In a troubled economic climate resulting in a boost in debt recovery, the recent English case of Ferguson v British Gas Trading Limited [2009] EWCA Civ 46 provides a warning to those involved in debt collection.
Ms Ferguson was a customer of British Gas but switched to a different supplier. However, British Gas sent her bills which were either for sums she had already paid, or were for the period following the termination of her contract with British Gas. Worse still, British Gas wrote to advise that if she did not make payment, they would cut off her gas supply, start legal proceedings and report her to credit rating agencies. Naturally, Ms Ferguson complained to British Gas and advised them of their mistake. However, despite her numerous letters and telephone calls, British Gas continued to send her the bills and accompanying threats.
Ms Ferguson decided that enough was enough and raised an action against British Gas for £10,000 on the basis that their conduct amounted to unlawful harassment in contravention of the Protection from Harassment Act 1997, having caused her stress, anxiety and financial loss through lost time and expenses. British Gas argued that its conduct was not serious enough to constitute harassment under the 1997 Act. It contended that because the letters were computer generated, they ought not to have been taken as seriously as if they had come directly from an individual. In the Court of Appeal Lord Justice Jacobs was not impressed with the arguments that British Gas had put forward, advising that the demands and threats from British Gas were indeed read by a real person who was likely to suffer real anxiety and distress.
British Gas had also argued that even if its conduct was held to be harassment in terms of the 1997 Act, it could not be guilty of it as a large corporation. The onus was, therefore, on Ms Ferguson to demonstrate that British Gas knew, or ought to have known, that the conduct amounted to harassment. Lord Justice Jacobs thought that at the very least, British Gas ought to have known and simply could not rely upon a "defence of incompetence".
The case was remitted to trial to decide if the conduct of British Gas fell within the parameters of harassment in terms of the 1997 Act but was subsequently settled out of court.
Whilst this case is an extreme example, it has brought to light valuable lessons for those involved in debt recovery:
- Be well aware that if you pursue the wrong person or pursue a person after a bill has been settled, you may risk both civil and criminal liability. This could result in liability to pay damages to that person and/or a court order for interdict, interim interdict or non-harassment being granted against you, breach of which could result in imprisonment of up to five years;
- You may not be able to avoid taking responsibility for correspondence sent to customers in attempting to argue that such correspondence was computer-generated;
- Ensure that your computer systems which hold customer data are up-to-date and accurate. This is of particular importance for those businesses dealing with debt factoring arrangements;
- Do not underestimate the importance of good customer relations. Check that your customer complaints procedures are accessible and efficient, with particular reference to your debt collection procedures.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
