Defteros v Prushka Fast Debt Recovery Pty Ltd
[2016] VSC 508
•30 August 2016
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2015 4897
| GEORGE DEFTEROS (trading as Defteros Lawyers) | Plaintiff |
| v | |
| PRUSHKA FAST DEBT RECOVERY PTY LTD | Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 May 2016 |
DATE OF JUDGMENT: | 30 August 2016 |
CASE MAY BE CITED AS: | Defteros v Prushka Fast Debt Recovery Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2016] VSC 508 |
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JUDICIAL REVIEW AND APPEALS – Appeal from the Magistrates’ Court on a question of law under s 109 of the Magistrates’ Court Act 1989 (Vic) – Agreement between firm of solicitors and debt recovery agency – Construction of covenant by client not to give ‘misleading, false, or insufficient details’ about debts – Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 referred to – Claim that there was no evidence to support a finding that there had been a failure on the part of the client to give sufficient details – Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 referred to – Whether any breach of covenant to provide sufficient details about debts amounted to repudiation giving rise to a right to claim commissions – Appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Wilmoth | Defteros Lawyers |
| For the Defendant | Mr B Devanny | Mendelsons Lawyers Pty Ltd |
HER HONOUR:
This appeal concerns an order made by Magistrate J Crowe in the Magistrates’ Court at Melbourne on 17 August 2015, where the learned magistrate, after a short hearing, ordered that the plaintiff in this proceeding (‘Defteros Lawyers’) pay the defendant in this proceeding (‘Prushka’) the sum of $5,508.22, plus interest of $836.27 and costs of $4,068.35. The orders were made in relation to a claim made by Prushka, a debt recovery firm, against Defteros Lawyers for commissions said to be owing to it by Defteros Lawyers. Prushka alleged that, notwithstanding repeated requests for further information by them concerning a number of debtors (many of whom challenged their liability to pay Defteros Lawyers), these requests were ignored, triggering Prushka’s entitlement to terminate the agreement between it and Defteros Lawyers to recover certain debts, and claim the commission that would have been payable to Prushka had those debts been recovered in full.
In its claim, Prushka relied upon clause 10 of the agreement between the parties (‘agreement’) which states:
The Principal’s instructions to Prushka to recover a debt pursuant to this agreement shall be deemed to have commenced from the date of receipt of a form or instructions by Prushka and should the Principal thereafter at any time instruct Prushka whether expressly or by conduct to terminate recovery proceedings for any reason whatsoever Prushka shall be entitled to charge commission from the date of termination regardless of the ultimate outcome of further recovery action as if the debt had been paid in full.
In its complaint, Prushka also relied upon clause 5 of the agreement, which provides as follows:
The Principal covenants that the details supplied by him are true and correct and include all information relevant to the debt. Should Prushka suffer loss or expense due to misleading, false or insufficient details being supplied by the principal, the principal will indemnify Prushka in full for such loss or expense.
In its complaint, Prushka alleged that by failing to respond to its requests for further information, Defteros Lawyers:
(a) breached its obligations under clause 5 of the agreement; and
(b) engaged in conduct which amounted to constructive termination of the agreement, entitling Prushka to claim its commissions in full.
In its defence to the claim, Defteros Lawyers denied that it was in breach of its obligations under clause 5 of the agreement, asserted that Defteros Lawyers provided all relevant and available information to Prushka, and advised Prushka to that effect. Any failure by Prushka to recover the debts arose from its own inaction. In any event, clause 5 of the agreement is not a material term breach of which could give to a repudiation of the agreement, and do not give rise to a right to make a valid claim for commissions. Further, Defteros Lawyers denied that by reason of its conduct it had terminated the agreement. Rather, the agreement was terminated by the effluxion of time and the inactivity of Prushka.
As noted above, the hearing before the learned magistrate was relatively brief, being conducted as an arbitration style hearing. Each party’s representative gave an outline of the evidence upon which it relied, and tendered bundles of documents. Witnesses did not give evidence-in-chief, but rather adopted the summary of each party’s position as presented by counsel, and were subject to some limited cross‑examination. Her Honour did not give written reasons or give detailed oral reasons for finding in favour of Prushka. I make no criticism of her Honour at all in that regard: the procedure that was adopted is clearly targeted at resolving small debt claims promptly and cost‑effectively. However, it means that one needs to have regard to the pleadings, the evidence, and the written and oral submissions of the parties, as well as the observations and remarks of her Honour during the course of the hearing to discern the factual and legal findings of her Honour with respect to Prushka’s claim.
