Hello, I am Law Denning and I am a practising solicitor in a HighStreet practice. I have been an expert on this website in UK law since 2008.During that time, as you appreciate, I have answered thousands of questionsfrom satisfied users on a variety of subjects.Because we are all in practice with clients and court and otherusers, I might not always respond inminutes, particularly evenings and weekends. Please bear with me in thatcaseIt is my pleasure to try and assist you with this today. Please bear with mewhile I gather some further information from you in order for me to be able to advise you fully.Do you have a specific question?
How many employees do you have?
How much do you owe them?
How many times and over how long have you dealt with them? Has this come from solicitors?
Thank you for coming back to me. There is only myself and my FD who owns 1% and who has also ordered on behalf of the company. The haulier did 6 jobs for us, which we paid the first one pro-forma from the companies account. We owe them £3078.00, dating back from October last year. We have (as we promised) kept them updated on a continual basis as to how we were getting on with getting compensation due to breach in contract from Serco including emails from myself and my FD to that effect. The first contact I had from their solicitors was an email I was cc'd on stating "
We are notifying you of the intention to commence legal action against E2E Solutions Ltd who, despite numerous requests for payment have gone beyond payment terms.
Details of the invoices are as follows.
INV NO DATE AMOUNT
22060 19/11/2012 £858.00
21997 31/10/2012 £690.00
21948 23/10/2012 £420.00
21945 19/10/2012 £420.00
21942 12/10/2012 £690.00
21851 27/09/2012 £420.00
Total amount owing = £3498.00
The Company Details: E2E solutions Limited
41 St Albans House
Northampton, NN3 2RH
E-Mail – [email protected]
Contact ; Darren Mitchell
Tel; 01604 406377
even from this it is apparent that they were under the impression that e2e solutions were a ltd company! I replied stating that we need their support in order that the directors can invest £1500 of their own money to our solicitors barrister for him to do the final analysis on our claim and give the green light for our solicitors to take the case on a no win no fee basis.
their solicitor replied
"It is entirely a matter for you as to whether you seek recovery from your Client. From our investigations it is apparent that you are personally liable for the sum due to our Client,as at no stage in the contracting process was the existence of “E2E” disclosed to our Client. Accordingly you personally contracted with our Client for the services it provided. What are your proposals for its repayment?"
I then replied stating that at no point did I personally contract his client as a sole trader or as an individual and that his client has known all along that they have been working for e2e recycling ltd and not Mr Darren Mitchell directly. Pointing out that my signature block has a registered address on it (which I would not have if I was a sole trader or an individual working alone on behalf of a company. Their solicitor replied
"Once again, please confirm in what document it is stated that the contract was placed in the name of a limited company, and provide a copy of the same. Your emails make no reference to it, breach of the Companies Act 1986.
The issue is the identity of the contracting parties at the time the contract was concluded. Nowhere is it stated on your email that you were acting on behalf of a limited company. In consequence you are deemed to be the contracting party. Any arrangement between the company and a third party is of course entirely irrelevant."
Despite the initial contract being done over the phone and the fact that when their driver picked up the first job from us he was handed a duty of care waste transfer note (has to be done by law) and attached to this was an introductory letter which was asked by them (I presume as a number of companies do, just for their records), which has our name and details on including our company number. So I just want to know if this is a legitimate claim and in that case will I have to defend it in court? Or are they now just trying it on somewhat in order to recover their debt directly from me?
Thankyou. Let me tell you now that all correspondence, invoices etc, includingemails, should have the name of the limited company on, the registered addressand the company number.
If youdon't do that, you are indeed in breach of the Act.
Nothingwill probably happen in that respect but it is something that you need to beaware of and you do need to remedy. You can thank the solicitor for bringing itto your attention and confirm that it has now been remedied. You cannot changeany of the existing correspondence.
Whetherindeed be deemed to be the contracting party or not would really come down tothe amount of evidence in the exchanges between you as to whether theygenuinely believe that they will contracting with you or whether they willcontracting with a limited company. That would be one for the judge to decidebased upon the evidence in front of him.
Theamount they are claiming is under £10,000 and therefore it will be small claimscourt and they will not get their legal costs back even if they win unlessthere is something in their contract you will documentation which allows themto do so. In that respect, you need to study their paperwork in detail to makesure that if it does go to court, and you lose, they do not recover their costs.If there is no mention of them recovering the costs of enforcing any agreementbetween you, they do not get their solicitor's costs back even if they win. Ifthey went to court on this, they would almost certainly win because you admitowing the money.
Theonly issue is over whether you personally owes the money or it is the limitedcompany which owns the money.
Soassuming you admit that the limited company owes money, would be that the judgeto decide whether you are personally liable.
