The New York City Small Claims Division, which is part of the Civil Court of the City of New York, handles approximately 70,000 consumer complaints each year. There is a Small Claims Division conveniently located in each of the five counties comprising the City of New York. In the counties of New York, Kings and Queens, sessions are held four nights each week, in the Bronx three nights each week and in Richmond County once a week. In addition, in New York County a Small Claims Division, held in East Harlem, provides a bilingual service particularly for Spanish speaking residents of New York City. I witnessed the operation of the mono-lingual Small Claims Division in New York County.
The New York City Civil Court Act and Rules provide that to commence a proceeding a claimant or someone on his behalf must appear at the office of the Small Claims Division having jurisdiction. A suit may be brought only by an individual or on his behalf. Corporations, partnerships, associations, assignees or insurers may not sue; they may only be sued. The claim must be for money only and must involve a claim not in excess of $ 1000. Cases of a complicated nature may in the court’s discretion be transferred to the regular division of the court. Moreover, the appearance of lawyers is not encouraged; indeed, if both sides appear with counsel, the case must be transferred to the day-court. Out of 70,000 claims filed annually more than 68,000 are filed by claimants without an attorney.1
The claimant supplies the intake clerk with the following information: (1) his name and address; (2) the defendant’s name and address, place of business or employment; (3) the nature and amount of his claim; and (4) all dates and other relevant information concerning his claim. Thereupon he pays the required fee, secures a notice of claim, and the small claim proceeding is commenced. There are no formal pleadings on the part of either party to the action.
The hearing date is fixed for not less than 15, nor more than 30, days thereafter, as required by statute. The claimant or person representing him is given a form notice setting forth the date, time and place of the hearing, and directing him to be present with his proof and witnesses, if any, in support of his claim. Subpoenas are available to compel the attendance of witnesses. The clerk then forwards to the defendant by registered mail the notice of claim which includes the date, time and place of hearing. By this notice the defendant is directed to produce witnesses or proof of any defence at the appointed time and place and he is further advised that, if he fails to appear, judgment may be entered against him. If a defendant, in his answer to a claim, asserts a cause of action against the claimant, that cause of action will be heard with the original claim. However, if the counter-claim demands recovery of damages in excess of $1000, the entire case is transferred to the regular day-time proceedings of the court.
Each calendar call at 6.30 p.m. in the respective counties usually consists of 120 to 200 cases. Prior to calendar call, litigants are advised that they may have their cases tried before the presiding judge (a judge of the Civil Court) or before an arbitrator. The latter are experienced attorneys, usually seven to ten being in attendance each night. Approximately 80 per cent of the cases tried in the Small Claims Division are tried before the arbitrators.2 The decision of the arbitrators is final and binding. An appeal does not lie from a judge’s determination unless it can be shown that substantial justice was not done according to substantive law.
Where parties agree to arbitration they acknowledge their consent in writing and are assigned a hearing room. At the head of the table sits the arbitrator and, on the sides, the claimant and defendant. The arbitrator’s first duty is to effect a settlement, if possible. Failing that, he proceeds to take sworn testimony without a record. To facilitate hearings in the Small Claims Division statutes and rules governing the practice in the Supreme Court are not followed. Rather, the court is obliged to render “substantial justice” according to the rules of substantive law but 14 without regard to the rules of evidence or practice”.3 The form of the hearing is the same as for a trial. The parties testifying are duly sworn; the claimant presents his case and a right of cross-examination is afforded to the other side; witnesses may give evidence and be cross-examined; exhibits are introduced; the defendant presents his version of the claim; he may be cross-examined; and witnesses in his support may be called. Upon conclusion of the hearing the arbitrator reserves his decision and, after the parties have left, he makes a note of his finding.
Most matters are settled. If a claim is not settled and the parties proceed to trial, a claimant securing judgment will be awarded his disbursements for filing and mailing the summons. Where a judgment is not paid, the claimant may secure execution on the defendant’s property upon payment of a $5.00 fee to the Sheriff or City Marshal. This fee is another expense chargeable to the debtor.
In New South Wales a small claims system has been operative since 1974. The Consumer Claims Tribunal Act, 1974,4 provides for the constitution of a Consumer Claims Tribunal by a referee sitting alone. A referee is appointed by the Governor, holds office for a term not exceeding seven years, and is eligible for re-appointment. Claims may be lodged with the Registrar of the Consumer Claims Tribunal or any Clerk of Petty Sessions. The Tribunal has jurisdiction to hear only consumer claims which are defined by the Act. Orders made by the Tribunal are limited to $1000 or the performance of work not exceeding $1000 in value (the increased limit of $ 1 000 applies from 25 June, 1976).
Evidence is required to be given on oath but the hearing is conducted in an informal “round table” atmosphere. The Tribunal is not bound by the rules or practice as to evidence and may inform itself of any matter in such manner as it thinks fit. The Act prohibits representation of the parties by a solicitor or barrister, unless all parties to the proceeding agree and the Tribunal considers that a party will not thereby be unfairly disadvantaged. To the date of writing all parties have been unrepresented.
