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Court Counterclaim

Court Counterclaim

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Has anyone else had a problem like mine? Been in Practice successfully since 1997, I had the misfortune to have a bid accepted for a Client whose Business Methods frankly stank. Using the Limited Company Account for his personal expenditure, not taking advice, not providing timely Receipts and Dcumentation.

Frankly it was all too much, the accounts got behind but were pulled back in time for filing within the deadlines. It was murder getting paid and I left early this year as I do not work for free! After countless broken promises I finally issued a Small Claims Action for the overdues just short of £2000.

Client threatened negligence claim, we had a meeting and later as a gesture of goodwill and, without admitting guilt issued a 30% or so credit note. I thought it was all agreed in deed I got an email offering £100 per month, responded by saying £200 -£250 would be better so the matter could be speedily cleared up.

Months of silence, the exasperated at the delay I issued a fresh Claim for the amended amount. Imagine my shock and horror to receive a Defence AND Counterclaim for just over £7K with a 30 point defence basically libelling me saying untruths that I was not qualified, providing an exceptionally poor service, causing a loss of a potential merger situation by not providing timely accounts, having to pay for extra bookkeeping (which was necessary but not really my problem), and loads more factual inaccuracies (LIES!) I felt really insulted that such a lowlife pipsqueak with dubious business morals should make wild accusations to a well respected accountant in my community having been in Practice since 1997 with NO Complaints!

Naturally I will NOT be taking such a besmirchment of my character lying down, and have instructed my PI Insurers to act post - haste! But what do other members think? Is this a common situation? It really feels to me like people a resorting to any attempt, no matter how ill - conceived, to extort money out of innocent people!!!

Replies (26)

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By petersaxton
05th Jul 2013 00:41

I don't think it's common but

have faith in the legal system. They're not good at dealing with people who try to delay things and the bailiff's can be hopeless at getting money but the Judge's are first class. They have a lot of experience, common sense and intelligent. I think your ex client is trying it on and you will win easily. Unfortunately, you will spend a lot of time putting your case together given the wild accusations. Tell the Judge that the ex-client only received a credit note the basis of a deal that was reneged on. You may be able to get the money for the credit note.

Good luck.

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By Steve McQueen
05th Jul 2013 07:28

Sadly I have experienced this sort of situation...
And whilst I agree with Peter regarding the Judges, it's the professional bodies you have to watch as they have no experience, no common sense and do not demonstrate intelligence.

Clearly your ex-client hasn't caught on to this yet, but expect the complaint at any time.

All in all, don't expect to get your cash from this and do expect to waste several hundred hours.

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By mikeyban
05th Jul 2013 08:16

Let your PI cover deal with .

In my experience judges are very clever and will see through this person.

However whether you will ever see your money is doubtful.

What doesn't kill you makes you stronger and anything over £1000 should be money up front or DD in advance. You live and learn!!!

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By johngroganjga
05th Jul 2013 08:29

Yes it's a common occurrence when fees are unpaid due to a dispute rather than inability to pay or forgetfulness.

Indeed it's almost the norm when you sue a client who doesn't think, rightly or wrongly, that he should have to pay.

One tip - keep all emotion out of it. 

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By bernard michael
05th Jul 2013 08:54

I may be wrong in my memory but I recall that if the counterclaim is bigger than the original claim the defendant then takes over and is responsible for conduct of the case.

 Perhaps that is in larger claims

David help?????

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By ShirleyM
05th Jul 2013 09:07

I had a similar experience

The first client I took to Small Claims made a counterclaim. The judge looked at all the paperwork and asked a few questions and decided in our favour.

I had the misfortune to use the small claims a couple more times, but since then I always get a minimum of 50% up front, and never submit anything, or give the client any copies of accounts/tax, until my fee is paid in full. Overdue returns, or anything urgent, and I ask for 100% up front. It saves a lot of stress and wasted time.

 

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By johngroganjga
05th Jul 2013 09:13

These days only the court "takes over and is responsible for the conduct of the case".

Terminology gets complex when there is a counterclaim.

In this case OP is the Claimant in the debt action and the Defendant in the counterclaim and his opponent is the Defendant in the debt action and the Claimant in the counterclaim.

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Mark Lee 2017
By Mark Lee
06th Jul 2013 18:40

Sadly only too common

I explain this during my talks on how to avoid professional negligence claims. One thing you sadly have to watch is the prospect of an ex-client counter-claiming negligence in order to delay or avoid paying your outstanding fees. 

It's another reason to avoid building up significant debtors and for being very choosy who you take on as clients.

I have hard good and bad stories re the professional bodies re the way they deal with cases like this. On balance ICAEW seem generally to be perceived as professional and fair if you explain everything carefully when the claim is made. Members can also use the Ethical Advisory service on an anonymous basis in advance of any such claim being made to clarify what to do etc.

Good luck!

