What is a small claim procedure?
A small claim procedure in Malaysia is a simplified and cost-effective legal process designed to resolve small amounts of money disputes. It is an alternative to the regular court system, which can be time-consuming and expensive. Its purpose is to make seeking justice more accessible and affordable to the general public, especially for cases where the disputed amount makes hiring a lawyer impracticable.
Small claims dispute falls under the jurisdiction of the Magistrate Court and is governed by the Rules of Court 2012 (“ROC”).
Here are some typical scenarios where one may opt for the small claim procedure:
- Unpaid bills or invoices: When a customer or client fails to honour their financial obligations, businesses, freelancers or service providers may use the small claim procedure to seek redress.
- Property damage: If an individual or company’s property has been damaged due to someone else’s negligence or misconduct, and the repair cost is relatively small, the small claim procedure might be fitting.
- Disputes over minor contracts can include disputes between tenants and landlords over rental agreements or minor disagreements arising from sales agreements.
- Unfulfilled promises from retailers: If a product or service purchased fails to meet the promised standards and the amount involved is minimal, the buyer may resort to the small claim procedure.
Objectives of small claims procedure
- To provide a platform for Plaintiff to resolve their disputes in a simplified manner, without the need for complex legal procedures and representation;
- To reduce the backlog of court cases and ensure the court can prioritise more complex cases;
- To expedite the resolution of cases as hearings for small claims are procedurally quicker without unnecessary delays compared to complex cases, which may take up to years to be resolved;
- To reduce the costs associated with obtaining justice in the court. Small claim procedures often have lower filing fees, thus making it affordable for parties to pursue their claims.
- To promote amicable settlement as the process encourages parties to engage in negotiation and mediation to reach a mutually acceptable resolution.
Pre-requisites of small claims procedure
The rules and procedure for small claims procedure in Malaysia are stipulated under Order 93 of ROC, which sets a few conditions for such procedure.
According to ROC, only an individual can initiate the action for small claims. This small claim avenue is not available for companies or corporate entities. However, the defendant is not limited to just an individual. Any legal entity, such as companies or small-medium enterprises (SMEs), can be named a defendant.
(2) The subject matter of the claim
Another pre-requisite for the small claim procedure is that the claim must be civil in nature. This means that the claim should not involve criminal offences or other matters that fall under the jurisdiction of other specialised courts, such as the industrial court.
The small claims procedure is designed to handle disputes of a civil nature, such as breach of contract, property damage or unpaid debts.
(3) Amount of disputes
One of the significant prerequisites is that the claim must fall within the monetary limit set by the court. In Malaysia, the small claims procedure is applicable for claims up to RM5,000.
If the claim amount exceeds RM5,000, it would not be eligible for the small claims procedure and would need to be filed through the regular court process.
(4) Valid cause of action
Additionally, the claimant must have a valid and legal cause of action. This means that there must be a legitimate legal basis for the claim. For example, if someone owes you money and has failed to repay it, you have a valid cause of action to recover the debt via a small claim procedure.
However, if you have a mere personal disagreement with someone and want to sue them, that would not be a valid cause of action for a small claim.
Can one hire a lawyer to represent them in small claim procedure?
According to Order 93 Rule 7, no legal representation is allowed for both parties, except where the Defendant is required by law to be presented by an authorised person. For example, a corporate body must be represented by a lawyer in civil proceedings, not by the board members.
As parties, you can consult legal advice from a lawyer, but it is essential to remember that they cannot represent you during the hearing. Small claim procedure is designed to be accessible to individuals without legal training.
The court will provide assistance and guidance to help you understand the procedures and requirements. Additionally, resources are available online and at the court to help you prepare your case and understand the legal principles involved.
How do you file your action as a Plaintiff?
Once you have determined that your case qualifies as a small claim, the next step is to gather all the necessary documents and evidence to support your claim. This may include receipts, invoices, contracts, photographs, or any other relevant documents that can prove your case. It is important to ensure that you have all the required documentation before proceeding with the filing.
After completing the above, you will need to do the following steps:
- Go to the nearest Subordinate Court Registry and request 4 copies of Form 198 (“Writ of Small Claim”). Alternatively, this form can also be downloaded from the e-filing portal.
- Fill all four copies of the form with the particulars of the parties, the nature of the claim and the amount you are seeking against the Defendant.
- Once the required details are correctly filled, the Plaintiff must remember to sign or thumbprint the form personally. A signature or thumbprint is required under Order 93 Rule 4 of ROC.
- Upon completing the form, you will need to file it at the Magistrate Court near you to obtain sealed copies of the form by paying minimal filing fees and to receive a hearing date.
What do you do if you have been served with a writ of small claim?
If you receive a writ of small claim, it is essential to take immediate action. The first step is to read the writ and understand the details of the claim against you. Paying attention to the deadline mentioned in the writ is crucial, as you must respond within a specific timeframe.
The next step is to prepare your statement of defence in Form 199. This document outlines your response to the claim and presents your arguments and evidence. It is essential to be concise, clear and factual in your statement of defence. Ensure to address each point mentioned in the claim and provide supporting evidence for your arguments.
What if the Defendant failed to file their defence within 14 days of receiving the writ?
If the defendant fails to file their defence within 14 days of receiving the writ, the plaintiff can proceed with an application for judgment in default. This means the plaintiff can ask the court to enter the judgment in default in their favour without needing a trial or further proceedings.
Once the judgment is granted, the plaintiff can proceed to enforce the judgment. This may involve various methods, such as garnishing the defendant’s wages, seizing their assets, or obtaining a charging order on their property.
What to expect during the small claim hearing?
During the hearing for small claims, it is vital to be prepared and know what to expect. Typically, it will take place in a Magistrate’s chamber, a less formal setting than open courtrooms.
When attending the hearing, arriving on time and being well-prepared with all the necessary documents and evidence to support your case is essential. Organising these documents clearly and logically is advisable to present your case effectively.
During the hearing, the Magistrate will preside over the proceedings and listen to both parties involved. It is important to remain calm, respectful and focused during the hearing.
Parties will be allowed to present their case and submit their evidence. Clearly and concisely explain your claim, including the facts, events, and any damages or losses incurred.
The Magistrate may ask questions to clarify specific points or seek further information. Answer each question honestly and to the best of your knowledge. If you are unsure about something, it is better to admit it rather than provide incorrect or misleading information.
The Magistrate will consider the evidence presented by both parties and decide based on the case’s merits.
Can you appeal the decision made by the court?
It is essential to note that the small claims court’s judgment is final and binding. If you are dissatisfied with the decision, you cannot appeal the decision, regardless if you are a Plaintiff or the Defendant.
Therefore, presenting your case effectively and providing all the necessary evidence during the hearing is crucial to maximise your chances of a favourable outcome.
What happens if both parties agree to a settlement?
If both parties agree to a settlement, the court will enter a consent judgment in Form 206. A consent judgment is a legal term to describe an agreement between the parties involved in a lawsuit.
Both parties reach a voluntary agreement, which is then presented to the court for approval. The court will review the terms of the agreement and, if satisfied, will enter it as a judgment.
- Keeping track of all deadlines, court appearances, and documents filed is essential throughout the small claim procedure.
- Maintain precise records of all communication with the court and your opposing parties.
- Overall, both the plaintiff and the defendant must understand the timelines and requirements of the small claim procedure in Malaysia.
- The plaintiff should ensure they have a strong case and provide all necessary documents to support their claim, while the defendant should diligently file their defence within the required time.
- If you have any doubts or concerns, consider seeking legal advice to ensure you properly navigate Malaysia’s small claim procedure.