DEMAND LETTER (SCOPE & PURPOSE, WITH SAMPLE )

 

1. INTRODUCTION:

· The demand letter is written after taking instructions from a client.

· Demand Letter: It 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.

· No Court proceedings: The letter gives the recipient a chance to perform the obligation without being taken to Court.

2. SCOPE OF THE DEMAND LETTER:

· It is a letter sent to the person against whom a grievance is raised.

· It is sent before the commencement of the suit.

· The letter is intended to elicit a payment or compliance from the part of the prospective defendant.

· It serves to inform the adversary of a pending claim.

· The adversary is given a time-frame within which a response is required.

· It may be written by the person seeking redress, or by a legal representative on the person’s behalf.

· A copy is made and the original sent in a way that provides proof of delivery i.e., by: a) registered mail, or b) it can be served by a registered legal clerk.

3. PURPOSE OF A DEMAND LETTER:

· It is to afford both parties an opportunity to avoid embarking on unnecessary litigation or incurring additional costs, especially within the context of overburdened judiciary and the reality of a constricted economy.

· It serves as notice to the other party, that there is an issue against them.

4. DEMAND LETTER: WHETHER MANDATORY?

· In most types of legal proceedings, especially civil suits guided by the Civil Procedure Rules, 2010, a demand letter is mandatory.

· Order 2, Rule 10(3)(b) of the Civil Procedure Rules, 2010: Particulars of pleading: Where a party alleges as a fact that a person had knowledge or notice of some fact, matter or thing then, the Court may, on such terms as it thinks just, order that party to serve on any other party where he alleges notice, particulars of the notice.

· Order 3, Rule 2(d) of the Civil Procedure Rules, 2010 provides that all suits filed including suits against the Government, except small claims, must be accompanied by copies of documents to be relied on at the trial including a demand letter before action.

· Rule 53, the Advocates Remuneration Order, 1962: No advocate’s costs where suit brought without notice except on special order: If the plaintiff in any action has not given the defendant notice of his intention to sue, and the defendant pays the amount claimed or found due at or before the first hearing, no advocate’s costs shall be allowed except on a special order of the Judge or Magistrate. Thus, where a demand letter is excluded, a party may not be able to claim for costs in the suit.

5. REASONS FOR MAKING FORMAL DEMAND:

a) To avoid incurring additional costs of suit should the claim be admitted by the other party.

b) To avoid suits that may be vexatious or brought out of malice.

c) To give notice of intention to right a wrong against a legal right.

6. CONTENTS OF A DEMAND LETTER:

a) Date.

b) Authority giving the advocate to act for the claimant i.e., “I HAVE BEEN INSTRUCTED BY …”

c) Summary of the matter in issue.

d) Demand for a specific relief or payment sought.

e) Deadline by which the matter must be settled.

f) It should be addressed to the person against whom the complaint is made, or the recipient’s lawyer, or if the person has an advocate to whom s/he has donated power, to such person holding the power of attorney.

g) The term “DEMAND LETTER” stated in the body of the letter to direct the recipient to act accordingly

h) Clear intimation that payment is required. It must be of a peremptory character and unconditional.26

i) Reasonable duration to respond i.e., 7 days, where debtor resides in the same town as advocate, 10 days, where he resides in a different town in Kenya and 15 days, where he resides outside East Africa.

j) Consequences of default or non-adherence to the demand of claim.

k) Name and signature of the advocate. It is a document that is chargeable under the Advocates (Remuneration) Order, 2009 and it therefore attracts the prohibition under Sections 34 and 35 of the Advocates Act, Cap 16, i.e., it should not to be drawn by an unqualified person, or remuneration thereof accepted by an unqualified person. In Singh v. Munshi Ram27 it was held that “signing in the name of the Firm is not sufficient and not safe. It may lay the demand letter open to challenge as not being given either by the party or by an advocate as his representative on his behalf.”

l) A threat that criminal proceedings would be initiated against the debtor in event of non-payment: A demand letter should not demand from the debtor the costs of the advocate giving notice.28 There is both a statutory and professional bar to making such a demand. Rule 11 of the Advocates (Practice) Rules, 1966 provides that no advocate may request in a letter of demand before action payment from any person other than his client of any costs chargeable by him to his client in respect of such demand before action, or in respect of professional services connected with the demand. But, if subsequent to the original letter of demand, the debtor requests to be allowed to make payment of demand sum by installments, and the terms are accepted, then it is permissible to add the advocate’s costs to the principal sum owing. This must be done at the time of accepting the proposal of payment by installments. This is permissible because fresh consideration is being given by the creditor, for adding those costs to the principal amount.

m) It should contain sufficient facts that would enable the other party to understand what the case is all about. In other words, it should be long enough to convey the material facts.

n) In a defamation case, it should set out the specific words complained of and the language used in the words.

