Letters of Demand - Standard of proof to demonstrate that a demand letter was issued

Declan McDonald v Thomas Michael Hill [2014] IEHC 629

In a recent judgment of Mr. Justice Binchy, an issue arose surrounding the standards of proof that a bank must demonstrate to prove that a letter of demand was sent to a mortgagee prior to the appointment of a receiver.

This judgment arose from an application for interlocutory relief in which the plaintiff (acting as receiver on behalf of Dankse Bank (the Bank)) sought orders to restrain the defendant from interfering with and obstructing the work of the plaintiff in respect of a property that had been charged in favour of the Bank as security.

The Bank had issued a letter of demand for repayment of monies due under a loan agreement on 22 November 2013.  The plaintiff was then appointed as receiver on 14 April 2014.  The defendant argued and maintained that no letter of demand was sent to him as he claimed he would have received it.  The central dispute was therefore whether or not the Bank had actually sent a letter of demand to the defendant.

The deed of mortgage stated that the "monies owing upon this security shall be deemed to have become due….immediately on demand for payment being made by the Bank….such demand may be effectually made by notice in writing either left at or sent by post to the mortgagor either at the mortgagor's usual or last known place of abode or business in Ireland, or left for the mortgagor on any part of the mortgage property…"

The plaintiff's contention that a letter of demand for the repayment of monies owed was sent to the defendant on 22 November 2013 was supported by affidavits from officers/employees of the Bank to the effect that the demand letter was "checked, printed, signed and placed in the internal bank postage process (for subsequent external posting to the defendant via the Head Office of the Bank)…".

The Judge noted that the plaintiff did not have evidence to prove to the court that the letter was sent as a matter of certainty.  The lack of evidence surrounding the posting of the letter of demand also called into question the validity of the plaintiff's appointment as receiver.

The Judge noted that there did not appear to be any authority dealing with the standard of proof required to demonstrate that a letter of demand had been sent prior to the appointment of a receiver.  The Judge determined that there was a serious issue to be tried and on that basis, refused the relief sought by the plaintiff.

The full judgment can be accessed here.

For more information please contact Louise McNabola, lmcnabola@algoodbody or your usual contact in A&L Goodbody Solicitors.

Date Published: 27 January 2015