Acorn Services Ltd v Dill
| Jurisdiction | Bermuda |
| Judge | Kawaley, C.J. |
| Judgment Date | 23 April 2013 |
| Court | Supreme Court (Bermuda) |
| Docket Number | 3 of 2013 |
| Date | 23 April 2013 |
Supreme Court
Kawaley, CJ
3 of 2013
Ms Lovette Tannock, Christopher Swan & Co, for the appellant
The respondent appeared in person
Administrative Law - Breach of natural justice — Whether the Magistrate erred by not granting collection of costs — Whether the application for collection fees to recover arrears in rent was a penalty and as such unlawful — Collection fees recoverable as liquidated damages — Quantum — Appeal allowed.
By an Ordinary Summons issued in the Magistrates' Court on February 14, 2012, the appellant claimed $5,886 consisting of $4,412 in rental arrears and $1,474 in respect of collection fees pursuant to clause 4(f) of the relevant Lease. In addition $125 was claimed in respect of legal costs and $50 in respect of the costs of service. At the trial on December 4, 2012, the plaintiff increased its arrears of rent claim but the Magistrates' Court (Worshipful Arthur Hodgson (Acting)) only allowed $500 for “Legal and Charges”. Judgment was awarded in favour of the plaintiff in the amount of $8,708.86.
The appellant, while seeking this Court's affirmation of the judgment of the Magistrates' Court in part, appeals in part on the following ground:
“1. The learned magistrate erred in Law by not advising of his reasons for not granting the plaintiff's collection costs, thereby denying the plaintiff their right to due process.”
However, the central complaint was substantive as well as procedural. Namely, that (a) the Summons had claimed a collection fee of 33% based on common market practice in the debt collection world, and (b) that the Magistrates' Court ought to have awarded $ 2708.92 or 33% of the total amount of the arrears of rent found to be due. Ms. Tannock conceded that the Lease did not specify on what basis the collection charges would be computed.
The appellant's counsel submitted that this aspect of the appellant's claim had not been challenged by the respondent at trial. The respondent contended with great conviction that the appellant's counsel had conceded before the Learned Acting Magistrate that the collection costs should not be awarded. Because the Appeal Record and the Magistrate's notes were silent on this issue, I reserved judgment so that a transcript of the audio recording could be prepared. I also indicated, after hearing counsel, that if the appeal was successful I would summarily assess costs.
Findings: were sufficient reasons given for refusing the claim for a 33% collection fee?
According to an unofficial transcript of the hearing completed by the Court on or about April 15, 2013, the following discourse took place between the parties and the Learned Acting Magistrate in relation to the collection costs head of claim in the course of a two hour long hearing (Minor cosmetic changes have been made to the Transcript placed on the Court file.):
“…COURT: Anyway, what have you done with this bill?
MS TAVVOCK: Your Worship I relieve the amended amount which has deducted the cost of the locks. Which includes rent, water and late fees up until June 2012 comes to $8,208.86. Our collection fee is which we claim we are entitled to claim under Section 4(f).
COURT: That collection fee, how do you determine that? When somebody signs an agreement that says you're entitled to recover expenses of collection, how do you determine what that is?
MS TAVVOCK: You mean what the percentage is? COURT: Yeah, how do you, you know…
MS TAVVOCK: The percentage is determined by the collection agency, what it's based on the debt.
COURT: Suppose they want 100% can they take 100%?
MS TAVVOCK: They can try but I don't know how much will fly in front of a Magistrate.
COURT: Right so how does a Magistrate make a decision about what it should be?
(3:34:08)
MS TAVVOCK: Your Worship the standard amongst debt collection agencies on this island is around 33% that is what we charge.
COURT: And I don't think they are usually able to collect that amount. If this were done on a, on a umm time spent basis, that had to be assessed by the Court what would it be? How much time have you put in this case?
MS TAVVOCK: If you give me a moment to confirm how many times we've appeared in Court Your Worship. This matter was set for trial on the 8th of June, so we appeared in Court once before and we've appeared today. Your Worship I'm prepared to say at least 500.