The Notice of Appeal filed by Defteros Lawyers on 28 August 2015 is reproduced below:
QUESTIONS OF LAW
1. Did the learned Magistrate misconstrue clause 5 of the engagement?
2.Did the learned Magistrate err in that there was no evidence to support a finding that there had been a failure on the part of the defendant to provide sufficient detail?
GROUNDS OF APPEAL
1.The learned Magistrate misconstrued clause 5 of the engagement in that ‘insufficient detail’ within the meaning of clause 5 means a conscious withholding of information.
2.Irrespective of the interpretation that is to be accorded to clause 5 of the engagement the learned Magistrate erred in that there was no evidence to support a finding that there had been a failure on the part of the defendant to provide sufficient detail.
ORDERS SOUGHT IN THIS APPEAL
1.Order 1 of Her Honour Magistrate Crowe is set aside.
2.In their place, order that:
(a)The plaintiff’s claim be dismissed.
(b)The plaintiff pay the defendant’s costs of the proceeding.
Further, in its submissions filed on 2 December 2015, Defteros Lawyers sought to raise a further ground of appeal, being:
the learned Magistrate misconstrued clause 5 of the engagement in that ‘loss or expense’ within the meaning of clause 5 does not extend to an indemnity in respect of the commissions which might otherwise have been earned.
No leave was sought or granted with respect to the additional ground of appeal, but as both parties dealt with it in their submissions I will give it due consideration.
In relation to the first ground of appeal, Defteros Lawyers repeated the submissions made before the learned magistrate to the effect that the term ‘insufficient detail’ in clause 5 of the agreement had to be construed in the context of the entirety of that clause. In its written outline of submissions, Defteros Lawyer stated as follows:
What Clause 5 in fact does is protect Prushka in circumstances where its client provides ‘misleading, false or insufficient details’. That is to say, it protects Prushka in circumstances where the party claiming the debt has, in some way, misled or acted in such a manner as to thwart the endeavours of Prushka to recovery the debt for its own client. ‘Insufficient details’ in its context, is a reference to the withholding of information on the part of a client, presumably in circumstances where the factual existence of a debt in question is perhaps dubious. The details must in fact exist.
It cannot extend to the recovery of a debt where there is an absence of information to support it. That is, ‘misleading, false or insufficient details’ is not something which is construed objectively. The question as to whether a client has provided insufficient details must be read in the context of the provision of false and misleading information. It is suggestive of a conscious or reckless withholding of information. There is no suggestion in the present case that for some unknown reason Defteros has withheld information which was available so as to thwart the recovery of the claims that it makes. The only evidence before the magistrate was to the effect that requests for further information went unsatisfied, because there was no further information to provide.
I am dubious that the submission in the last sentence of the paragraph above is supported by the evidence actually before her Honour, and the submission to the effect that a clause of a contract is not to be construed objectively is a surprising submission to hear in this, or any court. That said, Defteros Lawyers submitted before her Honour that the principle of construction ejusdem generis should inform what is meant by ‘insufficient detail’. That is, that where there is a list of terms in a written document, one should construe a particular term by reference to the flavour of the list. In the current case, given the reference to ‘misleading’ and ‘false’ immediately preceding the word ‘insufficient’, the term ‘insufficient detail’ must mean a conscious withholding of information on the part of the client.
This submission found no favour with the learned magistrate, as shown by the following extract from the transcript:[1]
HER HONOUR: That’s not how I would interpret that at all. If that construction were to be accepted – sorry. For that construction to be accepted, it would have to be something that involved a deception-type approach. Because we have misleading and we have false.
I think that’s clearly what was intended, that either of those. And it then say, ‘Or insufficient details’. So, ‘or’ acts as a circuit breaker. And insufficient details does not, to my mind, have the connotation of somehow maliciously deceptive, if I could use that phrase or those two words, rather.
[1]T35, 4-14.
