day period was acceptable to you. The fact that you have previously accepted payment well beyond 30 days from the invoice dates, in one case as long as 85 days after the date of the invoice, means that it was wholly unfair and unconscionable for you to now attempt to retrospectively assert your rights. We note that no demand for these payments was made by you until the trading relationship between yourselves and our client was terminated, and we respectfully suggest that this is why you are now claiming these amounts.
Our client intends to vigorously defend any legal action brought by you in relation to this matter. In doing so, our client will be relying on the law of estoppel, as set out in the case of Central London Property Trust Limited -v- High Trees House Limited [1947] KB 130. This case stands for the proposition that where a party to a contract, by either words or conduct, makes an assurance to the other party that they will not enforce their legal rights, and the other party then relies on that, the party who gave the assurance will not then be allowed to act inconsistently with it.
In this case, your conduct amounted to an assurance to our client that you would not enforce your strict legal rights, which our client relied upon by continuing to make payment after 30 days from the date of the invoices in the belief that this was acceptable to you. On the basis of this our client contends that your demand for payment is entirely unreasonable and without merit.
We would recommend that if you are in any doubt as to the position as set out above you should seek independent legal advice.
Yours faithfully
DLA Piper UK LLP
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Letter from Q Hotels to Anywhere 4th June 2007
Dear Sirs
We refer to your letter of 25 April and note that you have now issued proceedings against Qhotels Ltd. We are concerned that you have taken this step without replying to the letter sent to you by DLA Piper on 8 May 2007, in breach of paragraph 4 of the Civil Procedure Rules practice direction on pre-action behaviour. We suggest that you now reply to the letter as soon as possible direct to us.
We wish to formally advise you that we are reserving our position as to costs in the event that you are found to have acted unreasonably.
It remains our position that your demand for payment is entirely without merit, and we are in the process of drafting our defence.
Yours sincerely
Harriet Flanagan
Group Finance Manager
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Q Hotels Defence, dated 7th June 2007
QHotels Ltd (QHotels) has been trading with Anywhere Couriers (Anywhere) since December 2005, in that time Anywhere has made no demand for payment of interest for late payment of invoices.
Anywhere, in previously accepting payment within a timescale of up to 90 days and failing to assert their statutory rights, created a reasonable presumption on the part of QHotels that they had waived any claim for interest or late payment penalties (ref Section 5 of the Late Payment of Commercial Debts (Interest) Act 1998).
Anywhere have only now demanded these payments in circumstances following the termination of their trading relationship with QHotels and it would be unfair to allow them to retrospectively change their position. In practice the delay in payment of each debt was not significant and they accepted payment without demanding interest at the time. The unreasonableness of their request is highlighted by the fact that that the interest part of the claim (£177.51) is tiny in comparison with the penalty payments element (£x,xxx).
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Letter from Anywhere to Q Hotels 12th June 2007
Dear Ms Flanagan
I refer to your letter of 4th June 2007 and note your comments on the Civil Procedure Rules practice direction on pre-action behaviour.
You received notice of our intention to claim this outstanding debt on 16th March 2007 yet you failed to acknowledge receipt until prompted to do so by our telephone call and subsequent faxed letter on 23rd April 2007. On 25th April 2007 you wrote to us stating that you were currently in consultations with your solicitors. It was therefore reasonable for us to expect a prompt response based on those consultations which were apparently already underway. Having not received any further contact from you two weeks later we commenced proceedings on 9th May 2007. The letter from DLA Piper was received on 14th May 2007.
As DLA Piper is clearly a distinguished and knowledgeable firm it did not seem necessary to point out to them the obvious flaws in their argument.
The Late Payment of Commercial Debts (Interest) Act 1998 as amended (“the Act”) allows for interest and compensation to be charged on all qualifying debts. A separate debt is created distinct from the principal debt. The Limitation Act 1980 sets a time limit within which such debts are recoverable of six years.
