Toronto freelancer goes the distance to pursue non-paying client

Most freelancers have had to deal with it at some point in their careers – a client who is slow to process invoices, or, worse, one that’s deliberately avoiding paying their contractors. Chasing down a paycheque can be frustrating, humiliating and damaging to your productivity.

Sometimes it seems easier to just give up on that long-unpaid invoice and chalk the lost income up to experience. Is it really worth all the time and energy necessary to track down late payment?

Toronto corporate communications writer and marketing consultant Flavian DeLima thinks it is. Over the past three years he has spent considerable time and energy pursuing payment for work he did in 2011. The chase took him to court in Ontario to litigate against a European company in Oslo, Norway that refused to pay what they owed him.

DeLima understands why many writers decide not to pursue delinquent clients, but he wants to share the story of his legal victory for the benefit of freelancers who are considering taking legal action themselves.

 

Communications… and Complications

Between February and August 2011, DeLima spent 140 hours working on communications for Digilife AS, a Norwegian company and distributor of various products in Europe. He worked in marketing, communications and public relations for one of their product lines for the Nordic market — computer glasses intended to reduce eyestrain caused by long hours in front of computer screens.

As he finished the work he’d been assigned, the company co-founders and co-CEOs told him they weren’t going to pay him.

“They said ‘show us proof of a contract and the work you’ve done,’” DeLima told Story Board during a phone interview.

DeLima’s situation was complicated first of all by the fact that the company he had worked for was located overseas.

Another complication was that DeLima hadn’t signed a formal contract with Diglife. He had worked with the sales and marketing co-CEO and co-founder in Toronto. The co-CEO had then moved to Norway to start Digilife AS and he contracted DeLima’s services during a series of phone calls and emails during which they agreed to terms, hours and hourly rate. The co-CEO received approval from his partner before DeLima came on board. DeLima trusted him enough to start work for the company.

As proof of the work he had done, DeLima offered Digilife AS phone logs, emails and detailed activity reports for completed projects with the company. Many emails included praise, recognition and promise of payment for services rendered. After numerous promises but still no payment, DeLima contacted the Canadian Embassy in Norway, which can act on behalf of Canadian companies doing business in Norway. Officials from the embassy met with one of the co-founders, who admitted that money was owed.

DeLima then contacted the Professional Writers Association of Canada, of which he’d been a member for several years, for assistance. PWAC sent a demand letter on DeLima’s behalf to the two co-CEOs and co-founders of Diglife AS and copied Canadian Embassy officials and the company’s American parent company.

Diglife AS responded by denying him payment, saying there was no contract and that no work was done.

Legal action

DeLima decided to take action after Diglife AS changed their tone from apologetic to accusatory. But legal action, especially when conducted from overseas, is onerous and complicated. Firstly, DeLima sought and obtained permission from the Ontario court to serve Diglife AS and one of the firm’s Co-CEOs a statement of claim and legal papers by registered mail via Canada Post.

Diglife AS and the company’s Co-CEO responded by filing a statement of defence. This was a key moment in DeLima’s case.

Toronto lawyer Sean FitzPatrick specializes in labour issues and frequently serves as counsel for the Canadian Media Guild. He explains that by responding, the Norwegian parties legally attorned to the jurisdiction of Canada – meaning DeLima was subsequently able to pursue the case through the courts in Ontario instead of having to travel to Norway to pursue it there.

“Attornment is where a party outside of a jurisdiction starts to participate in a lawsuit without raising an objection to the jurisdiction,” FitzPatrick told Story Board.

“They are said to have ‘attorned’ — agreed — that the court has jurisdiction to deal with the matter. So while there may have been an argument in this case that the Norwegian company or party wasn’t subject to an Ontario court, if they filed a statement of defence and participated in the proceeding then they’ve agreed — attorned — to the jurisdiction,” he said.

FitzPatrick explained that the defendants could likely have raised an objection at the outset.

