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Stuart J
Stuart J, Solicitor
Category: Law
Satisfied Customers: 22402
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street Practice
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Good morning, I am a director for a recycling company to which

Customer Question

Good morning, I am a director for a recycling company to which I own 99% of the shares, it is a ltd company. In September of last year the company instructed on a number of occasions a haulier company to move its product to a Serco prison with which the company had a contract with.
Serco have breached this contract and we are currently starting a litigation against them for £120k+. Due to this massive cash flow hole the company has asked it's creditors to support it (in spirit), whilst it fights against Serco to regain their money owed. The haulier is one of these creditors, but they are trying to argue that it was not the company who contracted them to move its recycled product but me personally. Despite the company paying them upfront for the first job they did.
I personally do not have a waste exemption licence so would be breaking the law trading in this field, the company does have the necessary licenses and permits. Their solicitors are claiming this (despite the fact that they were told all about the Serco contract and the fact that they would be working for the company on the phone when I first spoke to them, naturally they wanted to know what they were getting into) due to the fact that our email address is different to the company name, but close, as the company name was not available as an email address or URL, as somebody else had bought this. Can this possible happen despite all the common sence evidence pointing to the fact that they knew that they were working for the company and not me direct from the very start, including sending their invoices to the company name and not to me direct. I would appreciate very much some help on this one please yours Darren Mitchell
Submitted: 3 years ago.
Category: Law
Expert:  Stuart J replied 3 years ago.


Hello, I am Law Denning and I am a practising solicitor in a High
Street 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 questions
from satisfied users on a variety of subjects.
Because we are all in practice with clients and court and other
users, I might not always respond in
minutes, particularly evenings and weekends. Please bear with me in that
case

It is my pleasure to try and assist you with this today. Please bear with me
while 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?

Customer: replied 3 years ago.

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


E2E House


41 St Albans House


Northampton, NN3 2RH




E-Mail – [email protected]


Contact ; Darren Mitchell


Tel; 01604 406377


Mobile XXXXXXXXXXX


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?



Expert:  Stuart J replied 3 years ago.


Thank
you. Let me tell you now that all correspondence, invoices etc, including
emails, should have the name of the limited company on, the registered address
and the company number.

If you
don't do that, you are indeed in breach of the Act.



Nothing
will probably happen in that respect but it is something that you need to be
aware of and you do need to remedy. You can thank the solicitor for bringing it
to your attention and confirm that it has now been remedied. You cannot change
any of the existing correspondence.



 



Whether
indeed be deemed to be the contracting party or not would really come down to
the amount of evidence in the exchanges between you as to whether they
genuinely believe that they will contracting with you or whether they will
contracting with a limited company. That would be one for the judge to decide
based upon the evidence in front of him.



 



The
amount they are claiming is under £10,000 and therefore it will be small claims
court and they will not get their legal costs back even if they win unless
there is something in their contract you will documentation which allows them
to do so. In that respect, you need to study their paperwork in detail to make
sure 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 agreement
between you, they do not get their solicitor's costs back even if they win. If
they went to court on this, they would almost certainly win because you admit
owing the money.



The
only issue is over whether you personally owes the money or it is the limited
company which owns the money.



So
assuming you admit that the limited company owes money, would be that the judge
to decide whether you are personally liable.



There
is another potential issue which the solicitor has not covered which I must
advise you about and that is that if the claimant claims that the limited
company is actually your alter ego, i.e., you, hiding behind the front of a
limited company in order to avoid creditors, then the claimant can "sue behind
the corporate veil" and sue you personally even though the contract
documentation was indeed with the limited company.



It is
a technical issue and not one that would normally be considered for a small
claim matter and I mention it for completeness. There would need to be an
application by the claimant to the court for the court to consider whether you
were the correct claimant or not. The situation in this latter case is slightly
different than what the solicitor is claiming because the solicitor is claiming
that it was not the limited company that contract it.