Thereis another potential issue which the solicitor has not covered which I mustadvise you about and that is that if the claimant claims that the limitedcompany is actually your alter ego, i.e., you, hiding behind the front of alimited company in order to avoid creditors, then the claimant can "sue behindthe corporate veil" and sue you personally even though the contractdocumentation was indeed with the limited company.
It isa technical issue and not one that would normally be considered for a smallclaim matter and I mention it for completeness. There would need to be anapplication by the claimant to the court for the court to consider whether youwere the correct claimant or not. The situation in this latter case is slightlydifferent than what the solicitor is claiming because the solicitor is claimingthat it was not the limited company that contract it.
Whatcan happen is that even though it is the limited company that contracts, theindividual director/shareholder can still be liable if he was seen, by thecourt, to be simply hiding behind the limited. I think it unlikely that wouldsucceed on these facts and as I said, I mention it for completeness.
Atthis stage, all you can do is send copies of the correspondence with the factthat it is a limited company and copies of their correspondence to the limitedcompany and deny any personal liability and tell them that if they feeldifferently, they should issue proceedings which will be defended.
Doesthat answer the question? Can I help further? Can I answer any specific points?
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I amoff-line shortly but will pick this up later because I am on and off-line eachday and weekend so please bear with me.
Thank you, as the company was solely set up to work in the contract with Serco at their prison in uttoxeter, I most definitely did not set the company up with the intention to hide behind it and rack up debt, so I agree with you on that and am not concerned with that loop hole, but thank you for pointing it out.
I did reply to their solicitor as you suggested with the following
Good morning, as previously stated the agreement by Swinson transport to work for E2E recycling ltd was carried out over the phone after a lengthy conversation with them all about who we were and what we did. Further to that Mr Darren Mitchell does not and has never had a waste exemption certificate, which means he cannot deal with recycled waste material, and would never flout the law in doing so. E2E recycling does have the necessary exemptions as outlined in law by the EA and as such when they ask a haulier to move their waste they are – as is your client – obliged to ask for the relevant evidence as to their legitimacy in handling and or carrying this waste. As such E2E (as was their practice) asked for Swinsons waste carriers licence number, ergo satisfying their due diligence, and E2E gave their driver a Duty of care waste transfer note (as is the law) along with our standard introductory letter with E2E’s address, company number etc on headed paper. As the waste transfer note is a legal requirement when transferring recycled waste goods and has to be kept for 2 years by the haulier and their client, your client will be able to furnish you with these documents.
Further to this, as a sole trader I would not have the need for a registered address, there is however clearly a registered address on my signature block, pointing to the fact that I was working on behalf of a limited company. However as our signature block clearly states we cannot guarantee that some information could be incomplete or missing etc and do not accept responsibility for errors or emissions. We thank you for pointing out that to further help clarify that we work for E2E recycling ltd to anybody that has become confused during any communications during our working relations with suppliers (to which we would also point you to the fact if there is any ambiguity or if verification is required as to whom any company may think with whom they are dealing with that a hard copy – on headed paper – would be freely available on request, despite an introductory letter being given to our new suppliers anyway!) we have amended our signatory block to include our company details.
I trust that with this new documentation to hand, proving that at no time did Swinson transport ever think that they were doing work for an individual but did in fact know that they were working for e2e recycling ltd, this spurious and underhand attempt to discredit Mr Darren Mitchell will cease."
So apart from the introductory letter that we gave to their driver (which they claim they have not got) which did have all the necessary information we did fall fowl of being unaware that this law existed and have put it right straight away.
There is one very telling piece of documentation from the haulier that I have brought to the attention of their solicitor. All invoices and statements have been made out to e2e solutuions ltd (our email address being e2e-solutions ltd, as it was the closest one available). Although they have gotten the name wrong - solutions rather than recycling - they clearly think that they are working for a limited company and not an individual. And I have most definitely never received an invoice for Mr Darren Mitchell. A fact that I have put to their solicitor to which he replied
"invoices are not relevant as they post-date the contract"
but they do not post date the contracts as they clearly have the contract / job date on them!
Please give me your thoughts on this.
You aredoing it again. Be careful. You refer, in the 3rd sentence to E2E recycling.You don't mention limited. You need to make sure that limited is after every referencein this correspondence with the solicitor.
Youcan make the point that any contract made by you personally in respect of thisrecycling is void for illegality. You simply cannot legally do what you aredoing personally and it can only be done as a limited company. I think that isan excellent point.
It isnot the fact that you have registered address or do not have a registeredaddress it is whether the carrier thought that they were dealing with youpersonally with the limited company.