COURT: One of the disadvantages of being in business is that you never collect all that you would like to.
MS TAVVOCK: I understand that Your Worship and I appreciate that but under the lease he's entitled, our clients are entitled to the cost of the their legal fees and collection fees.
COURT: Well it can't be both, legal and collection. That is part of the collection fees, the legal fees.
MS TAVVOCK: Actually collecting the debt, I submit Your Worship is actually separate than the representation in Court.
COURT: What have other Magistrate's done with respect to that fee? MS TAVVOCK: Pardon I'm sorry.
COURT: What have other Magistrates, I'm sure this is not the first time you've been to Court on this item.
MS TAVVOCK: Magistrate Wolffe, I'm being honest, Magistrate Wolffe is usually, usually understands that our offices try not to claim anything excessive. I'm being honest….but…
COURT: You're expected to be honest, you're an officer of the Court.
MS TAVVOCK: But I mean, my, I believe my offices are willing to negotiate on the collection fees if we are willing to have, if there's a judgment in place. It's not a hard and fast rule that our offices work by because we understand that circumstances are tight on both sides, sometimes on the landlord side and sometimes on the tenant's side.
COURT: I'm just going to make a note here of how I dealt with this matter. You can have a seat, you can have a set Mr Dill.
MR DILL: Your Honour, you hear that he said that I moved in on the September, and it's August. This is (unclear) lies that this man's telling you……
COURT: One of the things…I'll tell you what's on my mind with respect. I'm having some trouble, she's charging you $1400 for legal and collection fees. I'm having a little difficulty with that but I'm also aware of the fact that even if I give judgment, it doesn't mean to say that he's going to get his money. In other words, they may be spending more time trying to get the money from you. How do you propose to pay this?
MR DILL: Well Your Honour….
COURT: Think about it while I write this note…
…COURT: Now, what am I going to give you for collection fees? You've been to Court twice?
MS TANNOCK: Yes we have Your Worship.
COURT: That's $100 an hour, 4 hours, $400. You had to prepare, that's $100 an hour, $500.
MS TANNOCK: We'd accept that Your Worship.
MR DILL: Excuse me Your Honour?
COURT: Yes.
MR DILL: Can I speak?
COURT: Yes.
MR DILL: We didn't spend no 4 hours in Court when we came here last time. We just came in here, couple minutes that's all it was. What's she talking about? ‘Cause when I had these pieces of paper to give to the Judge that was here, I don't know which one it was, she just said that ‘how do I plea’ this is why, he's here right now I mean, what hours are you talking, we was in Court…
COURT: She asked you fairly to come to Court, she has to come down here MR DILL: Yes.
COURT: Alright. She has to wait in line for example today we're been down here for an hour today. The time she comes down here, gets back up there..
MR DILL: Your Honour can I say something?
COURT: See let me tell you what you're doing Mr Dill. See you've got to watch this. You've got to watch this in life. You've signed a contract here that say you're going to pay for any legal action it says here in (f) ‘Legal and Collection Fees — the tenant agrees to be responsible for all legal Court and collection fees if the landlord or agent has to force the payment of any overdue rent. Late penalty or related expenses incurred by the tenant or their guests or invitees within the provisions of this lease’ Now, you've heard her say that the standard procedure in Bermuda for collection agencies is 30% of the bill. In other words, if a bill is $3,000 it's $1,000 for collection. Now, she's claiming here on this bill $1,400. Now I'm sitting here and I'm trying to help you out.
MR DILL: Yes Your Honour.
COURT: I'm saying to her, look I know what the standard it, I'm an attorney too and I know all of these charges but, I asked her because I wanted you to hear it. And I'm sitting here and I'm telling her ‘I'm not going to give you all of that’ so I'm trying to find a way to compromise it to benefit you and you don't recognize that I'm trying to help you here. You're jumping up, you're getting angry with her and this….I'm trying to help you here. Alright? Now, if...
To continue reading
Request your trial