At the hearing of the appeal, counsel representing Defteros Lawyers reiterated that the term ‘insufficient’ in clause 5 of the agreement must be tainted or tarnished with some element of dishonesty by the words ‘misleading’ and ‘false’. Further, the agreement contained no warranty as to the amount of supporting information available to recover a debt.
Counsel for Defteros Lawyers conceded that the communication between Defteros Lawyers and Prushka was not fulsome. However, he submitted that there may be many instances where a solicitor takes instructions on the run and only has a basic level of information about a particular client. Further, counsel for Defteros Lawyers submitted that the learned magistrate ought to have analysed the adequacy of the information on a client by client basis, rather than finding that Defteros Lawyers had not provided sufficient information about each of the clients referred to in the summary.
In its written and oral submissions, Prushka supported her Honour’s construction of clause 5 of the agreement, and submitted that to assert that the term ‘insufficient details’ imported some element of fraud is to misconstrue the effect of the clause. There is no relevant ambiguity in the meaning of that phrase, such as to render admissible evidence of the surrounding circumstances which would contradict the plain language of the agreement. Even if there was any ambiguity, the purpose of the agreement and the circumstances in which it is to be performed would lead to the same result. The clause places the onus upon the client to provide sufficient information to enable Prushka to collect the debts from Defteros Lawyers’ debtors. The evidence before the learned magistrate was that the debtors about which Prushka sought further information and instructions denied any liability to pay the debts, and Prushka’s requests were ignored.
Prushka relied upon the recent (and convenient) restatement of the principles of contractual construction by the plurality of the High Court in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited,[2] as reproduced below (citations omitted):
The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if any expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.
Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption ‘that the parties … intended to produce a commercial result’. Put another way, a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.
[2](2015) 256 CLR 104 [46]-[51] per French CJ, Nettle and Gordon JJ.
At the hearing of the appeal, counsel for Prushka submitted, in summary, as follows:
(a) while Prushka takes on a significant risk in attempting to recover debts on a no‑win, no fee basis, the suggestion that Prushka takes on the risk that the debt did not exist or had already been paid is baseless;
(b) Prushka entered into the agreement with an Australian law practice regulated under the Legal Profession Act 2004 (Vic), and as such, were required to comply with certain regulatory requirements for a debt to be recoverable, while Prushka has an obligation not to demand the repayment of a debt from a person without having a belief on reasonable grounds that the person is the debtor or its agent, and is liable for the debt; and
(c) the information and the instructions sought by Prushka went to the very existence of the debts concerned.
I agree with the submissions advanced on the part of Prushka that the learned magistrate did not err in her construction of clause 5 of the agreement. In my view, there is no ambiguity in the term ‘insufficient detail’, even read with the antecedent words ‘misleading’ and ‘false’. I do not accept the construction of Defteros Lawyers to the effect that there must have been some conscious withholding of the information to amount to insufficient information. No element of consciousness or moral obloquy can be imported into the term ‘insufficient’: whether the amount and nature of the information that is provided is sufficient or insufficient involves an objective factual judgment.
If there is any relevant ambiguity in the term ‘insufficient’, to the extent that it is necessary to have recourse to events, circumstances, and matters external to the agreement in order to establish what might be deemed ‘insufficient’, all of these matters suggest that it matters not whether the failure to provide sufficient details to enable Prushka to recover the debts is wilful, inadvertent, or as a result of negligence or simply incompetence. The commercial purpose of both parties is to recover the debt. However, in the current case, the only party which held information regarding the existence of the debt, the quantum of the outstanding debt, and the debtor’s alleged liability to pay the debt is Defteros Lawyers. If it was unwilling or unable to provide sufficient information regarding the debt, Prushka could not perform its side of the bargain. As for the submission that the learned magistrate ought to have determined liability on a debtor by debtor basis, this submission is not particularly relevant to the construction of clause 5, or any other ground of appeal. The first ground of appeal fails.
