Is failure to reply an admission of Debt

A commentary on PECD Construction Sdn Bhd v Freehold Point Sdn Bhd and Tan Cheng Hock v Chan Thean Soo by Ng Chian Huey

 

 

 

PECD CONSTRUCTION v FREEHOLD POINT [2008] 3 CLJ 215

In this case, the Plaintiff applied to the High Court for an injunction to restrain a winding-up petition from being presented based on a statutory notice of demand issued under section 218 of the Companies Act 1965 by the Defendant. That notice was premised on the Defendant’s claim for the balance of purchase price for goods sold and delivered to a third party company, the payment of which was to be made by the Plaintiff.

 

Vincent Ng J. (as he then was) dismissed the Plaintiff’s application for the injunction on the ground that the issues raised by the Plaintiff were unsubstantiated.  In the course of his judgment it was held that:-

 

The Plaintiff did not deny the receipt of the Defendant’s letter that stated that the Plaintiff agreed to release to the Defendant payment for the balance of the purchase price. Nor was there any letter to dispute the debt of RM133,640.00. Since there was no oral or written response to that letter, the Plaintiff should be deemed to have admitted the said debt. It followed that the amount demanded in the section 218 notice was a debt clearly due and outstanding to the Defendant and the injunction prayed for ought to be dismissed with costs.” (emphasis added)

 

In arriving at its judgment, the Court applied the decision of Gopal Sri Ram JCA in David Wong Hon Leong v Noorazman Adnan [1995] 4 CLJ 155 where the learned judge cited with approval the judgment of Edgar Joseph Jr. J (as he then was) in Tan Cheng Hock v Chan Thean Soo & Anor [1986] 1 LNS 42:-

 

“In Wiedemann v Walpole ([1891] 2 QB 534), an action for breach of promise of marriage, it was held that the mere fact that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff’s testimony in support of such promise. Lord Esher M.R., in his judgment, remarked, “Here, we have only to see whether the mere fact of not answering the letters, with nothing else for us to consider is any evidence in corroboration of the promise” (emphasis added). Earlier, in his judgment, he said, “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.”

 

The latter observation was relied on by Vincent Ng, J to hold that the Plaintiff’s failure to reply to a letter from the Defendant asserting that it was owed money amounted to an admission.

 

 

TAN CHENG HOCK V CHAN THEAN SOO & ANOR [1986] 1 LNS 42

In Tan Cheng Hock v Chan Thean Soo & Anor, the trial judge Edgar Joseph Jr. J. was invited to draw an adverse inference against the Defendant for his failure to reply to two notes calling for a compromise.

 

The learned judge, after referring to Wiedemann v Walpole, held as follows:-

 

In this case, having regard to the shifting stances adopted by Mr. Chan when cross-examined about the two notes, I did at one stage think that perhaps his silence upon receipt of those notes might be construed as an admission of their contents. However, at the end of the day, I considered that to be fair to him, I should not so construe his silence. Accordingly, I did not treat his silence as an admission of the contents of the notes.

 

Notwithstanding the same, the learned Judge ruled in favour of the Plaintiff based on other evidence adduced before the Court.

 

 

CONCLUSION

Although the High Court in PECD Construction Sdn Bhd v Freehold Point Sdn Bhd held that a failure to reply amounts to an admission, Tan Cheng Hock v Chan Thean Soo shows that the Court is not necessarily bound to do so, even though the Court does not question the principle laid down in Wiedemann v Walpole.

 

It is submitted that it will be prudent for a party who denies liability for a debt to issue an appropriate response to a letter of demand or other written allegation of liability to avoid a similar outcome as in PECD Construction Sdn Bhd v Freehold Point Sdn Bhd.

 

 

NG CHIAN HUEY ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 
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