IT Service provider enforces fixed term contract with customer repudiating the contract. Garnishee Order leads to payment in full.

The client provided an IT support service under a fixed term contract. The customer had intimated to the client that they intended to cancel the contract and engage another service provider.

The client sought advice from Roberts Legal. Roberts Legal advised the client that any termination by the customer would be a repudiation of the fixed term agreement entitling the client to terminate the agreement and recover damages for the remaining term of the IT service agreement. Roberts Legal also provided advice in relation to the likely defences and cross claims that the customer may assert if a dispute arise following termination of the agreement as result of which the client made contact with the customer and obtained confirmation that the threatened cancellation was not due to any failure to provide the agreed service or breach by the client of the agreement and was solely because the customer had found a cheaper supplier.

The customer purported to cancel the fixed term agreement. Roberts Legal wrote to the customer giving notice of termination in reliance on the customer’s repudiation and demanded damages equal to the service fees payable over the remaining 13 months at approximately $50,000.00.

The customer ignored the demand and Roberts Legal commenced an action on behalf of the client in the Local Court for damages.

The customer sought legal advice. As anticipated the customer’s Solicitors asserting that the client had breach the fixed term agreement by failing to provide the service as agreed. Roberts Legal responded nullifying the argument by reference to the communications between the client and the customer that had occurred prior to the cancellation at Roberts Legal’s suggestion.

The customer’s Solicitors did not respond further presumably having accepted that the claim brought on behalf of the client had no reasonable prospects of being defeated.

Roberts Legal obtained Judgment by default upon the lapsing of 28 days in the amount of $52,000.00 (inclusive of costs) and simultaneously obtained and served a Garnishee Order on the customer’s bank.

The Garnishee Order was successful. As a result, within 12 weeks of the customer’s purported cancellation of the contract Roberts Legal had obtained Judgment in the Local Court and recovered payment in full on behalf of the client.

By Sam Roberts,
Managing Director, Accredited Specialist (Commercial Litigation)