The Tribunal and mediation

The Small Claims Tribunal uses mediation to help parties settle their dispute before the matter is actually heard by a referee or judge. In fact, the Subordinate Courts website states that this is used extensively in the Tribunal -
see http://app.subcourts.gov.sg/sct/page.aspx?pageid=8617

What is mediation? This is a process where the mediator tries to persuade the parties to settle their dispute without a normal hearing. The keyword here is persuade. He cannot force any parties to agree to the settlement.

The mediation process is meant to be confidential so anything that a party says here cannot be repeated elsewhere. To preserve confidentiality, the mediator is also a different party from the referee who hears the case.

The mediator will try to convince both parties that a settlement is in their best interests rather than an acrimonous hearing where each side makes allegations about the other. Options to satisfy both parties are explored including apologies, partial payment of the claim, and promises to remedy defects or shortfalls in expected services.

In a normal court mediation (not one in the Tribunal), the mediator will often point out the high risk and costs of fighting a case in court with a party having to pay his own lawyer for court preparation as well as time spent in court. In addition, the rule is that the loser of a lawsuit has to pay the winner's legal fees. However, these points will not be relevant to a Tribunal claim.

When not to use the Small Claims Tribunal

Suing in a Tribunal often takes more time compared with Subordinate Courts lawsuits, especially if you are not familiar with court procedures, but in the end, it is often cheaper.

However, if you decide to sue in the Subordinate Courts, the Magistrate's Court can handle claims of up to $60,000. You can hire a lawyer to handle all your paperwork. And the usual rule applies - the loser pays legal fees of the winner.

Note however, that this rule does not mean that you get all your legal fees. As a very rough guide, you may receive about 75% of your legal fees. Also, if the other party is insolvent, then you will not recover either this amount or the money owing to you under your claim.

So the question is whether it is worth the risk in order to have a lawyer handle all the court procedures.

Law - what is a claim?

As readers may know, the Small Claims Tribunal has a $10,000 limit on claims, which limit is increased to $20,000 if both parties agree.

The issue to be examined here is what is a claim? Every breach of contract can be considered a claim. Of course, one cannot divide a single claim into smaller claims in order to come within the Tribunal limit. However, every allegation of breach of contract can be considered a separate claim.

For example, if you bought a computer package consisting of CPU unit, monitor, printer, every instance where the package did not conform to the contract could be considered a claim. For example, if the processor and the graphics card were different from what was promised, these could be considered 2 separate claims.

The above suggestion would of course only be useful if you entered into an expensive contract worth much more than $10,000, so that your claims if not carefully drafted may well exceed the Tribunal limit.

Proof of your contract

In an earlier post, I mentioned that for breach of contract cases, you may have to prove the terms of the contract between you and the other party.

Besides any written document that you sign, what other documents might contain other contract terms? Some of the documents that the other party may have used and which you may argue form part of the contract -

a) newspaper advertisements of the other party;
b) television commercials;
c) brochures;
d) catalogues; and
e) even webpages (print these out if necessary and noting the date on the print out).
Copies of all these documents should be provided to the court and to the other party during any Tribunal hearing.

Advertisements are important in showing what can be expected by a customer from a vendor or service provider. I remember a case (not in the Small Claims Tribunal) where the other party, a awning installer, had sued a food court operator for the installation fees. The awning installer had advertised the safety aspect of its products and services in the Yellow Pages. Yet, the awning collapsed after a heavy rain. The court was not impressed with the awning installer's claim and dismissed it.

Contract - damages

Even if you cannot prove a direct financial loss for the other party's breach of contract, you may be able to claim damages for loss of amenities. This means in simple English, that you suffered from less enjoyment.

Some simple examples -

• you buy an high end stereo system costing $10,000 and the sound that comes out sounds like a $200 system, which you used for 3 months before you obtained compensation,
• you buy a high end sports car that is supposed to accelerate from 0-100 km/h in 5 seconds but it takes 10 seconds to do so;
• you are promised a beautiful view when you rent a holiday chalet for a week at East Coast Park but the chalet only faces the rubbish dump.

