WHETHER
OR NOT THE DEFENDANTS ARE LIABLE TO PAY COSTS ON AN ATTORNEY/CLIENT
SCALE AND COLLECTION COMMISSION
Clause
2 of Part 1 of the General condition of the Invoice Discounting
Agreement reads:-
“Unless
stated otherwise, this Invoice Discounting Agreement provides for a
maximum amount of confirmed orders, advance payment amount, and
discount rate together with additional interest levied on ...
WHETHER
OR NOT THE DEFENDANTS ARE LIABLE TO PAY COSTS ON AN ATTORNEY/CLIENT
SCALE AND COLLECTION COMMISSION
Clause
2 of Part 1 of the General condition of the Invoice Discounting
Agreement reads:-
“Unless
stated otherwise, this Invoice Discounting Agreement provides for a
maximum amount of confirmed orders, advance payment amount, and
discount rate together with additional interest levied on past due
amounts, processing fees and costs relating to the enforcement of
this agreement, recovery of charges incurred or paid by ZDB for
legal, accounting, audit, consultancy or monitoring services where
applicable.”
It
was submitted by the plaintiff that this clause obliged the
defendants to pay Attorney and Client costs as apprised to party and
party costs. Dumisani Sibanda, in his testimony, alleged that the
defendants were appraised
that they would pay the actual costs expended by the plaintiff in
enforcing the agreement. This was disputed by the defendants.
The
onus was on the plaintiff to show that clause 2 referred to Attorney
and Client costs. This was because it was the plaintiff who made that
allegation.
The
clause does not, on the face of it, use the words Attorney and Client
costs.
There
are two types of legal costs. These are Attorney and Client and party
and party. The use of the words costs, charges incurred or paid may
relate to either Attorney/Client costs or party and party costs. The
contra
preferentum
rule penalizes the author of a contract by having it interpreted
against him if it is ambiguous. Clearly, the plaintiff could easily
have made its intention apparent by specifying that it would seek
Attorney and Client costs. The ambiguity in the expressions favour
the defendant's position.
Thus,
while it is clear that parties to a contract can agree on the
inclusion of Attorney and Client costs, see INNES CJ in Texas
Co. S.A. Ltd v Cape Town Municipality
1926 AD 467…, the stipulation must be clear.
In
the present matter it is not.
Contractually
stipulated Attorney and Client costs are not punitive costs in the
sense highlighted in Van
Dyk v Conradie and Anor
1963 (2) SA 413.
I
hold that, in the present matter, the plaintiff has failed to satisfy
me that the agreement contemplated Attorney and Client costs.
The
plaintiff also sought to use clause 5 of Part 1 of the General
Conditions to found the claim for collection commission. The clause
reads:-
“When
applying receipts to amounts due priority is given to collection
charges, invoice discount charges, other fees, interest and principal
in that order until the debt is discharged.”
It
is apparent from the decision in Scotfin Ltd v Ngomahuru (Pvt) Ltd
1997 (2) ZLR 567 (H) that the plaintiff cannot recover collection
commission unless it demonstrates that the defendant agreed to pay
it.
It
becomes doubly difficult to claim collection commission together with
Attorney and Client costs without laying out proof that the
collection commission was paid or incurred. Clause 5, in my view,
dealt with appropriation of funds paid in general. Collection
commission was not covered in the agreement itself. The plaintiff did
not show that the defendants agreed to pay it.
The
plaintiff cannot resort to Part IX of the Law Society Rules of 1982.
They do not sanction collection commission for the payment of a debt
secured through contested action.
It
seems to me, therefore, that the plaintiff's claim for collection
commission cannot succeed.
