Landlord v Supplier

[HSS2016]

Hi all,

We have been a tenant of our landlord since 2019.

We have also been a supplier to our landlord - a large commercial property company - for a little longer.

Our customer (our landlord) is dreadful when it comes to paying invoices.
We find ourselves in a frequent position now where our landlord has not paid any invoices to us since October 2024 with no reason other than there is a chain of signatures required to make the payments. Their balance is currently £22,000 owed, increasing everyday as we continue to provide services.

Now it comes to our rent... we have to pay our rent quarterly in advance. So currently we owe 2025 first quarter of £6,000

They have once again instructed bailiffs to come and collect the rent. I am in a position where I simply can not afford to keep going like this. I have asked to offset the rent against invoices owed but this goes declined or ignored.

Their credit control officer quoted on an email "its not our problem we do not pay you on time. It's your responsibility to pay us on time".

Any advice before I have a complete meltdown?!

H.

 

[fisicx]

Stop providing services that they won’t pay for. Engage a credit control agency to recover the money.

 

[ChrisCallaghan]

Completely agree with the above. Unless you have any sort of contractual agreement stating such, you have no grounds to withhold due rent, as unfair as that seems.

If you would like a referral to a credit control specialist, please DM me.

 

[Mark T Jones]

To paraphrase the above, play them at their game, not yours

Put the account on hold. Demand payment and get on with your collections process

You do have a collections process, don't you!?

 

[DontAsk]

Send in the bailiffs.

 

[AlanJ1]

Would be funny to use the same ballifs that they instruct against you.

 

[eteb3]

You could stipulate that all further supplies will be subject to a right of set-off.

I’d want legal advice on the wording and what constitutes their agreement, but now seems a good time to insist on a variation of the contract

 

[Gyumri]

You can apply to the court for a stay of enforcement on the basis that you are entitled to set-off what the landlord owes you as an equitable set-off. But you should be taking legal advice to recover your debt as you are molly-coddling your landlord and therefore encouraging his behaviour.

 

[eteb3]

https://cms-lawnow.com/en/ealerts/2010/06/equitable-set-off-court-of-appeal-restates-legal-principles-and-the-appropriate-test

I think even equitable set off will be hard to establish - tho it probably depends on the exact nature of what’s being supplied to LL and why

 

[ChrisCallaghan]

Given one side of this relates to a landlord/tenant relationship, I also think arguing equitable set off is difficult and risky. We're it my business, I'd want legal advice to establish rights of set off.

 

[Michael Loveridge]

You can apply to the court for a stay of enforcement on the basis that you are entitled to set-off what the landlord owes you as an equitable set-off. But you should be taking legal advice to recover your debt as you are molly-coddling your landlord and therefore encouraging his behaviour.

That would almost certainly be a waste of time and money, as although the right of set-off can theoretically apply to rent it's almost always specifically excluded by a term of the lease.

An example lifted from a lease that's on my desk at the moment reads:

The Tenant must not make any legal or equitable deduction, set-off or counterclaim from any payment due under this Lease unless required to do so by law.

Such clauses are 100% enforceable, so if you don't have any right of set-off your argument for a stay will fall at the first hurdle.

Why don't you take some action to recover the £22k? If you kick them hard enough it might (a) deter them from using such bullying tactics in future; and (2) persuade them that prompt payment of your invoices is actually the better option.

 

[Gyumri]

I agree with the above so the answer may be to first apply for a stay of enforcement pending determination of the issuing of a claim against the landlord.

Either way the OP needs to crank up his solicitor to get started with the usual pre-action letters.

 

[WaveJumper]

If its a large commercial property company its not a "signature" issue per-see, its probably an issue of all their funds are held in offshore accounts. I don't mention this as an excuse but when in the game its was not unusual for invoices to take three months to get paid by the accounts department which i always thought outrageous.

I know it's easy to say but don't let your invoices mount up chase their accounts department real hard daily if need be. Are you charging interest under your terms & conditions.

Obviously all advice above from others is completely valid although perhaps difficult if their income is vital to your business but if they are not paying and its putting your business in jeopardy then seek to recover just like they would do to you

 

[eteb3]

Are you charging interest under your terms & conditions.

You don't need Ts & Cs, you have statutory right to statutory interest (8% + BOE); and statutory terms are 60 days unless otherwise agreed (and if not 60d, must be fair).

A contract can't displace statutory interest unless the alternative is what the court would view as meaningfully equivalent compensation.

Deciding whether to enforce these rights is a separate set of considerations, obvs, but they are there if you want to.

Guidance:

Late commercial payments: charging interest and debt recovery

Late commercial payments - interest and debt recovery costs you can charge businesses for late payments

www.gov.uk

Legislation:

Late Payment of Commercial Debts (Interest) Act 1998

An Act to make provision with respect to interest on the late payment of certain debts arising under commercial contracts for the supply of goods or services; and for connected purposes.

www.legislation.gov.uk

 

[Michael Loveridge]

You don't need Ts & Cs, you have statutory right to statutory interest (8% + BOE); and statutory terms are 60 days unless otherwise agreed (and if not 60d, must be fair).

The default position is that in the absence of any specific payment terms payment is deemed late after 30 days, not 60 days.

 

[eteb3]

The default position is that in the absence of any specific payment terms payment is deemed late after 30 days, not 60 days.

Quite so, thank you. The 60 day was in my head as the usual default, but is in fact the long-stop (as I'm sure you yourself know).

So statutory credit terms are:

• 30 days unless otherwise agreed;
• the mutually agreed term if that is >30 and <60 days
• if the agreed term is >60 days, statute intervenes and the term is 60 days only.

Unless customer is a public authority, and then terms are max 30 days only, and they can't contract out of it.

Do I have that right?

 

[Lisa Thomas]

Pay the rent.
Stop supplying them.
Start recovering proceedings for the debt. I can recommend a solicitor if you don't fine one on here. Feel free to dm me.