Sunday, 26 February 2012

Quicker court action for non payment of bills?

Normally we will take a long time before taking someone that owes us money to court. We try and sort any misunderstandings or disagreements and get the money by amicable means. We even allow people to pay by installments. There are lots of things we try to do to be reasonable and not heavy handed.

However, one of the shocking things about this ADR case is that they took the case on even though we were taking the customer to court for unpaid invoices. They then went on to consider the unpaid invoices in their decision - requiring us to waive invoices for services that were provided and used but not paid for.

So it seems ADR can be used as a means to get out of paying your telco, even after the telco has started proceedings in the county court.

So, in future, given that they won't take a case until it is 8 weeks old (well, that is what they say, but who knows what they do - contracts and agreements mean little to these people), we will have to ensure any case where someone owes us money goes to court in enough time to get a decision by the court within 8 weeks.

We would hope that is a dispute is resolved by the court then it cannot go to ADR at that point. Again, this is a huge assumption.

That should be slightly easier on business to business disputes as the court allow a lot less time for a defence to be filed - but even so 8 weeks is pushing it.

It means we'll have to start court proceedings after a week or two at the most if someone owes us money and has not paid.

Otherwise the customer can blackmail us by threatening to take the matter to ADR, knowing that we not only have to pay £335 even if we are right, but we could have the invoices waived and substantial good will awards made against us, even if we are in the right too.

If that is what OFCOM want by insisting on ADR, then that is what they get. Sorry.

P.S. To qualify this - this is obviously something of a devil's advocate type of posting, and we are talking about people refusing to pay. Once the dispute is started there are 8 weeks in which we can get the dispute resolved by a real judge following normal contract law. If we fail then we are subject to some alternative reality legal system that charges us when we win and even awards penalties against us when they agree we are in the right. That is when we have to act quickly. We have no choice - as a director I have to act in the interests of the shareholders and the company - that is the law.

24 comments:

  1. Adrian, I love AAISP's service and your dedication to solving the really hard problems in providing the best possible broadband service in the UK. But this conclusion is INSANE and will endanger your business through sheer amount of ill-will generated. If you start court filings after an invoice has been overdue only one week, you will turn customers who might only have been mildly-inclined to screw you around (by paying an invoice late) to be strongly-inclined to do so. They will also now be able to use your now well-documented research and conclusions into the ADR process.

    The problem you have in this case isn't one of an unfair procedure (which seems deeply unlikely to happen again), it's handling customers who, rightly or wrongly, bear you ill will. Sometimes there's nothing you can do with a customer who's unhappy and you're better off trying to work out how you ended up taking them on and disappointing them - the answer is usually somewhere in the sales process. 99 times out of 100 when we have a customer who is *so* unhappy, I can find hints of why they might have been from looking back at how they were sold a service.

    Personally the more I read about contract law, the more it challenged my feeling that were any legal certainties about how to do business in the UK. Big decisions happen every few years, and it shifts future legal attitudes. If you're trying to run an ISP at the technical level you are, you simply won't be on top of it as much as you think.

    A better investment would be looking at how you deal with people - your frequent cries at how unreasonably you've been treated by your own customers suggests that you've got a lot to research in this area :)

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  2. That is the thing though, surely, if someone has ill will (i.e. refusing to pay) then surely we have to avoid the risk of them taking the case to ADR?

    Contract law is fine - I am happy working within contract law - it is this new thing where one can not breach the contract but still have to pay thousands of pounds that I cannot work with.

    Dealing with people is a challenge, I know. A lot of customers love us (and would never refuse to pay). Some do not. How we bridge the gap and make all customers love us I do not know.

    This ADR case is where I know that my staff went really overboard trying to help - they faced huge issues with BT and some of the emails in the case file show Shaun was chasing BT at 2am over this. We did everything to meet a deadline we did not contractually agree in spite of problems that were not of our making.

    Then we have all of it thrown in our faces.

    It is clearly not in our commercial interests to be nice. I see that now. OFCOM want us to be hard nosed businessmen that do not allow things to go to ADR, do not try and provide a service when we can say "computer says no" and not go the extra mile.

    This is clearly what they want - else why would they have imposed such a mental system upon us?

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  3. And yes, this is insane - but what choice do I have. If someone actually refuses to pay a bill, for example...

    As a company director I have to act in the best interests of the company and its members. Faced with a choice of take to court and win, or delay and lose plus face huge additional penalties, what choice do I have, legally?

