A few months ago, I handled a case where my client was asking for RM80,000 in unpaid claims for a construction project.
The debtor replied to us: "Actually, YOUR CLIENT owes us RM300,000."
Ah yes.... one of my favourite debt recovery tactics: the fabled, magical counterclaim.
So, of course, I asked my client: "Have you ever heard about this RM300,000 claim before?"
He said no.
Any previous demand? Also no. Any invoice? Nope. Any calculation showing how they arrived at RM300,000? Tarak. Any complaint when the work was being done? Zilch.
But somehow, the moment we asked them to pay RM80,000; POOF. A RM300,000 counterclaim was conceived out of thin air for "rectification of newly ascertained defects"
Many, many debtors I've faced have tried this tactic, ie. throwing back a huge counterclaim at the creditor. The debtor's thought process (or perhaps how he had been advised by his lawyer), is to make the dispute look much more complicated than it is, to discourage the creditor's claim.
The debtor wants you to think "Jialat... if I sue them, they are going to sue me for RM300,000. Might as well drop the case lah."
But, you cannot just pull a number out of thin air and call it a counterclaim. If it has no actual substantive basis, it cannot deter a legitimate claim.
So I advised my Client to hold his ground and not back off.
We wrote a long a$$ reply asking them to substantiate their counterclaim with documents, basis of loss, calculations, apportionments, evidence of when these claims were first raised, contemporaneous complaints, etc. We also exhibited mutiple Whatsapp and email exchanges showing that the debtor had already agreed multiple times to issue post dated cheques in settlement of the RM80k.
Any rational person could see that our claim was bulletproof and theirs was a work of lousy fiction.
The day before we filed the Writ, the debtor's solicitors immediately contacted us "without prejudice to discuss a settlement that would be beneficial for both parties to save time and cost". Long story short, my client was eventually paid in full via installments.
This is why I tell clients:
Don't be intimidated just because a debtor responds to your RM80,000 claim with a RM300,000 counterclaim.
Yeah... some counterclaims are legitimate, some are very serious. But you must know which ones are simply designed to make you go away. A big number in a lawyer's letter is still just a big number... they still have to prove it.
Rudi Cheu (rudi@rulecolaw.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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