DEMAND LETTER

Question 1

What is a DEMAND LETTER?

Answer 1

• A demand letter is a formal notice demanding that the addressee perform a legal obligation, such as rectifying a problem, paying a sum of money, or honouring a contractual commitment, on specific terms and within a specified time

Question 2

What is the purpose of a Demand Letter?

Answer 2

The purpose of a demand letter and notices prior to litigation is to afford both parties an opportunity to avoid embarking on unnecessary litigation or incurring additional costs, especially within the context of our overburdened judiciary and the
reality of a constrained economy

• The letter gives the recipient a chance to perform the obligation without being taken to court
• It is sent to the person against whom a grievance is raised and is sent before the commencement of the suit
• It serves to inform the adversary of a pending claim and the adversary is given a time frame within which a response is required
• The demand letter may be written by the person seeking redress, or by a legal representative on that person’s behalf
• A copy of the letter is made and the original must be sent in a way that provides proof of delivery, e.g. it can be sent be registered mail, or can be served by a registered legal clerk

Question 3

What are the contents of a Demand Letter?

Answer 3

1) A date and the recipient’s contact information;
2) The authority to act for the claimant;
3) A summary of the matter in issue (i.e. the facts);
4) A demand for a specific relief or payment;
5) A deadline by which the matter must be settled;
6) Consequences of non-adherence to the demand of a claim; and
7) The term ‘demand’ stated in the body of the letter to direct the recipient to act accordingly

Question 4

Why is a demand letter mandatory?

Answer 4

Civil Suits guided by the Civil Procedure Rules 2010 (CPR), a demand letter is mandatory
* Where it is pleaded, a demand is required to be made as a matter of law (Order 3, Rule 2(d)) * Where it is excluded, a party may not be able to claim for costs in the suit – the court has discretion to award costs of and incidental to the suit to the party it deems fit (Section 27(1), Civil Procedure Act) (CPA)
* Where the court in its finding concludes that a demand or notice of intention to sue was not issued, the plaintiff may be denied costs for denying the defendant an opportunity to settle the claim out of court

Question 5

What can’t a demand letter contain?

Answer 5

The letter of demand may not demand from the debtor the costs of the advocate giving notice – there is both a statutory and professional bar to making such a demand (Rule 13, Advocates (Practice) Rules and The LSK Digest of Professional
Conduct and Etiquette)

UNLESS: However, if subsequent to the original letter of demand, the debtor requests to be allowed to make payment of the demanded sum by installments, and these terms are accepted, then it is permissible to add the advocate’s costs to the
principal sum owing
o This must be done at the time of accepting the proposal of payment by instalments
o It is permissible because fresh consideration is given by the creditor, for adding those costs to the principal
amount

Question 6

When is a demand letter not advisable?

Answer 6

o When you will be seeking an Anton Pillar Order against the possible defendant; and/or
o When you will be seeking a Mareva Injunction against the defendant
* This is because in the above two situations, the application for those orders is normally made ex parte without notice to the defendant
* This is because knowledge by the defendant that the application is pending may defeat the very object that the plaintiff is trying to achieve, through dissipation of the subject matter of the suit or removal of assets of the debtor from the courts’ jurisdiction
* A demand letter in such situations would adversely affect the element of surprise and thus the efficacy of the court process

Question 7

What is does ‘Without prejudice’ communication in a demand letter mean?

Answer 7

The demand letter is not advisable in the following circumstances:
o When you will be seeking an Anton Pillar Order against the possible defendant; and/or
o When you will be seeking a Mareva Injunction against the defendant
* This is because in the above two situations, the application for those orders is normally made ex parte without notice to the defendant
* This is because knowledge by the defendant that the application is pending may defeat the very object which the plaintiff is trying to achieve, through dissipation of the subject matter of the suit or removal of assets of the debtor from the courts’
jurisdiction
* A demand letter in such situations would adversely affect the element of surprise and thus the efficacy of the court process