There is of course no easy way to ascertain how much the loss of amenities is worth but the judge will use the cost of the entire contract as one of the guiding factors.

Misrepresentation 2

This posting is to further clarify what is meant by the phrase that "a misrepresentation must be operative".

The other party may make false statements of facts to you but to show misrepresentation, you have to show that the statement was important to you.

For example, before you buy a Porsche sports car, the salesman tells you that the car was designed by the famous designer Guigaro and its top speed is 350 km/hour. Both statements are untrue but if you can convince the judge who the designer is, was important to you, then the misrepresentation is operative. On the other hand, the salesman may be able to show that you are a careful driver who never exceeds the speed limit and who does not drive the car to Malaysia. In that case, the judge may well conclude that the top speed was unimportant to you and therefore the mispresentation was not operative.

Suing for breach of contract - contract terms

Proving the terms of a contract -

If there is a written document, then the document will be proof of the terms of the contract. If the contract was made orally, then it can still be proved. However, if the other party disputes your account of the terms, then the judge will decide who is more likely to telling the truth.

Solution - tape record any promises made by the other party. This can even be done after the contract has been made - e.g. you get the other party to admit that he failed to do certain things promised under the contract.

Note that Singapore law allows tape recordings to be used in court but some other countries do not.

It is possible for a contract to be made partly in writing and partly orally so don't give up if the other party is relying on a written contract. But trying to argue that the contract is partly written or partly oral may not always be easy.

Suing for breach of contract

If you are suing for breach of contract, you have to prove the following -

• the terms of the contract with the other party,
• the other party breached one or more of the contract terms, and
• you suffered loss due to the breach.

A later post will deal with these issues separately.

law - misrepresentation

The case of Clemen Chiang raised the issue of misrepresentation.

This area is part of tort law although it is closely related to contract law. Misrepresentation refers to false statement of facts not opinions. Importantly, the misrepresentation must be operative or act as an inducement. This means that the false statement must affect the contracting party and induce him into entering the contract.

In the light of the Lehman Brothers fiasco, there are questions about whether a mass lawsuit can be filed against the sellers of Minibonds and other exotic instruments for misrepresentation. If the misrepresentations are made in a written document, then there are no major problems (see for example, the Raffles Town Club lawsuits, although the court found there was no misrepresentation). However, where the statements are made wholly or partially orally, trying to start a mass lawsuit (or what lawyers would call a class action lawsuit) would pose many problems.

Clemen Chiang, Freely Business School 2

Another 122 people are going to the Small Claims Tribunal to sue Clemen Chiang after the Straits Times reported a few days ago about successful mass claims against him and his school for misrepresentation. This 2nd group of persons want refunds of between $3,500 to $15,000 which they had paid in seminar fees.

Since the Small Claims Tribunal can only award up to $10,000 in one claim, it is likely that those claiming more than this limit are willing to give up their claim for the remainder, and are using the tribunal in order to avoid expensive legal fees and complicated court procedures.

It is thought that the claims made against Chiang are the largest number filed against any party in the Tribunal.

Clemen Chiang, Freely Business School 1

In March 2009, the Straits Times reported that 49 customers of well known options trading lecturer Clemen Chiang won their lawsuits against him and his business school, Freely Business School. The suits were filed in the Small Claims Tribunal.

The court found that there was misrepresentation by Chiang as he had claimed that he had a doctorate or PhD in options trading (something that is quite rare) but that this degree was from an unaccredited university.

For compensation, the court ordered a refund of 80% of lecture fees and 100% refund of software and web seminar fees.

Time limit to sue in Small Claims Tribunal

The Consumer Protection (Fair Trading) Amendment Act 2008 has now increased the time limit to sue in the Small Claims Tribunal from 1 year to 2 years.

This is indeed a welcome move. However, it is puzzling why the normal contractual time limit of 6 years is not applied to small claims.