Linen hire supplier awarded $661.21 after its $325 debt collection fee was refused (VCAT, 2026)

What happened

The applicant, Premium Linen Services Pty Ltd, supplied linen hire services to a company respondent under an agreement made on or about 2 December 2024. The tribunal found the agreement was partly spoken and partly implied: the supplier would provide linen hire services and the company would pay for them. Six invoices were issued between 2 December 2024 and 27 January 2025, totalling $1,555.31. A statement of account dated 13 May 2025 added a further invoice for $325.00 described as a debt collection charge, bringing the account to $1,880.31.

The company paid $1,000.00 towards the account, leaving $880.31 claimed. The supplier applied to VCAT for that balance plus the $105.90 application fee and costs. The application was filed and run by an account manager of eCollect.com.au, a collection agency. The tribunal asked for written proof that he was authorised to act, received it, and gave leave for him to represent the supplier.

The tribunal accepted a declaration of service showing the application, the tribunal's orders and the Points of Claim were served at the company's registered office on 18 August 2026. The company did not file a defence or any material. Both sides were told the matter might be decided on the papers and given until 26 August 2026 and 16 September 2026 to object or send material. Neither objected, so the matter was decided from the documents alone, without any hearing appearance, oral evidence or cross-examination.

The member noted that the company's silence did not remove the supplier's job of proving its claim on the balance of probabilities, meaning more likely than not. The claim was assessed only on the documents filed.

What each side wanted

The supplier asked for $880.31 (the $1,555.31 in linen hire invoices plus the $325.00 debt collection charge, less the $1,000.00 already paid), reimbursement of the $105.90 application fee, and costs. It said a term of the agreement entitled it to recover all costs caused by the company's breach. In the alternative, it argued the company had received a benefit from the services and should pay for it on restitutionary principles called quantum meruit (a reasonable sum for work done) and quantum valebant (a reasonable sum for goods supplied). The company filed nothing and made no argument.

What the tribunal decided

The tribunal ordered the company to pay the supplier a total of $661.21, made up of $555.31 for the unpaid linen hire services, ordered under s 184(2)(b)(i) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), and $105.90 as reimbursement of the application fee, ordered under ss 115B(1)(a) and 115C(1)(a) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).

The claim for $325.00 in debt collection fees was dismissed. The further or alternative claim based on quantum meruit and quantum valebant was dismissed. There was no order as to costs.

The tribunal also granted leave under s 62(1)(c) of the VCAT Act for the collection agency's account manager to represent the supplier, and directed that the representation be allowed under clause 4D(1)(b)(ii) of schedule 1 to the extent that clause applied.

Why the tribunal decided it that way

The tribunal first confirmed it could hear the case. A dispute between the supplier and the buyer of linen hire services is a consumer and trader dispute under s 182 of the Australian Consumer Law and Fair Trading Act, s 184(1) gives the tribunal power to decide it, and s 184(2)(b)(i) lets it order payment of money found owing. Because the claim came from a contract for services and was under $15,000, it was a small claim under s 183.

On the invoices, the tribunal was satisfied the supplier agreed to supply linen hire for payment, did supply it, and that $1,555.31 fell due and stayed unpaid before the $1,000.00 payment. The payment reduced the hire balance to $555.31, and the member said there was no need to work out which individual invoice the $1,000.00 paid off in order to fix the total still owing.

The alternative claims failed because the supplier already had an enforceable contract right to be paid. Relying on Mann v Paterson Constructions Pty Ltd [2019] HCA 32, the tribunal said a restitutionary claim in quantum meruit cannot displace an accrued contractual right to payment, and no separate restitutionary entitlement was shown. Quantum valebant is about the reasonable value of goods received, and simply making linen available under a hire agreement did not establish that claim or any way of valuing it. Citing s 185 of the Act did not excuse the supplier from proving facts to support the alternative claim.

The $325.00 collection charge needed its own legal and evidentiary basis. The Points of Claim alleged a term allowing recovery of all costs caused by a breach, but did not identify the conversation or conduct that created that term, and an allegation in a pleading does not prove the term. Agreeing to pay for linen hire does not, on its own, mean agreeing to cover the supplier's collection expenses, and issuing an invoice later does not prove the customer agreed to it. Section 52(1) of the Act limits recovering collection remuneration from a debtor; s 52(2)(b) allows an exception for reasonably incurred enforcement expenses where an agreement permits recovery and the debt was not mainly for personal, domestic or household purposes. The transaction looked commercial, so the tribunal considered the exception, but it still required proof of an agreed term and of expenses reasonably incurred, and the documents did not show what collection work was done, how $325.00 was calculated, or that the expense was reasonably incurred. To the extent the $325.00 or the separate costs claim related to preparing or running the case, clause 4I(1) of schedule 1 to the VCAT Act bans a costs order in a small claim (apart from a review exception that did not apply here), and calling such charges debt collection fees does not avoid that ban. The application fee was different: under ss 115B and 115C, because the supplier substantially succeeded on the hire charges, the $105.90 fee it had paid was reimbursed.

What this means if you are in a similar position

If you are in a similar position chasing unpaid invoices from another business, this decision shows that the invoices themselves, a statement of account and proof of what was supplied can be enough to establish the debt, even where the other side files nothing at all. Silence from the other side does not win the case for you: the tribunal still expects the person claiming to prove the amount on the balance of probabilities from the documents filed.

It also shows that add-on charges are treated as a separate claim with their own proof requirements. A debt collection fee added to a statement of account was not recoverable where the agreement said to allow it was not identified or evidenced, and where nothing showed what collection work was done or how the figure was worked out. In a VCAT small claim, charges that are really the cost of preparing or running the case run into the costs prohibition, whatever they are labelled. On the other hand, a party that substantially succeeds can be reimbursed the tribunal application fee it actually paid.

For most people and small businesses in this kind of dispute, the usual first step is a clear written demand that itemises each invoice, the dates, any payments received and the balance owing, and sets a deadline to pay, followed by a tribunal application if the money is still not paid.

How to apply: our step-by-step guide to a VCAT application. More decisions: VCAT cases and unpaid debts and invoices.

Source: Premium Linen Services Pty Ltd v ACN 161 596 569 Pty Ltd [2026] VCAT 872 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.