“They could have respectfully responded to the statement of claim, ‘we’re filing our defence but subject to our position that this court has no jurisdiction over us.’ And then started as a preliminary issue of dealing with that, jurisdiction. But if they skipped that and just started in, they can’t after the fact say ‘well we don’t care about this decision because you don’t have jurisdiction over us.'”

DeLima and the defendants were required to attend a mandatory settlement conference by telephone prior to the hearing. At the settlement conference, the defendants agreed that work was done but that no contract existed.

But the lack of a formal signed contract was not a problem for DeLima. When the case was subsequently sent to court, the judge, upon hearing evidence, said a contract did exist between DeLima and Diglife AS because services, terms, hours and dollar amounts were agreed upon in email exchanges and by telephone and the company benefited from DeLima’s services.

Lawyer Sean FitzPatrick explains that a verbal contract is as binding as a written contract.

“There’s no requirement for a signature or, in fact, that there be anything in writing. An agreement made verbally, a contractual agreement that one party will do X in exchange for Y is an offer and an acceptance of that offer. The practical matter is, if you have something in writing with a signature or even an email exchange, then you have clear evidence of what the agreement was,” he says.

At this stage in the proceedings, the lawyer representing the defendants requested the case be thrown out because Ontario was the wrong jurisdiction. The judge presiding at the hearing overruled the jurisdiction challenge because the defendants had attorned to the jurisdiction of Ontario by filing a statement of defence and defending the action over a 15-month period.

A judgement was issued by the Ontario court in DeLima’s favour against Diglife AS in May of 2012.

A court victory… What comes next?

DeLima still hasn’t managed to collect the money he’s owed. Pursuing a judgment will involve collections and additional enforcement expenses.

All in all, the pursuit of this one unpaid invoice was time-consuming for DeLima, but he felt compelled to persist.

“I had to confront this injustice due to the aggressive and accusatory nature of the defendants. I also wanted to try to stop them from doing the same thing to other contractors,” he said.

“I understand and respect why others avoid taking legal action. But it is important for people – especially professionals – to stand up for something important to them. I had to stand up for my values – integrity and character being the big ones.” he said.

DeLima is happy with what he’s accomplished.

“While I would prefer a big cheque, it still feels good even if the company hasn’t paid me. Lots of things take time and money. This one ended with a judgement against a foreign company who did wrong and justice prevailed, I hope they think twice about doing this to others. Mostly, I hope my example helps writers and other professionals stand up for their rights”, he said.

De Lima said the company’s lack of ethics and their aggressive tone spurred him to pursue the matter formally when all other avenues failed.

“It’s the principle,” he said.

“The route I went was harder than most – successfully pursuing a legal judgement between two countries on different continents. But I learned it is possible to pursue a deadbeat client and have a positive outcome. The world is getting smaller and reputation matters more today than ever,” he said.

Advice for other freelancers

DeLima says the support of professional organizations like PWAC and the Canadian Media Guild is crucial if you’re planning to take a non-paying client to court. Not only did PWAC offer advice and act on his behalf, but having colleagues to commiserate with offered valuable moral support.

“Having a network of people you can talk to about a stressful problem is helpful and a big confidence booster, especially with deadbeat customers who make countless excuses,” he said.

Two things that DeLima gained from his experience were a better understanding of contract law and the need to identify and cut bad clients early.

“My biggest learning as a result of this is that a bad client can really slow you down and take a toll if you allow it to get the better of you without taking decisive action,” he said.

“Any professional with a conscience who is good natured can end up as a target of those who prefer to manipulate other people,” he said.

A strong sense of your professional worth and a good network, DeLima says, will help protect you from being taken advantage of.

“You have to believe you’re a professional and that your invoices need to be paid like those of any company. There’s a certain self-belief that’s required,” he said.

Most importantly, he wanted to tell his story so that others might benefit from the knowledge he’s gained and the lessons he’s learned.

Next steps

DeLima intends to continue trying to enforce the judgement against Diglife AS. There is no expiry date to enforce a judgement against a company. Even if the company changes its name, the judgement can still be enforced against the new company entity.

It could end up being another lengthy process, but DeLima is has already proven that he’s tenacious enough to see it through.