The referee uses his best endeavours to bring the parties to a settlement acceptable to all before making an order. Where this is not possible the referee makes an order which is, in his opinion, fair and equitable to all the parties to the proceeding. The Tribunal may make an order dismissing the claim, or requiring a party to the proceeding, other than the claimant, to pay money to a person within a specified time, to perform work, or to take other steps to rectify a defect in goods or services within a specified time. The proceedings of the Tribunal are not subject to review by any court, except where it is alleged that the Tribunal had no jurisdiction or that a denial of natural justice to any party to the proceedings has occurred.5
There are substantial similarities between the small claims procedures in New York and New South Wales. However, the small claims system in New York raises some significant matters for comment. The first matter concerns the hearing of small claims at night. The small claims procedure in New York is undoubtedly popular; as stated above, approximately 70,000 claims are filed each year.6 However, in the United States, some reservations were expressed to me about the justification for, and popularity of, night courts. Certainly there is an argument for the introduction of night courts on a limited basis as an alternative for the working man or woman who cannot get time off work or can do so only with great difficulty. The New South Wales Government accepted this argument and introduced night courts from 19 July, 1976. On Monday and Tuesday, hearings are scheduled for 6, 7 and 8 p.m. At this early stage the demand for night hearings is moderate only.
Secondly, the small claims procedure in New York is clearly part of the court system; the Small Claims Division is part of the Civil Court of the City of New York. In New South Wales the Consumer Claims Tribunal is clearly separated from the court system, being under the control of the Minister for Consumer Affairs and Minister for Co-operative Societies. It is difficult to understand why. Section 31 of the Act provides that the evidence material to the proceeding shall be given on oath, and section 32 provides that the issues in dispute shall be resolved by the Tribunal on the evidence adduced before it. These sections show that the referees are required to act judicially. Moreover, section 25 provides that orders made by the Tribunal may be enforced through Courts of Petty Sessions. Despite the informal procedures of the Tribunal it is clearly a court and should be administered by the Department of the Attorney General and of Justice, which is responsible for all courts. Moreover, the Tribunals should be not only administratively but, wherever possible, physically within the court -system. I recommend below an extension of the claims that may be brought in the Small Claims Tribunal. If this recommendation is adopted additional facilities and personnel will be required. It seems to me that, for reasons of economy and efficiency, the Tribunals, wherever possible, should be closely linked with existing Courts of Petty Sessions.
The third matter concerns the status of claimants. I recognize the problems inherent in a proposal to extend the right to bring a claim to those other than consumers. Indeed, under the New York City Civil Court Act small claims courts are closed to, inter alia, corporations, partnerships, associations, and assignees of small claims. One reason for restricting claims to consumers is that some small claims systems have been transformed into collection agencies for business concerns.7 These business concerns consider the use of the small claims procedure to be an attractive alternative either to selling the claim to a collection agency, or to prosecuting the defendant through the slow and costly mechanisms of the regular part of the court. I do not recommend that proprietary companies be given access to the Tribunal but there is a case for granting limited access to the Tribunal to proprietors of small businesses. Many small businessmen appreciate the small claims procedure because it is a quick, cheap and final procedure. This proposal may not be politically acceptable to governments generally but it seems fairer to all concerned.
The final issue concerns the nature of the claims that may be brought in a small claims system. In New York City the Small Claims Division, in effect, possesses jurisdiction over any cause of action which is brought solely for a money judgment not in excess of $1000. Prior to 1963 the term “small claims” included all claims, causes of action and counterclaims under $300, with the exception of certain real property actions. In 1963, however, small claims in New York City were restricted to actions solely for a money judgment (the limit of jurisdiction was subsequently raised to $500 and then to $1000 to keep pace with inflation).8 By contrast, the Act in New South Wales is limited to, inter alia, claims “arising out of a contract”.9 There are proposals now under consideration whereby claimants will be able to sue for the return of rent deposits (“bond money”) and where disputes arise from the performance of professional services.
My recommendation is that the ambit of claims should be broadened to include actions in tort, at the very minimum. Indeed, the fundamental question ought to be, what categories of claim should be excluded from the small claims procedure, rather than what categories should be included within it. The Consumer Claims Tribunal provides a simple, inexpensive, prompt and informal means of resolving relatively small disputes. Perhaps most importantly, the Tribunal may achieve a fairer result than that obtained in the normal adversary proceeding. At present, litigants for claims under $1000 must generally bring their actions in Courts of Petty Sessions. Where a party is unrepresented the magistrate will usually give a sympathetic hearing to his case and stretch the rules ,of evidence and procedure. This is particularly so where the issue in dispute is confined to an issue of fact. Where questions of law are involved, the represented party is clearly in an advantageous position. If the unrepresented litigant were able to bring his claim before the Consumer Claims Tribunal this problem would not arise.
Footnotes
1. Manual, Small Claims Part: Civil Court of the City of New York (amended October, 1975), p. 6.
2. Determan, “The Arbitration of Small Claims,” Forum (1974), P. 840.
3. New York City Civil Court Act, 1804.
4. Act No. 16, 1974.
5. Consumer Claims Tribunals Act, sections 20-21;
6. It is arguable that there is too much pressure on the claimant to submit to arbitration and that the work-load of the arbitrators - up to 15 cases per night - is too heavy, thus causing some matters to be rushed.
7. “The Nature and Operation of the New York Small Claims Courts”, 38 Albany L.R. (1974), pp. 196, 203-205.
8. Id. 198, note 27.
9. See definition of “consumer claim” in section. 4 (1).
