Sunday, December 30, 2007

How to Chase your Client for Late Payment - Legally

This is a summarised transcript of the last 7:21 smalltalk by lawyer Rajendran Packiry as requested by some kakireka members. Raj covered the 2 topics that interests many designers, esp. if you're a freelance designer or you own a small design house setup.

He spoke on how to legally deal with certain clients from hell who refuse to pay you after the work has been done & delivered. or How to handle legal disputes over payment due from a client.
Don't get bullied, get paid.

Part 1
- "Make them Pay" or Modes of Execution Proceedings

To read article, click into the comments link under this post.

Before that, you've got to send your usual 1st, 2nd & 3rd invoice/reminders (in b&w), which is needed to build up your case (documenting the chronology of events) if/when you do go to court to plead your case. It is said that most people will settle/pay up upon receiving a letter from a lawyer's office (4th reminder & notice to sue) theatening to go to court if they don't respond.

Next step is to hire a lawyer to take action using the best suited mode of execution proceedings.

1 comment:

kakireka said...

5 Modes Of Execution Proceedings

This is an authority issued by the Court to the Court bailiff to seize and sell the property(s) belonging to the debtor with a view of realizing the debt owed to you (including interests and costs).

Property(s) here include movable property such as the debtor’s furniture & electrical goods as well as immovable property, i.e. land. However these must belong to the debtor and not to a third party. You must be able to provide us with information as to the Judgment Debtor’s assets.

There are certain immovable property(s) that cannot be seized from the debtor and they include, cooking utensils, beds, tools of trade, payment to land revenue and pension sums. With respect to land, if they are already encumbered(e.g. charged by a bank) or have a caveat lodged on the same, then the land cannot be seized.

Cost Estimate: RM4,000-5,000
(excluding a refundable court deposit of about RM2,500).

These are proceedings taken against a debtor-company under the Companies Act, whereby the affairs of the debtor-company will be ultimately left in the hands of the Official Receiver, who will then take steps to settle all the debtor- company’s debts, according to priority(i.e. secured creditor, unsecured creditor, etc.)

It would be advisable to ascertain whether the company has any assets before you proceed with winding-up proceedings. Winding-up proceedings are quite expensive as, in addition to a deposit required by the Court before the Petition for Winding-Up the debtor-company can be presented, the said Petition must also be served on the respondent, Official Receiver and the Registrar of Companies. It will be necessary to advertise the said Petition in at least two (2) local newspapers seven (7) days before the hearing as well in the Government Gazette.

Cost Estimate: about RM7,000.

This mode of execution enables you to attach all debts which are due and owing to the debtor by third parties. The attachment of debt is a common means of execution of Judgment. Money belonging to the debtor in the hands of the Banks can also be garnished.

You must be able to furnish us with full particulars of the debts due and owing to the debtor and the following debts owed to the debtor by third parties cannot be garnished:-
1. Pension sums
2. Workmen’s compensation
3. Deposits and interest on any deposits under the Bank Simpanan Nasional scheme
4. Employees Provident Fund (EPF)

Cost Estimate: about RM4,000-5,000.

This is a Court Order summoning the debtor to Court to be examined as to his means to pay your debt and a Court Order will ultimately be drawn up with respect to the mode of settlement, which the debtor is bound to comply. Failure of the debtor to comply with the aforesaid Court orders may lead to committal and imprisonment of the debtor.

However, this mode of execution is suitable only if the whereabouts of the debtor is known and provided that the debtor can be located, since the Judgment Debtor Summons must be served on the debtor, personally.

Cost Estimate: about RM4,000.

These are proceedings taken against an individual debtor only, whereby the assets of the debtor will ultimately be vested with the Official Assignee for equitable distribution among the debtor’s creditors according to their priority(i.e. secured creditor, unsecured creditor, etc). This proceedings are only for debts which are more than RM10,000.

This is to enable the creditors to recover whatever they can from the sale of the debtor’s property or from the contributions which may be ordered to be made to the Official Assignee.

A Bankruptcy Notice may be issued by the Court to the debtor calling upon him to pay up the judgment debt and costs within 7 days from the service of the notice on the debtor. It should be noted that if the debtor is solvent, the mere commencement of this proceedings is sufficient to force the debtor to pay off the debt, but if the debtor is insolvent then this proceedings would not achieve anything unless you wish to make the debtor a bankrupt on a matter of principle.

Cost Estimate: RM5,000-6,000.

Transcript prepared by:
Rajendran S. Packiry
Tel: 03-26932672