As for the second ground of appeal, being that the learned magistrate erred in giving judgment in favour of Prushka because there was no evidence to support a finding that there had been a failure on the part of Defteros Lawyers to provide sufficient information regarding the debts, the written and oral submissions filed on behalf of Defteros Lawyers did not elaborate on this ground in any detail. However, Defteros Lawyers did submit that:
(a) it was in Defteros Lawyers’ interests that Prushka be able to recover the debts;
(b) all information that Defteros had was provided to Prushka, and there was no reason for it not to do so;
(c) there was no evidence that any information existed which was not provided;
(d) there is no warranty in the agreement as to the amount of information that is available to assist in the recovery of each debt; and
(e) Prushka takes the risk that a debt may not be recoverable or might be keenly contested. There may be many instances where Prushka may be retained to seek recovery of a debt and the level of supporting information referrable to a debt claim is limited, for example, an oral agreement as to a loan.
In its written submissions, Prushka submitted that the effect of clause 5 of the agreement is that Defteros Lawyers is required to provide sufficient information to provide a reasonable basis for continuing to assert the existence of a debt which Prushka is contractually obliged to attempt to collect. It was submitted that this obligation required Defteros Lawyers to demonstrate that it has done work as a solicitor for a client in accordance with the Legal Profession Act 2004 (Vic) such that the debt would be recoverable in a Court, and that is established, it is then Prushka that takes the risk that the debtor is insolvent, deceased, or unable to be found. It is not incumbent upon Prushka, in a claim such as this, to prove that further information or documentation actually exists.
In further response to the ‘no evidence’ ground, Prushka’s submissions noted that in the course of the hearing before her Honour, Prushka tendered and relied upon a summary outlining all of the disputed amounts, the steps taken to recover those amounts and the deficiencies in the instructions provided by Defteros Lawyers (‘summary’).[3]
[3]See exhibit ‘JH-1’ to the affidavit of Jonathon Hancock sworn on 18 November 2015.
The disputes raised in the summary were:
(a) allegations that a third party was liable to Defteros Lawyers;
(b) allegations that the dispute had previously been settled with Defteros Lawyers;
(c) allegations of an agreement between the debtor and Defteros Lawyers not to charge over a fixed amount;
(d) allegations that amounts being claimed were funded by Victorian Legal Aid;
(e) allegations of agreements not to pursue the debtor;
(f) deficiencies of costs disclosure under the Legal Profession Act 2004; and
(g) allegations of a costs dispute with the Legal Services Commissioner.
Prushka submitted that to proceed with collecting any of these debts without clarifying its instructions from Defteros Lawyers would have constituted a prohibited debt collection practice under the relevant consumer protection legislation.
While the specific findings of fact made by her Honour were not evident from the transcript of the hearing, in an affidavit sworn by Prushka’s solicitor on 18 November 2015, which among other things annexed the summary referred to above, Mr Hancock deposed as follows:
The transcript of the original proceeding lends to this Honourable Court an indication of the evidence put before Her Honour and relied upon by Her Honour in reaching her decision. It was open for Her Honour to make the findings of fact mentioned at paragraph 12 by virtue of that evidence, namely that:
(a)The Respondent did adduce evidence regarding the attempts made to procure the requested information from the Defendant. A summary of the Respondent’s requests for information was tendered to the court in the original proceeding and is exhibited ad marked ‘JH-1’;
(b)The Appellant did not adduce any evidence or any credible evidence that the Appellant had indeed provided responses or adequate responses to the requests for information from the Respondent.
It was accepted by the parties that the Respondent’s terms and conditions were prevailing terms governing the agreement between them. Accordingly, once Her Honour considered the evidence mentioned at paragraph 13(a) and (b) it was open to Her Honour to find that the conduct of the Appellant constituted:
(a)A termination [of] the agreement and that the Respondent was entitled to commission by virtue of its clause 10; or alternatively
(b)A breach of the Respondent’s clause 5 such that the Respondent would be entitled to loss and damage in the amount sought.
The ‘no evidence’ ground is a well-known ground of appeal on a question of law. It is established and uncontroversial law that:
a tribunal that decides a question of fact when there is ‘no evidence’ in support of the finding makes an error of law. What amounts to material that could support a factual finding is ultimately a question for judicial determination.[4]
[4]Kosta v HIH Insurance Services Pty Ltd (2010) 241 CLR 390, 418.
However, where there is some evidence to support a finding, it has traditionally been extremely difficult to impugn a primary decision maker’s factual finding. In Azzopardi v Tasman UEB Industries Ltd,[5] Glass JA stated that factual findings of the character described below do not constitute errors of law:
[a] finding is perverse, that it is contrary to the overwhelming weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it.