Mark

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By marlins
08th Jul 2013 22:15

Thank you for all your advices. This was a client (incidentally won by a bid on the 'people per hour' website) where I worked chiefly in house so the monthly fees were quite modest at first, but they built up over a series of months. I am hoping the PI Specialists will work to get the counterclaim struck out so I can pursue the fee claim. The Counterclaim contains packs of lies, even saying I was paid double to what I actually got paid, and he signed a 'Statement of Truth' which is clearly nothing of the sort. I could easily go on about his dubious business practices such as putting through fake invoices, constantly overdrawn directors loan accounts etc but I will have to leave it to the legal eagles to determine what can and cant be mentioned.

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By dmmarler
17th Jul 2013 12:24

Money Laundering Report

I trust appropriate formal reports were made about the "fake" invoices in accordance with your professional body's advice ... remember he who goes to equity must go with clean hands. 

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By Roland St Clere-Smithe
17th Jul 2013 12:34

Trusting a judge

I went to Court a few years ago over unpaid service charges.

It was clear the Judge had skimmed the papers just before the hearing and made his mind up on who he preferred rather than the facts. 

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Replying to carnmores:
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By clarkmed
06th Feb 2015 23:49

Trusting a judge

Roland St Clere - In what capacity were you involved. What was the outcome?

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By pauljohnston
17th Jul 2013 12:34

Based on your comments

should you be making a submission to SOCA?

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@enanen
By enanen
17th Jul 2013 12:37

Delinquent Clients

Whilst you have to defend, I remember spending lots of money chasing debts between sheriff officers/lawyers and staff time and it really is a waste of time. You need to detach emotionally which can be hard. I have found the small claims procedures to be easily circumnavigated. If you are the debtor you just have to defend the claim to throw the small claims procedure into chaos for whatever ridiculous reason and thereafter you are both in court spending time and pre-work. Even with cast-iron engagements and agreements I found the court system unsympathetic or lacking understanding. (Possibly judges and sheriffs who hate their own accountant getting revenge against the profession). Now I just withhold our workings for unpaid accounts. If they never pay they never get the data. Suggest 50% deposit and 50% after agreement and prior to lodging.

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By andiparsons29
17th Jul 2013 12:51

We won

We had a situation with a client who stopped paying and tried to make out we weren't doing what was required. Again it came down to lack of records and paperwork being provided, even after several chasing attempts. As we had continued working for a short time, whilst invoices were unpaid, we ended up being owed about £2,000. We took the client to the small claims court and although they tried to put in a defence, the evidence we had totally out weighed it, with proof of correspondence, work complete and also a supporting letter from the previous accountant, who they had done the same to. The judge ruled clearly in our favour and the client paid in full plus interest. Certainly is worth the time and effort!

Good luck with your battle! 

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By The Black Knight
17th Jul 2013 13:18

once you show he has lied

Once you show he has lied you are home and dry.

Just put your bundle together (indexed so the judge can find things easily) Stating what happened when and you will be fine.

Just stick to facts and the law and leave any emotion out of it.

Every now and then you get a nasty idiot, usually when you have bent over backwards to help too.

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By rota2
17th Jul 2013 13:59

Can the client be invoiced for time refuting the counterclaim?

If a disengagement letter has not been issued and time is spent dealing with false counterclaims, can the client be invoiced for the time spent answering the complaints?

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7om
By Tom 7000
17th Jul 2013 14:57

My thoughts

You let the debt get too high. Bet you won't next time. So on balance, assuming you never receive the cash,  think of it as a learning cost...it happens to us all...

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By mydoghasfleas
17th Jul 2013 16:22

Two issues

If you let your PI insurers deal with, there is a chance they will settle at a lower level as it might be cheaper than fighting the claim fo negligence.  That said you have to notify them.

You have still got the problem with collecting your fees.  If you are confident you worked to the terms of your engagement the chance of negligence is small.  Judges are not stupid and the Small Claims Court judges deal with this sort of thing everyday.

My only reservations are that -

1 you acted for this client knowing what he is like.  I know times may be tough but you do not need clients like this.

2 you may not have received any complaints about your work (well apart from this one) but do not take that as a ringing endorsement because that sounds like complacency.

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By The Minion
17th Jul 2013 16:59

This is fairly standard fare unfortunately

We have a number of ex clients who haven't paid who suddenly think that we have provided a rubbish service and report us to the our professional body (had a phone call only this afternoon from our body about another ex client).

 

The clients, if they are PNPs (professional non payers) will know that you will have to go to court, then even if you win - not guaranteed, they will:

 

1. Not pay whatever is awarded.

2. So you have to go back to court to get a bailiff to go and collect.

3. The bailiff wont find them so you will have to incur further costs.

4. Repeat points 2 and 3 ad infinitum.

5. Client then appeals on a spurious basis which means you are then back in court.

6. Repeat steps 1 -5 ad infinitum.

7. The court order is then out of date so go back to Go etc

8. Client reports you to professional body.

 

This is not a theoretical list it is an extract (note i say extract) from just one PNP (that is the most i can call him on here!

We eventually got a CCJ but never got paid. All my time in court was eventually more than the debt

I would tick the mediation box and get the mediator to agree that both debts are written off and also  that any complaints to the professional body are withdrawn.