These facts are widely known throughout the business community and it is reasonable when doing business with substantial companies to assume that they are fully aware of any legislation that might affect them. We even went so far as to supply you with a link to the explanatory booklet provided on the internet by the Better Payment Practice Group. This guidance booklet clearly states that creditors have the right to make claims under the Act for up to six years; advice which is echoed in free guidance available from, amongst others, the Department of Trade and Industry, Business Link, the Institute of Directors and the CBI.
With this in mind it is clear that the only time it may be reasonable for you to believe that we would not seek to collect these debts would be after several of the debts had aged over six years and become statute-barred.
Your claims that you believed that we considered your late payments to be acceptable are pure fantasy. We made numerous calls to your accounts department chasing payment of overdue invoices and pointed out our policy on late payment charges on many occasions. Your staff cannot have forgotten these calls as they turned into quite unpleasant arguments on several occasions. We also wrote to you on several occasions emphasising the point that we had the right to claim these charges at any time up to six years in the future.
In their letter DLA Piper cited the case of Central London Property Trust Ltd v. High Trees House Ltd [1947] K.B. 130 and it is this case which finally exposes the weakness of your argument. The defendants in this case claimed that the plaintiffs’ action was estopped and lost the case. In his judgement Denning J said “If the case had been one of estoppel, it might be said that in any event the estoppel would cease when the conditions to which the representation applied came to an end, or it also might be said that it would only come to an end on notice”. Later, in the case of Tool Manufacturing v Tungsten Electric [1955] 2 All ER 657 (HL), it was held that where a creditor wishes to resume his strict rights he may do so by giving notice. It follows that, even if it had actually been possible for you at any time to have formed a belief that we did not intend to claim these charges, your right to rely on that mistaken belief in future would cease on receipt of notice from us that we did in fact intend to do so.
Every invoice and statement that we have issued to you has contained a prominently displayed notice “WE UNDERSTAND AND WILL EXERCISE OUR STATUTORY RIGHT TO INTEREST AND COMPENSATION FOR DEBT RECOVERY COSTS UNDER THE LATE PAYMENT LEGISLATION IF WE ARE NOT PAID ACCORDING TO OUR CREDIT TERMS”. Please note our deliberate use of the words ‘will exercise’, rather than ‘may exercise’. Under the Act there is no necessity for us to display this notice in order to be able to claim; we include the notice in order to emphasise that we will exercise our rights.
These notices gave you unequivocal advance notice that we intended to claim these charges if we were not paid on time and at the same time extinguished any right you may have had to rely on any previous belief to the contrary that you may have formed.
It is clear that you have no real prospect of successfully defending the claim and we urge you to settle this debt in full without any more waste of our, or the court’s, time.
Yours sincerely
Alec Simmons
Director
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Letter from Q Hotels to Anywhere 22nd June 2007
Dear Mr Simmons
I refer to your letter of 12th June 2007.
We still believe our payment terms have only become unacceptable to you, when we chose to terminate our trading relationship. However we have chosen to settle the alleged debt for reasons of convenience rather than a belief that we owe Anywhere Couriers this money.
The Late Payment of Commercial Debts (Interest) Act 1998 (“the Act”) was created to protect suppliers from customers not paying their debts, however we believe that you are using “the Act” to generate income for your business, this is unethical.
Please find attached a cheque for £x,xxx.xx, I will expect to receive notification from the court to confirm that the claim has been cancelled.
Yours sincerely
Harriet Flanagan
Group Finance Manager
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Letter from Anywhere to Q Hotels 26th June 2007
Dear Ms Flanagan
Thank you for your cheque for £x,xxx.xx which we have accepted in part settlement of our claim.
The full amount of our claim was £x,xxx.xx including the court fee and we will only cancel the claim once we have received the balance of £xxx.
Please ensure that we receive your payment by 7th July 2007 or there will be further costs incurred.
Yours sincerely
Alec Simmons
Director
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Letter from Anywhere to Q Hotels 3rd July 2007
Dear Ms Flanagan
I can confirm that I have advised the court that our claim has been settled.
Yours sincerely
Alec Simmons
Director
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This post was written by Alec on August 17, 2008
Brilliant. Very well done Alec.