A private money-lender has failed in a bid to recoup the “exorbitant” commission pocketed by its debt collector for the successful recovery on a loan default.

Paris Properties Pty Ltd missed the due date for repayment of a $330k short-term loan to lender Goldvine Pty Ltd, in August 2014.

In anticipation of the default, the lender’s Richard Cooper recruited debt collector Slater Byrne, to collect the outstanding funds on a non-recourse commission basis with Slater responsible for all expenses.

The debt was recovered in full in just 30 days.

Goldvine netted a little over $180k after Slater’s commission came in at $127k and legals at $20k.

The debtor stumped up for the receiver’s expenses but refused to cover the debt collector’s fee or legals.

That brought all the parties back to the District Court at Southport with Paris defending the lender’s lawsuit by arguing that the terms of Slater’s engagement precluded recovery by the lender of its fee.

Judge Katherine McGinness agreed. The “Non-recourse” terms under which Slater operated meant- she ruled- there was no expense for which lender could legitimately claim and indemnity from the debtor or any of the guarantors.

In the judge’s view, the arrangement was no different than if Goldvine had chosen to “assign the benefit of the loan to the debt collector at a 35% discount”.

The court rejected Goldvine’s further contention- that because the arrangement was a form of “litigation funding”- the statutory prohibition against the recovery of debt collection expense from a debtor was inapplicable.

Rather the case “stands as a good example of the sort of social evil which the legislation was no doubt intended to prevent,” said the judge in her written judgement.

Goldvine was also unable to recover the $20k debt collection legals as these were held to be expenses incurred by Slater for which the lender had no responsibility.

Shortly after its success in this dispute, Paris issued a further lawsuit against the receiver, which is still ongoing.

Goldvine Pty Ltd v Paris Properties Pty Ltd atf the Parisi Family Trust [2017] QDC 111 McGinness DCJ 6 April 2017



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