The 2ndparagraph is extremely confusing and the more times I read it the more confusedI got. You are covering several different points and I would make the paragraphis quite short.
Thethird paragraph has emotion in. Remove the emotion!
Withregard to the invoices, they do indeed postdate the contract but it would begthe question (if this went to court) as to why, if they thought that they weredealing with you as an individual, they sent the invoices to the limitedcompany. I think that, along with the illegality I mentioned earlier, is anexcellent point.
Bewareof going into too much detail.
To behonest, I would probably mention the illegality first, the invoice point secondand there any stuff about the paperwork exchange third.
so to put it simply
As a permitted waste carrier your client has an obligation under the EA rules to carry out due diligence and ensure that the company and or person that they are receiving the recycled material from has the necessary permits and or exemption certificates. They are not permitted to act for somebody that does not have these, in exactly the same way as e2e recycling ltd would have to ensure that the waste carrier had the necessary waste carriers licence, which e2e recycling ltd did. Mr Mitchell does not have and has never had any waste exemptions and as such would be breaking the law in trading in recycled or waste material, making any alleged contract made by Mr Mitchell himself void for illegality. . But as your client will know through their due diligence checks, e2e recycling ltd does have these and they could therefor take their waste legitimately.
Whilst it is true that the invoices post date any contract, it does beg the question as to why your client, if they thought they were dealing with an individual, they sent their invoices to the limited company?
We will endeavour to locate the hard copy of our introductory letter from e2e recycling ltd that was asked for by your client and sent it on by the end of the week.
e2e recycling ltd
Spoton. Short, sharp, to the point.
Iwould add in at the end that liability on behalf of the limited company isadmitted (I really don't think you can escape that) but any proceedings broughtagainst you as an individual will be vigourously defended
Ok sent that with the added bit about liability of the limited company. Cross fingers that outs him straight. Thank you for your help, just one question, why do the invoices etc post date the contract / jobs when they have the same date as the contract/ job on them? Surely that is not post dated but of the same date the contract was agreed?
Thankyou. It is not the date that is on the invoice but the chronology of events.
1 You agree to do the work. The contract
2 You do the work. The fulfilment of thecontract
3 They send you an invoice. Postcontract.
Itdoes not matter that the whole thing is done on the same day, you do notinvoice people before the contract, so essentially, the invoice must be Postcontractual.
Forthe same reason (worthwhile remembering) that unless you deal with the companyregularly, terms and conditions printed on your invoice are not effective. Thatis because they are Post contractual.
If youwant to make sure that your terms and conditions apply, you need to get anyoneyou do business with to sign them before you do any business. Incorporation ofterms and conditions into a contract is a whole legal minefield on its own.
Iwould also suggest that from now on, you tell them that you will only deal withcorrespondence in writing. Not by email and that if proceedings are issued, youwill not accept them by email.
It istoo easy to fire an email off and it is very easy for you, fired up with theemotion and adrenaline, to reply as quickly as possible, without thinking aboutit, and to say something that you would not have thought about.
Whenyou get any correspondence therefore simply acknowledge it immediately and tellthem that you will reply in due course.
Thatway you have time to think about your reply and fine tune it.
Pleasedon't forget to positively rate my answer service even if it was not what youwanted to hear. You should now see a series of buttons which enable you to ratemy answer service formally.
I understand that now, but in the first instance the invoice was paid pro-forma by e2e recycling ltd before any work was carried out, so was done before the contract was fulfilled. That was done as they did not know the company and wanted the first job paid upfront. Does that change anything?
Youcan raise that issue with the solicitor and tell him that incidentally, for theavoidance of doubt, they have been misinformed by their client as the firstinvoice was raised on a pro forma basis and was therefore pre-contractual, notpost-contractual, and their client clearly invoiced the limited company.
Itsimply reinforces your standpoint that they did indeed know they were dealingwith a limited company as the very first correspondence from them to "you" wasto the limited company
their solicitor has the following to say about my email to him:
Dear sir, any defect would be a matter for the regulatory authorities, it does not concern our Client. Nor would it render the contract “illegal”; such a misrepresentation by you would render the contract avoidable at our Client’s option, not void.
the point at which the contract was formed is when you first required our Client’s services-ie the telephone call from you. The invoice, regardless of its date, cannot be before that contact and in any event is wrongly addressed to a non-existent company (a fact which, until now, you have never challenged). We await hearing from you with the letter you referred to.
how do you respond to that?
Iwould respond and say,
Your commentsare noted. My position remains the same.
Pleaseconfirm how your client is funding legal costs.
I havenothing to add.
Thereason for asking how is client is funding legal costs is that you are entitledto know whether the client is paying or whether it is being done no win no fee.