Need to send notice or letter of demand?
If a company owes you money and you need to send a love letter a.k.a a notice of demand to them, how do you do it? This matter was briefly looked at in the High Court case of Tee Yam Holdings Sdn Bhd v Shanghai Capital Sdn Bhd; Tenaga Nasional Bhd (Petitioner)1.
Brief facts of the case
TNB sued Shanghai Capital for a sum of RM109, 276.25 for the non-payment of electricity bills. In this regard:
- TNB successfully obtained summary judgment in the Session Court against Shanghai Capital;
- A statutory notice of demand2 was issued against Shanghai Capital, demanding for the payment;
- Shanghai Capital did not respond to the demand, TNB proceeded to file a petition to wind up Shanghai Capital; and
- As Shanghai Capital did not oppose the application, the court proceeded to wind up Shanghai Capital.
However, this was not the end of the story. Almost more than one and a half years after the winding-up, Tee Yam Holdings, a contributory of Shanghai Capital, filed an application to terminate and/ or set aside the winding-up order3.
The parties’ contention
Tee Yam Holdings (amongst others) claimed that the petition should not have been allowed by the court as the service of the statutory notice was defective, as the statutory notice was made through a registered post and was not handed or left at Shanghai Capital’s registered office personally.
TNB opposed the application. They contended (amongst others) that the service is still good service, even though the service was made through a registered post.
The court’s judgment
The court dismissed Tee Yam Holdings’ application and ordered Tee Yam Holdings to pay the cost for bringing the matter to court to TNB.
The court’s rationale
In coming to its decision, the court held that the wording with respect to the service of notice must be scrutinized. In regards to this matter, section 466(1) (or formerly section 218(2)(a))4 states that:
“A company shall be deemed to be unable to pay its debts if a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding five hundred ringgit then due has served on the company by leaving at the registered office a demand under his hand or under the hand of his agent thereunto lawfully authorized requiring the company to pay the sum so due, and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor.”
Based on the wording of section 466(1), specifically the phrase “leaving at the registered office a demand…”, the court posed this question: Does it mean that the notice must be left or handed over at the registered office physically and personally by an individual or can the notice be served via registered post?
- The notice of demand can be served via registered post;
- Based on the wording of the section, it seems that the service could have been done by anyone, including TNB lawyer’s dispatch clerk, or TNB employee/ agent/ servant;
- If that is the case, why TNB cannot use a postal service worker to deliver the notice?;
- What is important in this whole exercise is that there is adequate proof that the notice has been sent by the creditor;
- Even if the service of notice was not done properly, the court will not automatically strike out a petition unless the Court is in the opinion that such impropriety would have caused substantial injustice to the debtor; and
- Based on the facts, and to make matters worse for Tee Yam Holdings and Shanghai Capital, neither Tee Yam Holdings nor Shanghai Capital contended that the postal service had not delivered the notice to them nor did they deny the fact that they had received the notice. Therefore, the application must be dismissed.
In conclusion, one can send a notice of demand personally or even via a registered post, as long as there is evidence to show that the letter has been sent to the company’s registered office.
Contact us if you need to send notice of demand:
1.  5 CLJ 130.
2. Section 218, Companies Act 1965 (now Companies Act 2016).
3. Section 493(1) and (2)(c), Companies Act 2016.
4. Companies Act 2016 (formerly Companies Act 1965).
5.  3 CLJ 511.
6.  1 LNS 63.