[5](1985) 4 NSWLR 139, 155-156.
The ‘Azzopardi principle’ has been subject to some judicial criticism, not the least by Kirby P, as he then was, who gave the dissenting judgment in that case, asserting that a perverse finding of fact should amount to an error of law.[6] The strict approach of the Azzopardi principle may have been softened by the High Court in Re Minister for Immigration and Multicultural Affairs: Ex parte Applicant S20/2002[7] which suggested that an administrative decision could be subject to judicial review on the basis that it was ‘irrational, illogical and not based upon findings or inferences of fact supported by logical grounds’.
[6]Ibid, 151.
[7](2003) 198 ALR 59 [34], [37].
However, while the limits on the review of a decision maker’s findings of fact may not be so strict as provided for by the Azzopardi principle, as can be seen from the above discussion, a party who seeks to overturn a decision on a ‘no evidence’ ground has a high hurdle to jump. In the current case, that hurdle has not been cleared by Defteros Lawyers. There was clearly evidence before the learned Magistrate that despite repeated requests from Prushka, Defteros Lawyers simply ignored the requests for information and assistance. The evidence given by the witness called by Defteros Lawyers, Ms Alexandra Petrovic-Defteros, the practice manager of Defteros Lawyers, was to the effect that she spoke with Prushka’s representatives on a number of occasions during the relevant period, or asked one of her staff members to do so, but she did not recall what information or instructions she provided to Prushka. It could not also be said that the learned magistrate’s finding was irrational or perverse, or not open to her to make on the evidence.[8] Ground 2 of the grounds of appeal has not been made out.
[8]S v Crimes Compensation Tribunal (1998) 1 VR 83, 90.
Before turning to the proposed third ground of appeal, I should for completeness address an issue which, while not being the subject of a separate ground of appeal, was raised by Defteros Lawyers in the submissions made both before her Honour and before this Court. The submissions are to the effect that, to the extent that Prushka relies upon clause 10 of the agreement in order to recover the commissions claimed by it, Prushka cannot rely upon any breach of clause 5 of the agreement to terminate the agreement, or to advance an argument that Defteros Lawyers repudiated the agreement. Defteros Lawyers relied upon the decision of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd,[9] where the Court held that there are two relevant circumstances in which a breach of contract by one party may entitle the other party to terminate a contract, being:
(a) where the obligation with which there has been a failure to comply has been agreed to be an essential obligation; and
(b) where there has been a sufficiently serious breach of a non-essential term.
[9](2007) 233 CLR 115.
Further, in that case, the High Court held, uncontroversially, that ‘conduct which evidences an unwillingness or an inability to render substantial performance of the contract’ may amount to a repudiation of the contract. Defteros Lawyers submitted, in summary, that:
(a) there was no evidence that the parties agreed at the time of entering into the agreement that clause 5 was an essential term;
(b) clause 5 is an indemnity clause, and as such, breach of clause 5 could not amount to repudiatory conduct;
(c) there has been no sufficiently serious breach of a non‑essential term; and
(d) if Defteros Lawyers’ conduct in failing to provide sufficient information was repudiatory, that would convert Prushka’s entitlements under the agreement from a commission basis for recovery to a guaranteed fee for service.
In response, Prushka submitted that the requirement in clause 5 of the agreement that the client provide Prushka with sufficient information does not elevate Prushka’s claim to a guaranteed fee for service, but rather prevents a situation arising whereby Prushka is instructed to and required to continue collecting a non‑existent and/or non‑enforceable debt at its own risk and expense. Further, it was submitted that:
The evidence below was that after requests for further information regarding the debts was ignored, [Defteros Lawyers] did not provide any further information to allow [Prushka] to continue with its task. That conduct constituted and (sic) implied instruction to terminate recovery proceedings and entitled [Prushka] to commission under paragraph 10 of the agreement.
Counsel for Prushka submitted that Prushka’s entitlement to be paid commissions under clause 10 of the agreement was triggered by Defteros Lawyers’ failure to respond to the email sent by Prushka to Defteros Lawyers on 11 November 2013. The email was headed ‘Final Reminder: Request for Information’, and listed the debts which were ultimately the subject of Prushka’s claim for commission in the Magistrates’ Court proceeding. the email stated as follows:
1.We accepted instructions to act for you based on your acceptance of our terms and conditions.