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  4. On your last point - every time we have a disagreement we look to improve. It is usually about making things clearer up front to avoid any misunderstand.

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  5. I have asked the ombudsman to confirm they will not take a case once there is a court judgment. I also asked if there is an earlier point such as when we get a hearing date, after which they will not take a case.

    Awaiting reply.

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  6. Is it possible for customers to voluntarily opt out of ADR? Or do Ofcom *force* consumers to use it?

    What I'm thinking is I can't ever see a day that I'd have that kind of dispute with AA, but I can imagine hitting a financial buffer and having to pay a week late (never intentionally, of course, but it's a possibility)... hence, could we sign a voluntary opt out that precludes us from ADR thus giving you the assurance that we're bound by contract law.

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  7. Tony, now that is a good point. No, they are not forced to use it. This issue is how valid is an agreement not to use it?

    And if valid I would be more than happy to give people time to pay, and all sorts in return for an enforceable agreement not to take ADR action.

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  8. Maybe I need a standard form of words. "We will issue a county court claim without further notice if not paid within 10 days. However, in return for an agreement not to take this issue to ADR we will allow a further 60 days to agree a resolution informally before taking court action".

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  9. Except it sounds like the ADR process would completely ignore that agreement anyway - so I decide not to pay you, agree not to ADR you, get 60 days more credit and then ADR you anyway...

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  10. Adrian
    I think you should consider getting legal advice from a suitably qualified solicitor, and make a formal complaint to the head of OFCOM. their system is utterly broken and totally inappropriate for smaller businesses to be on the receiving end of this kind of blunt instrument, that their system is usurping authority of the UK court system in a way that was never intended. ADR also needs to not be necesary for companies smaller than X people, where X > $aaisp_staff.

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  11. That's true.. in the alternative reality ADR lives in where contract law doesn't apply, they can just ignore it.

    Of course if contract law doesn't apply you don't have to abide by their decisions either :p

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  12. That is the thing though, surely, if someone has ill will (i.e. refusing to pay) then surely we have to avoid the risk of them taking the case to ADR?

    You absolutely don't.

    And yes, this is insane - but what choice do I have. If someone actually refuses to pay a bill, for example...

    You write it off immediately, because most customers aren't arses, and you shouldn't rearrange your business on the basis that they might be. A company MD's sleep and low stress level is worth more to your business than this tiny amount of money.

    You can afford to lose any one customer, or have one bill go unpaid with little harm done. So when a customer starts to mess you around, you should think "I will probably now never get this money, and most people don't behave like this."

    You can't put a single system in place that will deal with every class of fool that might become a customer, then deal with every type of grief they might give you. You've already suggested that you shouldn't "go the extra mile" in future and should start proceedings against customers within a week of an invoice having gone unpaid. Both of these things would make AAISP a far less good ISP than it is.

    I had a similar initial reaction after our team worked all hours to fix a customer's mess, and it ended with solicitors letters.

    An unmanaged customer destroyed their business because VMWare didn't warn them of a degraded RAID, and they had no backups. We'd told them we knew nothing about VMWare, and therefore they shouldn't run it, but they insisted. When the array broke, we spent 2 days and nights reprovisioning servers and swapping disks. Their techie admitted the lack of backups was a cost-saving measure, approved by management in the face of his protests. When the RAID looked hopeless, we suggested we send them the whole server, at our expense, and they should take it to a data recovery firm. They decided that we were to blame for their entire business losses, and engaged solicitors. After they had gone out of business, the solicitors for their professional indemnity insurance got in touch too. It cost us £10,000 in fees and a few sleepless nights before they were finally persuaded to drop it.

    I decided not to change how we work though. We say to customers in a similar situation "your data is probably screwed, mind if we try something unorthodox, even if it causes the server to catch fire?" rather than the more casual/optimistic "hmm, it might be salvageable, give me 30 minutes." If they are at all cagey, they can stay offline a few days and we'll send it to a recovery firm at their expense. Thankfully it doesn't happen very often.

    The contractual "fix" would have been either 1) to send every customer a contract that would say "We are not liable for any of your losses, even those caused by our negligence" and terminate service to those who refuse to sign OR 2) to refuse to attempt any kind of data recovery for customers, ever. Both would make us a crappier company.

