A letter of demand before a claim: when it works and when it does harm

First of all, there is no obligation

Contrary to the common impression, the Civil Procedure Regulations, 5779-2018, do not require a letter of demand or any prior approach before a civil claim is filed. They contain no such provision.

Even so, failing to send one is not without consequences, and these flow from three other regulations. Regulation 3(b) provides that the parties and their counsel have a duty to assist the court and to act in good faith and with procedural fairness. Regulation 4 prohibits abuse of process, including action that is disproportionate to the nature, cost or complexity of the proceedings. And regulation 151(c) empowers the court to award costs against a party who abused the process of the court or failed to comply with the regulations, and in special circumstances even against that party's counsel.

In other words, the consequence is not an automatic sanction for failing to send a letter, but a factor within the court's discretion when awarding costs. Filing a claim for an amount that would have been paid after a phone call looks very different from a claim preceded by an approach that was met with silence.

What a good letter actually achieves

• It creates a date. It fixes when the demand was made, which is relevant to interest and linkage, and sometimes also to limitation and the date of knowledge.
• It commits the other side to a position. A written reply is an asset. Even a blanket denial written in haste constrains the other side later on.
• It filters. Some disputes are resolved the moment someone realises the other side is serious. That saves the entire cost of proceedings.
• It builds the record of conduct. At the end of the proceedings, when costs are awarded, the court also looks at who tried to resolve the dispute and who did not.

And when it does harm

• When it shows your hand. A letter that sets out all the evidence allows the other side to prepare, and sometimes even to conceal or repair.
• When it gives time to someone who should not have it. Where there is a risk that assets will be moved out of reach or that the situation on the ground will be changed, advance warning is exactly what must be avoided. In such cases the remedy is interim relief, not a letter.
• When it threatens what cannot be carried out. A threat that is not carried out weakens everything written after it.
• When it is written in anger. A letter meant to vent frustration reads exactly that way, and the other side will attach it to the statement of defence.
• When it waives without meaning to. Careless wording of a narrow demand may be read as a waiver of everything else.

What it should contain

• Clear identification of the parties and of the contract or the event.
• A short, accurate factual account that can be proved. No interpretation and no accusations.
• The demand itself, quantified as far as possible, and clear as to what will satisfy it.
• A reasonable deadline for a response, suited to the complexity of the matter.
• An express statement that the letter does not waive any claim.
• A statement that proceedings will be taken if no response is received, without spelling out threats that are not meant to be carried out.

And what it should not contain: every judgment you have found, every document in your possession, and every alternative argument you will raise later. A letter of demand is not an early statement of claim.

When there is no reply

Silence is in itself a fact. It establishes that an opportunity was given, and it becomes relevant in due course when costs are awarded under regulations 151 to 153. At that stage the question is no longer whether to write again, but whether the right remedy is a claim, an application for interim relief, or recourse to a dedicated forum.

It is also worth making sure the letter is delivered in a way that can be proved. A letter that was sent but whose delivery cannot be shown is not worth much at a hearing.

Bottom line

A letter of demand is not mandatory, so sending one is a tactical decision, not a formality. The right question is not whether to send it, but what we want to achieve: payment, a written position, a date, or simply the ability to show at the end that we tried. The answer determines both what goes into the letter and what is left out.

Nothing in this article constitutes legal advice or a substitute for it, and every case is assessed on its own circumstances.