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  • Writer's pictureAarthi Jeyarajah

Letters of Demand: Should you answer?



The answer to the question posed must always be a resounding YES! This author has been repeatedly approached by clients who have failed to respond to letters of demand, and in some instances, letters serving a Statement of Claim or an Originating Summons are also not attended to in a timely manner.


This makes defending a claim harder for a potential defendant and more often than not, the lack of response will be held against them.


There can be severe repercussions to not responding to letters of demand. The Courts have taken a strict view to letters of demand that are not responded to. The Court of Appeal in the case of Yoong Sze Fatt v Pengkalen Securities Sdn Bhd [1] held that the defendant’s conduct or absence of response “speaks volumes against the defendant” and that “the silence, indeed the omission, by the defendant in this regard is deafening.” In this case, the defendant after having received the contract notes and contra statements from the plaintiff, had never protested nor queried the plaintiff thereon. There was also no complaint by the defendant that he had not allowed his employer to utilise the account and the Court found that he was completely oblivious to the plaintiff's letter of demand. In this context, the Court held that the silence on the part of the Defendant was “deafening” and construed the lack of response to be akin to anadmission. This same principle was used against the former premier of Malaysia in the case of Public Prosecutor v Dato’ Sri Mohd Najib bin Hj Abd Razak [2].


In certain instances, the lack of response to a letter of demand can also be deemed to be “fatal”! When a letter of demand is not responded to, but subsequently a defence in filed in Court proceedings, the Courts tend to hold the lack of response to a letter of demand against the defendant, more often when there is a lack of a credible or meritorious defence. The Courts are not very forgiving, especially when the individual involved are not your usual “mom and pop” or typical layman. The Court of Appeal in the case of Halim bin Saad v Chan Yok Peng [3], held as follows:


“Being a person of business, the defendant could not have been unaware of the grave implications to himself by not responding to and repudiating the contents of both the letters.”


This approach against “business” persons is not uncommon. The Courts have, for example, held as follows, in the case of Mohd Zin bin Omar & Anor vJentayu Padu Sdn Bhd [4], citing an earlier decision of PECD Construction SdnBhd v. Freehold Point Sdn Bhd [5]:


"It must also be noted that in commercial cases (not civil), Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed todo certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree."



In this regard, there have been extreme approaches where it had been stated that a failure to respond to a demand notice should lead to a judgment being entered against the defendant. In such cases where hefty sums of money are being demanded, the Courts have taken the view that a it is reasonable to expect a prompt and rigorous denial [6].


However, having said that, there are some instances where Courts have not always held the lack of response strictly against the defendant. The circumstances of each case would differ based on the circumstances and it is not always that a response is necessarily required. There are instances where alack of response had been said that it cannot amount to an admission. “Silence amounts to consent” is not a principle that has been accepted as part of our law of evidence.


Nevertheless, in commercial cases particularly, it really is of importance for a letter of demand to be responded to and would usually be the usual course of action advised. Time and again, the Courts have held the lack of response will reflect badly on a defendant. As such, clients are constantly advised to always keep an eye out when demands are made and documents are served.


It should also be noted that letters of demand are usually precursor to a claim being filed in Court. As such, litigation is almost always “just around the corner” when demand notices are served, which is why if a company or an individual is sent a letter of demand, immediate action and response is always advisable. The Rules of Court 2012 provide strict timelines in respect of what needs to be done when cause papers are served by a litigant, which we will discuss

in another edition!


Aarthi & Associates is a legal firm dealing with varied civil and corporate disputes, including construction disputes, injunctions and CIPAA claims. The firm's philosophy of "Providing Solutions", demonstrates a commitment to providing fast, effective and practical solution to disputes.

 

References:

[1] [2010] 1 MLJ 85

[2] [2020] 11 MLJ 808

[3] [2020] MLJU 1900

[4] [2017] MLJU 407

[5] [2008] 3 CLJ 215

[6] David Wong Hon Leong v. Noorazman Adnan [1995] 4 CLJ 155


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