COURT OR MEDIATION

Hi all,
apologies for the long introduction to my problem.

In June this year I started sub contract work to a Training Company that needed Internal Verifiers and Assessors to fulfil their commitments to receive government funding. I met the CEO and we agreed that part payments would be made for each learner that had been observed/or assessed and final payment would be made on Internal verification. There was a time frame to be met for funding issues so I and a sub contractor of mine committed to complete learners, working 18hr days as the learners work in shift patterns.

There were a number of issues with the learners and I informed the contractors MD, Ops Director and nominated Internal Verifier accordingly. We completed the work in August having issued the first part payment invoice in mid July.

The first invoice was overdue and I spoke to the Ops Director who said they were waiting on funding payment and that he would pay 50% on receipt of this and 50% later that month. In the meantime I had submitted another 4 invoices. I was then told by an employee at this company that they hadn't paid a number of associate assessors. I did receive payment for 50% of the first invoice.

The company failed to meet the required standards on external verification and funding payment was delayed. I explained that I had worked to their quality standard which had been signed off by their quality assurance. I also pointed out that I had informed them that they were not working to the required standard but this advice was shunned.

It was agreed that an internal verifier would conduct a phone call with each learner and make a few visits so I deducted £2300 from my total bill on a future invoice which subsequently I did not submit. I did this as a measure of good will to cover his costs.

All my invoices are per Payontime templates and I have issued final reminders and threatened court action if the last letter was ignored.

I have found out that all the Directors and the internal verifier have left the company having worked there for only 3 months. I have since spoken to the ex directors who say that he is a player, playing creditors off against each other and juggling payments. He has received the funding for all the learners that I completed.

The CEO phoned me saying that he had just picked up on the letter and email thread I had sent and needed some information from me which I supplied. He then said that the company was due funding and he would sort something out. He then proceded to ignore numerous calls from me. I finally got in touch again and he asked for the same information and stated the same about funding and is now disputing the invoices saying that other assessors were required, which is not the case.

I have 4 invoices outstanding with this company which totals £15230. I have applied recovery costs and interest up to 27/10/2010 totalling £380.58.

I am willing to take him to court however I am not sure how to go about it. Do I register each outstanding invoice via Claims on Line or do I tote them up as one claim? Will I be better off trying to go through a mediation service prior to taking court action which is going to bump the costs up even more? Any advice in this matter would be greatly appreciated.

The Courts will always want both parties to make EVERY effort to reach agreement prior to going to court and in this respect will suggest that mediation be tried.

The approach here is to speak with the other party and try to obtain agreement to jointly go to mediation, with BOTH parties agreeing to share thier own costs and to be bound by the mediators ruling. Last time I looked into this the cost was around £1,000 so much cheaper than lawyers, courts etc. You can google search or manybe mutually agree the appointment by say The Chartered Institutie of Accountants or Law Society.

If the other side refuses then its always a good idea to ask why, and obtain this in writing. This will assist your case if you do go to court as it will show the judge that you have made every effort to be reasonable and find a solution.

As for going to court. Well you need a lawyer for that, and they aren't cheap... However I would imagine from what you said this guy is the type that can pay but won't, you will get no where unless you do appoint a lawyer. I use Lanes4Claims but there are a number of good firms out there who basically apply a no nonesence approach that I bet will get results.

Thanks for the advice Ashley,
I am only a small company, and £1000 for mediation is a big hit for me as is obviously the outstanding debt. I am loathe to pay out for mediation and then still end up in the courts, would these costs be recoverable? I can see that this is going to cost me just to get what is due, however this non payment very nearly shut down my business as it is.

If you went mediation you could agree that the winner pays the other sides costs, but from what you have said I doubt your debtor will pay.

I think he's the sort that knows time and money cost, he's playing that you won't bother. I have been told time and again if the debts under £100,000 write it off as legals will outweigh risk and return. I needn't comment on my view of that statement !

Your first port of call should I believe be to a specialist firm of lawyers - they will issue an initial letter for around £5. This is often enough to resolve. If the other party fails to respond then they will commence proceedings. In my last case the total i paid up front was around £300, we won in 14 days, appointed a sherriff and had full collection and costs.

If the matter becomes defended/protracted the solicitor may ask for some up front on account money - typically £1,000. This is where you have to be careful, lawyers typically charge in 6 minute stages, no pleasant chats about the weather !!!! I have met more than one defendant who is a player, but generally people don't pay simply because they haven't got the money.

Be carefull and consider given the other party whether it's actually worth it. I sued last year on an c£125,000 debt, won, was awarded £60,000 and interest and c£ 75,000 costs. A year down the line and I have nothing, reason the company/assets were sold twice during the case and my debt was left in the original company which surprise went into liquidation with no assets ! Now had I known this I would not have made a £125,000 bad debt worse by spending a further £ 75,000 on lawyers.

Yes the above nearly took us out as well, sadly this is not the only time I have experienced this in the past 20 years.

In summary try the legal route but always have you hand on the exit door, decide BEFORE you start how much your prepared to loose. I know many slate me for this approach but having been there so many times the only real thing I can advise is ' experience is what you get when you don't get what you want'

Thanks again Ashley,
I have engaged a Solicitor to send a Letter Before Action today. Hopefully this will work but I can't see it to be honest. I take on board your advice on an exit strategy and will set my limits.

Hi Shane,

Going through the same thing you are and am following the advice given off this site to obtain the money owed to me.

good luck and all the best