Do Not Ignore Any Letter of Demand! – Jason Cheong (Partner) & Chan Jia Seng (…

Do not Ignore Any Letter Of Demand!
– Jason Cheong (Partner) & Chan Jia Seng (Intern)

A letter of demand (sometimes known as a “LOD” or “lawyer letter”) is commonly known as a letter issued against one party to another demanding specific action.

A letter of demand is usually issued for:

(i) requesting the payment of the sum owed by another party;
(ii) cease and desist (stop doing a certain act); and/or
(iii) demanding an apology (in defamation cases)

The issuer may institute legal action if the party who was issued the letter fails to comply with the request in the said letter.

So, what should you do when you receive a letter of demand? Should you ignore it? Should you reply to it, if yes – how should you reply to it?

If I do not reply to the LOD, does it mean I admit to the contents stated therein?

In the Court of Appeal case of Small Medium Enterprise Development Bank Malaysia V. Lim Woon Kat [2016] 5 MLJ 220, the court held that the respondent’s failure to reply to the letter of demand does not equate to an admission under Section 17 of the Evidence Act 1950. Nevertheless, the said conduct is still a relevant fact that the court will take into account to examine the probative force of the case.

That is to say – if you (being a Defendant) do not reply to a LOD, it will not be considered an admission, but the act of not replying to the LOD will still be taken into account by the Court in determining the probative value of your case.

On the contrary, in David Wong Hon Leong v. Noorazman Adnan [1995] 4 CLJ 155, the Court of Appeal held that in the context of business and mercantile cases when one party receives a letter from another specifying what the parties had agreed upon, the party must reply to the letter to show whether they agree with the said agreement or otherwise, failing which, the Court will presume that such agreement exists:

“There are cases – business and mercantile cases – in which the 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 to do 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 case, the appellant had yet to respond in any way to the confirmation sought by the respondent on the additional fee of RM100,000.00. The court opined that is reasonable to expect the appellant to make a prompt and vigorous denial of the agreement, but the appellant did not do so. As such, the Court of Appeal found that the failure to respond to the facts of the case should lead to the entering of judgment for the RM100,000.00.

Likewise in the recent High Court case of Jagdis Singh Banta Singh & Anor v. Ramaness Parasuraman [2023] 1 LNS 927, the plaintiff invested in the defendant’s company which eventually wound up. The defendant entered into a settlement agreement on 28.7.2013 with the plaintiff and agreed to pay back the money. However, the defendant still failed to make any payment. Notice of demand was issued to the defendant but there is no response. The defendant disputed the signature of the settlement agreement and lodged a police report after the case was filed in court. However, the expert report on the signature was not presented as evidence. As a result, the court referred to the principle of David Wong’s case presuming the existence of the settlement agreement, and further held that the signature was not sufficiently proven to be not the defendant’s signature.

In conclusion, clearly one should not ignore the letter of demand issued against him or her, particularly when there is a dispute on the content of the letter.

It is worth noting that a LOD can be used as a piece of evidence in Court, and so is any reply to the said LOD.

Hence, here are 3 practical steps to do when you receive a LOD:

1. Do not ignore the LOD;
2. Seek help from your lawyer immediately (do not forget to bring together your rebuttal evidence, if any); and
3. Reply to the letter.

Disclaimer: This article is for informational purposes only and does not constitute any legal advice. If you have any questions, please contact us directly.