Small claim procedure in Malaysia

The small claim procedure in Malaysia offers a streamlined and economical legal method intended for settling disputes involving small amounts of money. This serves as an alternative to the traditional court system, known for its time-consuming and costly nature. The primary aim is to enhance accessibility and affordability to justice for the general public, particularly in situations where engaging a lawyer may be impractical due to the relatively modest disputed amount.

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 offer a simplified avenue for plaintiffs to address their disputes, eliminating the necessity for intricate legal procedures and representation;
• To diminish the backlog of court cases, enabling the court to prioritize more intricate legal matters;
• To hasten the resolution of cases, as small claims hearings follow expedited procedures, avoiding unnecessary delays that complex cases may encounter, potentially taking years to conclude;
• To decrease the financial burdens associated with seeking justice in court, given that small claim procedures typically involve lower filing fees, making it economically feasible for parties to pursue their claims;
• To foster amicable settlements by encouraging parties to engage in negotiation and mediation, aiming for a mutually agreeable resolution.

Pre-requisites of small claims procedure in Malaysia

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.

(1) Parties

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 small 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 for small claim?

After establishing that your case falls within the parameters of a small claim, the subsequent action involves compiling essential documents and evidence to substantiate your claim. This may encompass receipts, invoices, contracts, photographs, or any pertinent materials that can validate your case. It is crucial to verify that you possess all the necessary documentation before initiating the filing process.

After completing the above, you will need to do the following steps:

1. 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.
2. 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.
3. 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.
4. 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 in Malaysia?

Upon receiving a writ of small claim, prompt action is imperative. Begin by thoroughly reading the writ to comprehend the particulars of the claim against you. Paying careful attention to the specified deadline is vital, as a timely response is required.

Subsequently, prepare your statement of defense using Form 199. This document articulates your response to the claim, presenting your arguments and supporting evidence. It is crucial to maintain clarity, conciseness, and factual accuracy in your statement of defense. Address each point raised in the claim and provide substantiating evidence for your arguments.

What if the Defendant failed to file their defence within 14 days of receiving the writ?

Should the defendant neglect to submit their defense within 14 days of receiving the writ, the plaintiff has the option to pursue an application for judgment in default. In essence, this empowers the plaintiff to request the court to grant judgment in default in their favor, bypassing the necessity for a trial or additional proceedings.

Upon the judgment being awarded, the plaintiff can then take steps to enforce it. This might encompass diverse methods, such as garnishing the defendant’s wages, seizing their assets, or securing a charging order on their property.

What to expect during the small claim hearing?

In preparation for the small claims hearing, it is crucial to be ready and anticipate what will transpire. Typically, these hearings occur in a Magistrate’s chamber, offering a less formal environment compared to open courtrooms.

Attending the hearing punctually and arriving well-prepared with all the requisite documents and evidence to bolster your case is imperative. Organizing these materials in a clear and logical manner is advisable to effectively present your case.

During the hearing, the Magistrate will oversee the proceedings, attentively listening to both parties. It is essential to maintain composure, show respect, and stay focused throughout the hearing.

Each party will have the opportunity to present their case and submit evidence. Clearly and concisely elucidate your claim, including pertinent facts, events, and any incurred damages or losses.

The Magistrate may pose questions to clarify specific points or gather additional information. Respond to each query honestly and to the best of your knowledge. If uncertainty arises, it is preferable to acknowledge it rather than providing inaccurate or misleading information.

Ultimately, the Magistrate will evaluate the evidence presented by both parties and make a decision based on the merits of the case.

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?

In the event that both parties come to a mutual agreement, the court will formalize the resolution through a consent judgment, documented in Form 206. A consent judgment refers to a legally recognized agreement reached by the parties engaged in a legal dispute.

Upon reaching a voluntary consensus, the agreement is submitted to the court for endorsement. The court meticulously assesses the terms of the agreement and, if content, officially acknowledges it as a judgment.

Key takeaways

• It is crucial to stay vigilant about deadlines, court appearances, and filed documents throughout the small claims process.
• Keep accurate records of all interactions with the court and the opposing parties.
• Both the plaintiff and the defendant should have a comprehensive understanding of the timelines and prerequisites of the small claims procedure in Malaysia.
• Plaintiffs need to establish a robust case, furnishing all essential documents to substantiate their claim. Meanwhile, defendants should diligently submit their defense within the stipulated timeframe.
• If uncertainties or concerns arise, seeking legal advice is advisable to ensure a proper navigation of Malaysia’s small claims procedure.