· It is important to note that the demand letter will later become highly relevant in subsequent applications and hearings in the suit, as well as to an assessment of the conduct of parties.29 Express provisions is made in the Civil Procedure Rules, 2010 for a Court to order that particulars of any notice earlier pleaded to be supplied to the opposite party.

· The demand letter should be in consonance with the plaint. In Abdulla v. Esmail30 and Jared Benson Kangwana v. Attorney-General31 it was held that where the plaint is at variance with the demand letter, particulars in explanation must be given by the plaintiff.

· After receiving the response to a demand letter, an advocate should:

a) seek the client’s opinion on the next course of action;

b) advise the client on settling the matter out of Court;

c) advise the client on the economics of going to Court.

7. ‘WITHOUT PREJUDICE’ COMMUNICATION’:

· The legal phrase “Without Prejudice” should not be written in a Demand Letter. However, in Millicent Wambui v. Nairobi Botanica Gardening Limited,32 it was held that once the person who is being claimed against responds, an advocate should quote the legal phrase “Without Prejudice” to protect the sender with regard to the contents of the letter.

· Scope of protection: The protection goes only in so far as protecting the communication between parties that genuinely attempts to resolve the disputes between the parties. Thus, the doctrine protects admissions, concessions or offers made by parties in communication.

· The words ‘without prejudice’ impose upon the communication an exclusion of use against the party making the statement in subsequent Court proceedings.

· A party making a ‘without prejudice’ offer does so on the basis that they reserve the right to assert their original position, if the offer is rejected and litigation ensues. However, the ‘without prejudice’ communication could be admissible if:

a) the issue was whether or not the negotiation resulted in an agreed settlement or whether the communication was made at all;33

b) waiver by the parties;

c) there is need to prove that there was fraud or perjury;

d) there is need to explain some delay in proceedings, especially where one of the parties seeks to have the suit dismissed.

· How to show that communication is without prejudice: The words should be inserted at the top of the correspondence. However, there is no rule that requires the words to be at the top. It can also be inferred by the conduct and can be oral.

8. WHEN DEMAND LETTER WOULD NOT BE ADVISABLE:

a) Anton Pillar Order.34

b) Mareva Injunction.35

· Initial application for the above is usually made ex parte without notice to the defendant.

· Knowledge by 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 Court’s jurisdiction, etc.

· A demand letter would thus adversely affect the element of surprise and the efficacy of the Court orders.

9. ILLUSTRATION:

MPOLE & SAMU COMPANY ADVOCATES MUTULA HALL, SECOND FLOOR,

P.O. BOX, 100356-00100, NAIROBI, KENYA

Tel: 0723321654 / 020-2586987

Email: mpole75@gmail.com

……………………………………………………………………………………………………………………...

Our Ref: DL/10/2017 Your Ref:

TBA

20th July 2017



“WITHOUT PREJUDICE”

TO

SAMUEL BITOO,

P.O. BOX 1289-00100, “BY REGISTERED

POST” NAIROBI.

Dear Sir,

DEMAND LETTER



We have been instructed by our client Mrs. Moses Limutu to address you as follows:



On 19th June 2017, our client painted your home for a contract price of Ksh.1,500,000. While you made the first two of the contract payments as agreed, you have delayed and/or refused to make the final payment of Ksh.500,000.


Our client has made repeated attempts to collect, but you have not come forward with the money.

Our instructions are to DEMAND from you, which we HEREBY DO, the immediate arrangements to make the final payment of Ksh.500,000 to my client.



TAKE NOTICE that unless you comply within the next 30 days from the date hereof, we shall commence proceedings without further reference to you whatsoever and at your risk as costs and other attendant consequences.



Yours faithfully,



MPOLE KAVITA

FOR: MPOLE & SAMU COMPANY ADVOCATES



Cc: Client