Rinnai Australia Pty Ltd v Ondarchie

[2011] VCC 599

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE

CIVIL DIVISION

COMMERCIAL LIST ─ GENERAL DIVISION

Case No. CI-11-01454

RINNAI AUSTRALIA PTY LTD	Plaintiff
v
KEITH ONDARCHIE and ADOLPH VAN GAALEN	Defendants

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	19 May 2011
DATE OF JUDGMENT:	30 May 2011
CASE MAY BE CITED AS:	Rinnai Australia Pty Ltd v Ondarchie & Anor
MEDIUM NEUTRAL CITATION:	[2011] VCC 599

REASONS FOR JUDGMENT

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Catchwords: Practice and procedure – Plaintiff’s summary judgment application – Claim against a guarantor for balance owing for goods supplied on credit – Credit terms provided that, “The customer is liable for all reasonable expenses (including contingent expenses such as debt collection commission) … for enforcement of obligations and recovery of monies due from the customer to Rinnai” – Claim for debt collector’s commission – Whether it was a “reasonable” expense.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C. Morey	Lewis Holdway Lawyers
For the First Defendant	No appearance
HIS HONOUR:

1           The plaintiff seeks summary judgment against the first defendant. Judgment has already been entered against the second defendant in default of appearance.

2           The plaintiff entered into a supply agreement with Servco Pty Ltd. The defendants guaranteed the obligations of the company pursuant to the supply agreement. The company is now in liquidation.

3           As part of its claim, the plaintiff seeks to recover collection costs totalling $17,276.69. The plaintiff’s claim is primarily for the sum of $279,611.46 for the balance owing for goods sold and delivered to the company on credit and interest pursuant to the terms of the credit arrangement at a rate 2 per cent higher than the appropriate rate under to the Penalty Interest Rates Act.

4           In relation to the claim for the debt collection costs, clause 2.2 of the terms and conditions attached to the credit application provides that, “The customer is liable for

all reasonable expenses (including contingent expenses such as debt collection
commission) and legal costs (on a solicitor/own client basis) incurred by Rinnai for
enforcement of obligations and recovery of monies due from the customer to Rinnai.
Any monies received by Rinnai from the customer will be applied first in relation to

such costs and expenses”.

5           The statement of claim contains the following assertions:

a. Paragraph 6(c): “Servco Pty Ltd shall be responsible for any legal or

other collection costs incurred by the plaintiff associated with the

collection of outstanding amounts”.

b.	Paragraph 12: “Further, the plaintiff has incurred expenses in engaging
a Mercantile Agency to collect the outstanding monies at a charge of 6 per cent commission together with costs of $500 totalling $17,276.69

(exclusive of GST)”.

6           In the affidavit in support of the summary judgment application, Lawrence Honey relevantly deposes as follows:

a. Paragraph 6: “In addition, it was a term of the credit account that the

debtor, and/or guarantors, would be liable for debt collection and legal

expenses incurred …”

b.	Paragraph 7: “The plaintiff has incurred collection costs totalling $17,276.69 …”
c.	Paragraph 10 exhibited the writ and statement of claim.

7           During the course of the application, Mr Holdway, the plaintiff’s solicitor who

appeared on the application, informed me that─

a.	his firm was instructed by the Collections Agency;
b.	the Collections Agency would charge the plaintiff a 6 per cent commission together with costs of $500 totalling $17,276.69 (exclusive of GST), as set out in the statement of claim;
c.	as part of the recovery process, the Collections Agency had written a number of letters;
d.	in the Magistrates’ Court, similar claims for a Collections Agency’s commission were regularly allowed.

8

in the absence of evidence it would be difficult to conclude that a fee charged by a
Collections Agency on the basis of a percentage of the debt, where the actual work
carried out consisted of the writing of a few letters, could be regarded as a

During the course of argument, I expressed my preliminary view to Mr Holdway that and give the matter further thought. Mr Holdway urged me to follow that course.

9           Having reflected on the matter, it is still my view that, in the absence of evidence, I should not regard the commission charged by the Collections Agency as a reasonable expense. Although the statement of claim is not specifically affirmed in the affidavit in support of the application, I am prepared to assume that the claim of $17,276.69 is, as alleged, a “charge of 6 per cent commission together with costs of $500”. Six per cent of the claimed amount of $279,611.46, is $16,776.69.

10         In the circumstances I would be prepared to allow the sum of $500 as the reasonable costs of the Collections Agency. I consider it is appropriate however to allow the plaintiff the opportunity of filing and serving further material in support of its application from which it might be concluded that the amount claimed, either by way of commission or further sum, is a “reasonable” expense.

11         The plaintiff might also choose to recalculate interest according to the terms of the credit arrangement. The calculation of the plaintiff’s interest does not appear to have been done in accordance with the contractual entitlement. Pursuant to clause 2.1 of the credit terms, “Payment is due on or prior to thirty (30) days from the last business

day of the calendar mouth of the supply of the goods… Rinnai may change [interest]

if payment is not received by the due date”.

12

In paragraph 15 of the statement of claim, interest is calculated to the date of issue of date (8 November 2010) appears to have been selected because it is the last day for the supply of goods as recorded on the statement dated 1 April 2011 exhibited to Mr Honey’s affidavit.

13         In my view, interest should (preferably) be calculated separately in respect of each date goods were supplied and calculated from a date 30 days after the date of supply. Alternatively, allowance must be made of the 30 days after the last date for the supply of goods. Calculating interest in the latter case would be based on 118 days to the issue of the writ and 45 days to 20 May 2011, a total of 163 days.

14 plaintiff notifies my Associate in writing with a copy to the first defendant by 4pm on 7
June 2011 that the plaintiff intends to file and serve further affidavit material in

A copy of these reasons for decision will be forwarded to the parties. Unless the as follows:

a. Judgment for the plaintiff against the first defendant for $280,111.46 together with interest pursuant to the agreement between the parties for 163 days from 5 December 2010 to 20 May 2011 at the rate of 12.5 per cent per annum

being $15,636.36; total judgment $295,747.82.

b. The defendant must pay the plaintiff’s costs of the proceeding, including any reserved costs, to be taxed on Scale D in default of agreement.

15         If the plaintiff gives notice of its intention to rely on further affidavit material, it must file and serve the affidavit by 4 pm on 14 June 2011. The further hearing of the plaintiff’s summary judgment application would be heard on a date in the following week as fixed by my associate.

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Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 30 May 2011.

Dated: 30 May 2011

Hannah Christensen

Associate to His Honour Judge Anderson