Part 1 : My Company/I am Owed Money : Small Claims Court

Debt recovery is thorny for Small Medium Enterprises (SME), or even individuals as claiming a debt through a lawyer is not logical in circumstances where the legal fees may exceed the debt owed.

A practical way of looking at it is that the method and manner of proceeding with your Claim depends on the value of the outstanding sum owed.

In Part 1, I would address debt recovery for debt outstanding/goods under RM 5,000.00 of which the Company representative or individual can act for themselves to seek remedy, while in Part 2, I shall address matters that are above RM 5,000.00 of which it would then be financially feasible (or not) to appoint a lawyer to act on your behalf.

Part 1 allows SMEs to be able to recover amounts owing without having to write them off as bad debts. While RM 1,000.00 – RM 5,000.00 may not be much for some, it could be a lifeline for some SMEs especially if they are a vendor with multiple clients who owe them small sums of debts as it can mount up to quite a large sum if not recovered. SMEs can exercise their legal rights under the law.

If the value of your debt/goods are under RM 5,000, I would recommend the Small Claims Court.

Procedure

Small Claims Court (Order 93, rule 2 ROC) is normally utilized by SMEs and individuals seeking remedy of a debt accrued.

a. At any Magistrate Court in Malaysia there is an officer who can assist you in this process and provide copies of Forms 198, 199, and 200. The official language of the Court is Malay.

b. He/She would provide Form 198 (Small Claim Writ and Statement of Claim) for the Plaintiff to set out what is the amount and particulars to the claim.

i. Sign or press thumbprint, and file four (4) copies of the Form and e-file it to Court with RM10.00 filing fees;

c. Once Plaintiff have e-filed the Form, you will obtain an Extraction copy of the Form 198 which includes the seal of the Court and serve it to the Debtor Defendant either personally By Hand or by A.R. Registered Post to his/her last known address;

d. If the Defendant is the recipient of a Small Claim Writ, he/she has to file a defence and counterclaim under Form 199 within 14 days of receiving the claim to dispute it, and if there is a counterclaim, the Plaintiff may file a defense to the counterclaim under Form 200.

i. Method of signing, filing, and service is the same as the Small Claim Writ;

e. When both the Writ and the Defense is filed, the Magistrate Court will formally give a Case Management notification to both parties to set out the administrative aspects of the case, to attend to get further directions and to fix a hearing date.

f. If at any time prior to the Hearing the Defendant offers to settle out of Court, the Plaintiff can choose to accept by

i. Writing a letter confirming acceptance to the Defendant in reply to the offer letter

ii. Sending a copy of the said letter to Court

g. On the Hearing date, the Court shall give directions to file Witness Statements and Bundle of Documents.

i. Witness Statements are written in Q & A format. The Witness is usually the person who is directly involved in the case and is able to provide factual confirmation of certain facts related to the Claim.

ii. Bundle of Documents are a compilation of documents relating to the Claim, be it contract agreements, proof of orders/Invoices etc.

h. Once the Witness Statement is filed a Hearing date is set by the Court to determine the Hearing or Trial date. Depending on the Magistrate, the Hearing would be conducted as if a Trial where parties are allowed to question and cross-examine each other on the facts and evidence of the Case or an interview-style where the Magistrate questions both parties.

i. Then there will be a Closing Submission where you summarise points of your Claim, and then a Decision shall be delivered by the Magistrate on the outcome of the Claim.

j. The winning party will have to file an Order to Court so that the Decision can be sealed by the Court and be enforceable where you can demand payment from the Defendant.

k. Pre-MCO timeline is roughly 3-4 months from the beginning to extraction of the Order. The maximum costs allowed by the Court is RM100.00.

Documentary Flowchart

In general, the above are procedures that any Company or Individual can file for themselves for Claims under RM 5,000.00.

This is intended as general guidance not actual legal advice. Please contact me at aziraaziz.law@gmail.com or fill up a form at www.aziraaziz.com for detailed legal services related to above, or anything at all related to law and policy.