2.A current set of terms and conditions is contained on our website. click here
3.The following clauses are relevant:
Clause 4
…..
Clause 5
The PRINCIPAL covenants that the details supplied by him are true and correct and include all information relevant to the debt. Should PRUSHKA suffer loss or expense due to misleading, false or insufficient details being supplied by the PRINCIPAL, the PRINCIPAL will indemnify PRUSHKA in full for such loss or expense.
Clause 7
…..
Clause 10
The PRINCIPAL’S instructions to PRUSHKA to recover a debt pursuant to this agreement shall be deemed to have commenced from the date of receipt of a form or instructions by PRUSHKA and should the PRINCIPAL thereafter at any time instruct PRUSHKA whether expressly or by conduct to terminate recovery proceedings for any reason whatsoever PRUSHKA shall be entitled to charge commission from the date of termination regardless of the ultimate outcome of further recovery action as if the debt has been paid in full.
4.Regarding the above debts, we have endeavoured to obtain information and instructions from you on numerous occasions, but to date we have received no reply. Without your active co‑operation, we are unable to proceed further.
5.Please contact our office within three (3) working days to discuss this.
6.If we do not hear from you within the 3 day period, we will reluctantly close all of the above debts and put through a commission charge based on breach by you of the above terms.[10]
[10]In her evidence, Ms Petrovic-Defteros said that she read this email, but because she was overseas at the time, she asked one of her staff members to call Prushka.
I agree with the submissions advanced on behalf of Prushka. Clause 10 of the agreement does not expressly refer to repudiatory conduct, but it is couched in the language of repudiation. It was certainly open to her Honour to find that by failing to provide Prushka with information about the debts which only Defteros Lawyers could know or have access to, and by ignoring repeated requests for information, that Defteros Lawyers had engaged in repudiatory conduct. In each of the instances referred to in the summary, the alleged debtor disputed any liability to pay the debt. Prushka was not, and could not be in possession of any information to rebut these denials of liability without instructions from Defteros Lawyers. Without any instructions from Defteros Lawyers, it could take no further action to recover the debts and fulfil its obligations under the agreement.
Turning now to the proposed third ground of appeal, I agree with the submissions advanced on behalf of Defteros Lawyers that clause 5 is an indemnity clause, which does not of itself give rise to a claim for commissions upon breach. While I do not accept that any liability of Defteros Lawyers under clause 5 is limited to amounts payable to third parties by Prushka, as contended for by Defteros Lawyers, I agree that in order to claim damages under this clause, Prushka would need to establish what losses had been caused by the provision of misleading, false, or insufficient information. If Prushka was able to establish that if the necessary information had been provided it would have been able to recover the debt, its loss or damage could be found to be equivalent to the commission it would have earned. An alternative scenario upon which losses could be claimed could be if, for example, a client gave erroneous information about the location of a debtor, causing Prushka to incur unnecessary travelling expenses. I do not accept the submissions made on behalf of Prushka that ‘loss and expense’ in clause 5 of the agreement ought necessarily be read together with the obligation to pay commissions triggered by clause 10 of the agreement.
However, my construction of this aspect of clause 5 of the agreement does not assist Defteros Lawyers on this appeal. Her Honour made no express finding that Prushka was entitled to its commissions by reason of Defteros Lawyers’ breach of clause 5 of the agreement. She simply granted ‘judgment on the claim’. However, when one looks closely at Prushka’s statement of claim, it makes no claim for loss and damage pursuant to clause 5 of the agreement. Rather, in paragraph 8 of the statement of claim, it alleges that Defteros Lawyers breached its obligations under clause 5 of the agreement, and provided particulars of breach. At paragraph 9 of the statement of claim, it relies upon the breaches referred to in paragraph 8 in support of its allegation that Defteros Lawyers had terminated the agreement, then entitling Prushka to claim its commissions under clause 10 of the agreement.
Accordingly, this proposed ground of appeal must fail. There was no error of law on the part of the learned Magistrate, and the appeal must be dismissed, subject to any further submissions on the question of costs.