Deemed Service Of A Letter Of Demand

Key point

Where the intended recipient of a letter of demand denies receipt in fact, but it can be shown that its service complied with the relevant loan document, the letter of demand will be treated as served.

The facts

A property investor ("A") borrowed funds to purchase a buy to let property (the "Loan"). A subsequently defaulted on the Loan and Redstone Mortgages Limited ("R"), who had taken an assignment of the Loan, demanded repayment by way of a letter of demand served by post (the "Letter of Demand").

A denied receiving the Letter of Demand and refused to repay the Loan but, on summary judgment, R was awarded the principal and interest accruing on the Loan, as well as its costs of the proceedings (on the indemnity basis).

A appealed against the decision and the Court was asked to consider, amongst other things, whether valid demand had been made pursuant to the Letter of Demand, despite A complaining that:

it had not been received; and it had not been sent to the address to which his statements of account were. Decision

On hearing A's case, the Court stated that there was no doubt that R had sent the Letter of Demand and, while A denied its receipt, the Loan conditions were clear: if a letter of demand was sent by post, service was deemed to have occurred on the second working day after being posted, even if the letter were not to reach its destination or were returned. Service was therefore deemed to have taken place at...