Disturbance to third parties is not allowed in the recovery of commission, and care must be taken when engaging the service of debt collection companies

Miss Shum is a senior manager in a limited company specialised in the investment business. Some time ago Mr Lee, a director of the company, signed a provisional agreement for sale and purchase for a luxurious flat in Kowloon Tong with the company as the purchaser, and the proposed purchase was made through an estate agency company. The transaction, however, did not materialise.

In the middle of last year Miss Shum became the object of disturbances from a debt collection company. The company demanded commission owed to the estate agency company in regard of the property transaction referred to above. Apart from sending letters to Miss Shum, the debt collection company also posted bills demanding payment outside her residence. Miss Shum then filed a complaint with the EAA.

EAA investigation suggests that although a senior manager of the investment company at the time the provisional agreement for sale and purchase was signed, Miss Shum was not a director of the company, and she was not engaged in its investment business. There was no evidence that she had been party to the property transaction in question, or had any information about it.

So, this is a case in which the debtor is a limited company. The creditor is the estate agency company and, in its effort to recover commission owed, should have sought payment from this limited company. However, the documents produced by the debt collection company indicated that Miss Shum was the debtor and attempts to recover the debt were taken against Miss Shum and Fook Pak, who were third parties to the matter. Furthermore, the documents issued by the debt collection company did not show the name of the creditor, ie the estate agency company, or the debt collection company itself. It is obvious that the estate agency company did not pursue the recovery of the commission owed in a proper manner.

The EAA issued practice circulars in 1999 and 2000 requesting practitioners to keep a close watch on the operation of any debt collection companies they might have engaged. Practitioners were also asked to instruct the debt collection companies not to seek payment, whether directly or indirectly, from third parties, ie parties other than the debtor himself. In the documents demanding repayment issued to the debtor, the debt collection company must make clear indication of the name and address of both the company itself, and those of the creditor. These are points which practitioners must bear in mind when seeking payment of commission from their clients, especially when the service of a debt collection company is involved.


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