It is cheaper that way, but may not be the end of it simply because depending upon  the professional body, they may file the case, or they may decide to simply carry on the investigation into the complaint on the "where there's smoke"basis

 

Treat it as lesson learnt.

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By David Gordon FCCA
17th Jul 2013 17:04

Join the club

 Sooner or later we all suffer this guy.

 Frankly your PI insurers will deal with it, and will probably make an offer because it just is not economical to fight this.

 When it happened to me, I was incandescent with rage. The wise PI lawyer told me not to take it personally, it happens to almost everyone.

Fortunately my PI company did not increase my premium, even though it cost them £12,000 inclusive of legals and settling for £3,000.

 So what I did for the future was:

 My terms of engagement includes agreement to mediation in case of querying fees, and that the client agrees that the quantum of disputed fees must be deposited with a stakeholder. Also that any querying of fees must be within 21 days of receipt of the bill. Thank God, it seems to work.

 

 

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By The Black Knight
18th Jul 2013 09:56

Take them on yourself

David Gordon FCCA wrote:

 Sooner or later we all suffer this guy.

 Frankly your PI insurers will deal with it, and will probably make an offer because it just is not economical to fight this.

 When it happened to me, I was incandescent with rage. The wise PI lawyer told me not to take it personally, it happens to almost everyone.

Take them on yourself and tell the useless lawyers to get knotted.

It is your reputation you are defending or else you will see a rise in these fraudulent claims. Could even be the next insurance scam.

Surely you can claim this is a vexatious claim and complain to the court that a criminal offence has been made in the statement of facts and demand action is taken.

Perhaps we should sell these debts to someone nasty?

 

 

 

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By Tomazaan
17th Jul 2013 20:15

Put not your trust in judges

This is a bit of a tangent to the query but be very wary of trusting good old British justice.  I have seen too many judges in action (mostly in the family courts but in our area the local judges do small claims, family and everything else, it seems).  Their ignorance is astounding and their overwhelming desire is to close the case.  I believe that the judges are used to lawyers telling what the law is and consequently cannot cope when dealing with litigants in persons - even in the small claims court which is designed for lay people.

I had one judge tell me that children are not liable to income tax and another accuse me of cheating the system when I said that income from assets owned jointly by husband and wife was split equally between them unless the husband and wife elected otherwise.  A circuit judge (who really should know better) failed to follow a Court of Appeal precedent and when I pointed this out to him said that I would have to appeal. 

My experiences over the past 15 years have taught me to avoid litigation if at all possible and if you are forced to go down that route (as sometimes you are), expect the worst.

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By David Gordon FCCA
19th Jul 2013 10:24

Yes but yes but no but

 You all are speaking wise words.

 But

 Except for personal pride and "pour encouragez les autres" going to court is mostly a disaster. To prepare papers porperly sor sub mission and to appear in court always costs a furtune in professional time.

 Judges are except for their expertise in the business of being judges and lawyers, ordinary people.

  In fact it strikes me from long bitter personal experience that lawyers come just above doctors and two degrees below plumbers in their quality of accounting and tax paperwork. The problem is that, because of their training, they "Know" half the story re accounts and tax. It is easier to deal with a person who knows nowt about it, because mostly they are prepared to listen.

 The difficulty and the glory of our legal system is, (Unlike tax legislation and HMRC administration) because it institutionally recognises the infinite ability of ordinary people to make a dog's dinner of their affairs, it contains safeguards, procedures, rules, to an extreme degree, in order to ensure that Joe Public gets a fair trial. Unfortunately this costs, and sometimes it is your turn to pay.

 Probably because 99.99% of lawyers from High Court Judge down, use accountants and mostly believe their fees are too high, we scriveners go into court at an immediate disadvantage. 

 

 

 

 

 

 

 

 

 

 

 

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By David Gordon FCCA
19th Jul 2013 10:41

Last word, do not try to be clever

 

 Whatever you may think about lawyers, who probably think the same about accountants, do not try to be clever.

 I have imprinted in my memory a case wherein an "Interesting" client accrued £153,000 approx. in tax penalties and interest. From a "Tax Law" point of view I opined the client was in deep sh*t, however:

 By the time our barrister (may he live long and prosper) finished with the HMRC representative, HMRC was apologising for hitting the barrister's fist with HMRC's  nose. Not because HMRC's claim was without substantial merit, but because HMRC had made numerous errors in their preparation and paperwork.

My client got away with a bill for £663.00

 The barrister cost us £5,000.

 The moral is, find your man, they are out there.

 

 

 

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By The Black Knight
19th Jul 2013 11:03

Lucky

the last Judge I had, understood contract law, was impressed by my bundle and quickly confirmed that my former client had no reason not to pay the bill. (he didn't pay the next accountant that caused all the trouble either. Muppet )

Re: David's comments above, I agree you are best of preparing yourself as many Lawyers (with a few notable exceptions) would be unable to present your case effectively. (in my opinion)

Most advise not to bother, perhaps because they know their limitations.

Yes it's a pain and it will cost you considerable lost time and stress, but the result is well worth the effort. Some times you have to stand up like a man and say you're just a bully that needs putting in their place.

Go for it....

 

 

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