What
can happen is that even though it is the limited company that contracts, the
individual director/shareholder can still be liable if he was seen, by the
court, to be simply hiding behind the limited. I think it unlikely that would
succeed on these facts and as I said, I mention it for completeness.



 



At
this stage, all you can do is send copies of the correspondence with the fact
that it is a limited company and copies of their correspondence to the limited
company and deny any personal liability and tell them that if they feel
differently, they should issue proceedings which will be defended.



 





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I am
off-line shortly but will pick this up later because I am on and off-line each
day and weekend so please bear with me.



 



Customer: replied 3 years ago.

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.

Expert:  Stuart J replied 3 years ago.


You are
doing 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 reference
in this correspondence with the solicitor.

You
can make the point that any contract made by you personally in respect of this
recycling is void for illegality. You simply cannot legally do what you are
doing personally and it can only be done as a limited company. I think that is
an excellent point.



 



It is
not the fact that you have registered address or do not have a registered
address it is whether the carrier thought that they were dealing with you
personally with the limited company.



 



The 2nd
paragraph is extremely confusing and the more times I read it the more confused
I got. You are covering several different points and I would make the paragraph
is quite short.



 



The
third paragraph has emotion in. Remove the emotion!



 



With
regard to the invoices, they do indeed postdate the contract but it would beg
the question (if this went to court) as to why, if they thought that they were
dealing with you as an individual, they sent the invoices to the limited
company. I think that, along with the illegality I mentioned earlier, is an
excellent point.



 



Beware
of going into too much detail.



To be
honest, I would probably mention the illegality first, the invoice point second
and there any stuff about the paperwork exchange third.

Customer: replied 3 years ago.

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.


Yours faithfully,


Darren Mitchell


e2e recycling ltd


how's that?

Expert:  Stuart J replied 3 years ago.




Spot
on. Short, sharp, to the point.

I
would add in at the end that liability on behalf of the limited company is
admitted (I really don't think you can escape that) but any proceedings brought
against you as an individual will be vigourously defended



Customer: replied 3 years ago.

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?

Expert:  Stuart J replied 3 years ago.




Thank
you. 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 the
contract



3 They send you an invoice. Post
contract.



It
does not matter that the whole thing is done on the same day, you do not
invoice people before the contract, so essentially, the invoice must be Post
contractual.



For
the same reason (worthwhile remembering) that unless you deal with the company
regularly, terms and conditions printed on your invoice are not effective. That
is because they are Post contractual.



If you
want to make sure that your terms and conditions apply, you need to get anyone
you do business with to sign them before you do any business. Incorporation of
terms and conditions into a contract is a whole legal minefield on its own.

 



I
would also suggest that from now on, you tell them that you will only deal with
correspondence in writing. Not by email and that if proceedings are issued, you
will not accept them by email.

It is
too easy to fire an email off and it is very easy for you, fired up with the
emotion and adrenaline, to reply as quickly as possible, without thinking about
it, and to say something that you would not have thought about.



When
you get any correspondence therefore simply acknowledge it immediately and tell
them that you will reply in due course.



That
way you have time to think about your reply and fine tune it.

 

 

Please
don't forget to positively rate my answer service even if it was not what you
wanted to hear. You should now see a series of buttons which enable you to rate
my answer service formally.



 

Customer: replied 3 years ago.

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?

Expert:  Stuart J replied 3 years ago.




You
can raise that issue with the solicitor and tell him that incidentally, for the
avoidance of doubt, they have been misinformed by their client as the first
invoice was raised on a pro forma basis and was therefore pre-contractual, not
post-contractual, and their client clearly invoiced the limited company.

It
simply reinforces your standpoint that they did indeed know they were dealing
with a limited company as the very first correspondence from them to "you" was
to the limited company



Customer: replied 3 years ago.

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?


 

Expert:  Stuart J replied 3 years ago.


I
would respond and say,

Your comments
are noted. My position remains the same.



Please
confirm how your client is funding legal costs.



I have
nothing to add.



Yours etc



The
reason for asking how is client is funding legal costs is that you are entitled
to know whether the client is paying or whether it is being done no win no fee.

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