The Financial Gazette

Matters legal with Vote Muza
MANY a time, debtors have received menacing letters from creditors or their agents who demand what is termed “collection commission”, as a penalty for the debtor’s failure to pay timeously. It is this precise subject of debt collection work that deserves close scrutiny so that the pervasive confusion, and misunderstanding by both lawyers in private practice, and the general public can possibly be cleared.
Legal justification for collection of this penalty can be found in the by laws of the Law Society, but for ordinary debt collectors who have sprouted all over town, I have sad news for them. For the simple fact that they are illegal, as their operations are outlawed by the Legal Practitioners Act (Chapter27;07) they cannot possibly levy collection charges.
Collection commission is essentially a charge made by a legal practitioner when payments have been obtained through his services prior to, or after judgment. It is designed to be a means of reward that does not require the complicated and expensive procedure of formulating what lawyers call a “bill of costs” providing for a detailed outline of the various attendances that the lawyer would have undertaken in a client’s matter.
The tendency by debt collectors, and I speak here with reference even to lawyers is to demand payment of commission even where no success has been scored. Such a habit is not only wrong, but also unfair to debtors. To the contrary, the basic rule is that collection commission is only chargeable on money or movable assets actually collected.
This commission is not recoverable as costs of suit. In every court case where a creditor seeks to recover from the defaulting debtor expenses incurred as commission on the collection of the debt, he must be able to rely on a specific cause of action in respect of the commission. That cause of action must be a contract between the debtor and creditor that obliges the debtor to pay collection charges incurred.
Since the clause providing for payment of commission will be a term of the parties contract, it is on that basis that the debt of collection commission will be based.  To make the point clear, collection commission is not recoverable by a creditor from a debtor unless the debtor has entered into an agreement to pay any such charges incurred in the event of his default.
A habit where lawyers claim on behalf of creditors both collection commission and costs “on an attorney and client scale” has become commonplace, and yet such duplication of recoveries is impermissible, save in certain instances permitted by courts.
In the case of Scotfin vs Ngomahuru 1997 (2) ZLR where the High Court had a good opportunity to give this thorny issue serious scrutiny, the practice of making such double claims was criticised and outlawed.
 Yet to this day, and despite the presence of numerous case  authorities on the subject, some continue to take advantage of vulnerable debtors by continuing with a practice that is as unfair as it is illegal, and the only reason for such a practice being nothing but greed. It may be worth to note that collection commission is not only recoverable on money actually collected for, through a close perusal of the Law Society’s by-laws, one can observe  that even where recovery of movable asset say a motor vehicle has been made, such a charge may be claimed.
The percentage of the commission will obviously be based on the value of the movable asset recovered.
Hire purchase agreements, loan agreements, as well as other trade debts usually have clauses protecting creditors, against defaulting debtors, and have as part of their terms, a provision binding the debtor to pay any legal costs or collection commission that the creditor may incur in trying to sue for the debt. It is a clause that every vigilant creditor must have in all contracts involving lending money or recovery of movable assets.
Taking such a move serves to protect the creditor from suffering the double jeopardy of losing through time spend attempting to recover the capital sum as losing more money suing for recovery of the debt. - Vote Muza is a partner with Muza and Nyapadi Legal Practitioners. Email; This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Website; muzaandnyapadi.com