The legal effect of factoring is the transfer to the factor (assignee) not only of the receivable itself, but also of a claim for overdue interest against the debtor (factoring counterparty) and other rights related to the transferred receivable. In my opinion, under factoring, the factor also transfers to the factor a claim for the so-called compensation for recovery costs in the amount of EUR 40 (Article 10(1) of the Act of March 8, 2013 on payment terms in commercial transactions, hereinafter "Law"). You can read more about compensation in this article: "Factoring vs. compensation for recovery costs (€40)„.
On 7.07.2017. Supreme Court ("SN") issued a judgment V CSK 660/16, which was commented on by some commentators as being a confirmation that debt collection or factoring companies are not entitled to compensation, as this is only due to the original creditor (i.e., the factor = assignor). In my opinion, these premature comments were due to the fact that they were made before the SN published the written reasons for the judgment.
In the judgment, the Supreme Court pointed out, among other things, that:
- The fact of the possibility of assignment of compensation is not in doubt;
- the scope of the assignment under factoring should be structured in such a way that there is no doubt as to whether the assignment also includes an entitlement to compensation;
- It is important to determine whether the factor's claim for compensation satisfies the interests of the factor or the original creditor (assignor).
Not much comes out of it. Meanwhile, the judgment does not dispute that the factor is entitled to the compensation referred to in Article 10(1) of the Act (€40). The judgment addresses other issues. This is because it casts doubt on the permissibility of such a construction in which the factor first charges the factor with substantial collection commissions, then the factor charges these commissions to the debtor and transfers the receivable back to the assignor. In this way, the amount generated in the case recognized by the Supreme Court grew to PLN 49,081.22 and significantly exceeded the multiple of EUR 40.00. Indeed, the court did not question the compensation in the amount of €40.00, but in that part covering the collection costs referred to in Article 10(2) of the Act.
In the present case, at the second instance stage, the District Court noted that:
- the fact that the cost of recovery includes, in particular, the costs incurred by creditors in using a lawyer or a collection agency, does not mean that the cost of recovery is also the fee charged by the factor to its client, a The phrase "use of a collection agency" does not include "use of a factoring agreement.";
- the contract between the assignor and the factor can not affect the amount of the debtor's obligation, as it is not a legitimate cost of recovery. These can only be borne by the creditor from the underlying commercial transaction (delivery of goods or services);
- The factor's pursuit of recovery costs first from the assignor, then (the same costs) from the debtor results in the factor obtaining the same costs twice. This, in turn, serves to circumvent the law and, as such, is contrary to its social and economic purpose and the principles of social intercourse.
So what conclusions can actually be drawn from this ruling?
- compensation for recovery costs in the amount of EUR 40.00 is due to the factor by virtue of the assignment itself, although the content of the factoring agreement should be carefully examined to avoid doubts in this regard;
- When the recovery costs incurred for late payment in a commercial transaction exceed the amount of compensation referred to in Article 10 of the Law, the creditor shall be entitled to reimbursement of such costs, including litigation costs, in excess of the lump sum (Article 10(2) of the Law). However, this provision must not be used to uncontrollably generate costs for the sole purpose of passing them on to the debtor, especially the generation of costs in the factor-factor relationship with effect on the debtor;
- The contract between the assignor and the factor cannot affect the debtor's liability, as it is not a reasonable cost of recovery;
- The facturer's attempt to obtain collection costs twice may be met with a successful claim of abuse of rights.
However, I am far from drawing such unequivocal positions from the above-mentioned ruling that "the compensations provided for in the Payment Deadlines Act are due only to the creditor from the original contract." Indeed, in the case recognized by the Supreme Court, there was an attempt to obtain the same costs twice from different entities to the detriment of the creditor. Therefore, one cannot simply transfer sentences from the Supreme Court ruling out of context and create universal theses out of them, especially one that would question the factfinder's entitlement to compensation as a rule.