    I strongly suspect that if we'd refused to help, and they'd gone out of business all the same, we'd have been accused just as much for not doing enough, or not doing it fast enough. They were going out of business the moment their server went offline without a recovery plan - their weaselly management would never have accepted the blame for their own failure.

    So I think this is a similar situation for AAISP - your low stress levels are a much greater asset to the company than this small bill, and you will not be able to fix the problem of customers being arses by complicating their contracts and their dispute process.

    Good luck with it, and breaaaathe.

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  13. We are awaiting the final decision and then expecting to be taking legal advice on how we fight it if it is this silly.

    We can see many ways in which the ombudsman is not acting in accordance with their terms of reference - that probably gives us cause to sue them for breach of contract in the small claims court - but I cannot tell if that is sensible without some legal advice.

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  14. Thanks Matthew. Interesting tale there.

    I think it highlights even more that we don't know the rules any more. You talk of making it part of the terms that you are not liable for losses. We already do that and the ombudsman agree we were not in breach of contract.

    Such terms are clearly meaningless - contracts are meaningless - we have no idea what we have to do to mitigate a risk of this sort of crap.

    I don't know what to do that works outside of contract law like this.

    I did add a caveat - we are talking cases where customers actually refuse to pay and start any sort of complain to us. I think if they make no complaint then they cannot go to ADR (I don't know). I think they cannot go to ADR within 8 weeks (I don't know). I think if we get a court judgment then they cannot go to ADR (I don't know).

    I don't know the rules under which I do business any more - and that is, in itself, scary.

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    1. You talk of making it part of the terms that you are not liable for losses. We already do that and the ombudsman agree we were not in breach of contract.

      Sure. In our case I was specifically referring to adding (and emphasising) the phrase "including negligence", i.e. if we stress to the customer that even if we do something horrendously lazy and incompetent, we are still not liable to them for losses. You can sign away your rights to sue for negligence, but it has to be up front and centre, not hidden. So obviously that makes the contract look quite shabby.

      Back to your point :) I don't imagine you are operating outside of contract law, but presumably Ofcom have some power over you as an ISP, by statute or contract or both. If those powers aren't fair (i.e. resulting in this barking mad ADR decision) there may be ways to challenge them, if you're keen to set the record straight. But that sounds like an expensive bit of legal work.

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    2. We say negligence too - honest - I read my contract law book, honest :-)

      We'll see what happens and how things go if OFCOM get involved.

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  15. Please try not to stoop to teh same level as your arse of a customer just to try to protect yourselves from their ilk.

    I strongly suspect that ADR or no ADR, they would have found some way to try to screw you over - some people and hence some businesses are just like that.

    If you have any significany number of customers you'll invitable have some "bad" ones who effectively see you as the enemy, it's a sad fact of life.

    On "acting in the best interests of the company" I would humbly suggest thast this means seeing the bigger picture and ensuring that you keep your modes of operation and terms of business such that the majority of your customers and future customers are comfortable and pleased to do business with you, rather than impacting on the majority (and putting off future prospects) to attempt to legislate for those who will screw you over regardless.

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  16. Thanks for the support - we are asking the questions of them anyway even if we don't change our behaviour.

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  17. I would ask that you don't let one customer ruin the attitude you have towards the rest of us.

    If you change your core ethos towards your customers, it will end up costing you a lot more than a 'goodwill payment' to this scrote of a customer.

    We have something in our T&Cs that states the maximum amount of money you can claim with regards to compensation in relation to an outage is one months' service fees - surely there has to be something very very wrong if you can be made to pay out more money than you have actually taken from a customer ?

    Although, this does remind me that I need to settle up an A&A invoice which is due tomorrow :-)

    Methinks ADR has become the new MSO as far as three letter acronyms which serve to wind you up somewhat but if your final appeal fails, I suggest you get in touch with the IT press (such as The Reg, Thinkbroadband, etc) and ask them to publish the facts and let the public make up their own minds.

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    1. Thanks for the support - lets see what happens.

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  18. If it stays pear-shaped, have you considered talking to your MP about it? You might even get it raised on the Floor of the House if they are as upset about it as you (and I!) are.

    As a final response, you could Send The Boys Round to have a word with the ex-customer - I'm sure some of your staff and customers would be happy to take along some tar and feathers... (NOT A SERIOUS SUGGESTION!) :-)

    Keep up the Good Work and don't let the bastards grind you down...

    - Howard

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