CNA Explains: What you need to know about claiming damages in a car accident - even if it happens in Malaysia

SINGAPORE: A Singaporean man who suffered permanent brain injuries from a car chain collision in Malaysia was awarded S$4.7 million (US$3.5 million) in damages by Singapore's High Court earlier in June.

CNA spoke to lawyers to answer commonly asked questions on how victims of motor accidents can obtain compensation via lawsuits for damages.

What kinds of damages can be claimed?

There are typically four main components in death or injury claims, said Mr Raj Singh Shergill, managing partner at the Lee Shergill law firm.

These are: 

• General damages comprising the likes of pain and suffering, loss of future income and future medical expenses.
• Special damages compensating for loss and expenses that have already occurred by the time damages are assessed. These include medical and transport expenses, as well as pre-trial loss of income.
• Interest on the damages for pain and suffering and loss of amenities - at 5.33 per cent per annum from the date proceedings are commenced. There is also interest on special damages at 2.67 per cent per annum, from the date of accident. Once judgment is granted, the entire judgment sum carries interest at 5.33 per cent per annum until full payment is made.
• A contribution to costs and disbursements.

Who pays in most cases?

That would be the defendant's insurer, as mandated by law.

There is a common misconception that a claimant will not be able to get large judgment sums if the defendant cannot afford to pay.

This is not relevant here because it is the motor insurer who must pay, Mr Shergill reiterated.

"Singapore law makes it mandatory to have motor insurance covering the risk of death or injury to third parties arising from the use of a motor vehicle and compels the motor insurer to satisfy the judgment sum awarded against the defendant," said Mr Shergill, noting that Malaysian law is broadly similar.

Under Singapore law, even if the insured person is bankrupt or has breached certain policy conditions such as by drink driving, this doesn't affect the right of third-party claimants to recover the judgment sum from the motor insurer, he added.

Mr Muhammad Razeen Sayed Majunoon, director at Advance Law, told CNA that amounts are typically paid in a lump sum, with insurers usually disbursing the full amount once the claim is settled and all documentation is in order.

"In some cases, especially in larger claims, the parties might agree to structured settlements where the payment is made in instalments or tranches. This, however, is less common and usually subject to agreement between the claimant and the paying party," he said.

Mr Razeen said it was rare for defendants to renege on payment when insurance is involved, and that claimants "almost always receive the awarded compensation" in insured cases.

What if the driver wasn't insured – or can't be identified?

Claimants will still get their money in such cases, said Mr Shergill.

In 1975, the Minister for Finance entered into an agreement with all motor insurers, under which the Motor Insurer's Bureau of Singapore (MIB) will compensate such victims, he pointed out.

"In situations where a policy was issued by a motor insurer but did not cover the particular driver, the motor insurer will satisfy the judgment on behalf of the MIB," said the lawyer.

"In all other cases, an application may be made directly to the MIB. The MIB cannot be sued in court, but their decisions can be appealed to the Public Trustee."

That's a government body with the discretion to administer compensation in motor accident cases. 

In any case, recovery of sums awarded is "simplified" and rarely requires enforcement proceedings, which would in any event be "relatively straightforward" and not concern the claimant, said Mr Shergill. 

Even if a defendant is uninsured because he breached certain conditions in an insurance policy, the insurer still has to satisfy the judgment sum as it cannot avoid the claim.

How quickly can you get paid?

Once a court awards damages, the timeline for receiving the money can vary, said Mr Razeen.

"If the payment is made by an insurer, it is usually processed and disbursed within a few weeks to a couple of months, depending on the insurer's procedures and whether there are any appeals," he said. 

"If enforcement actions are required (usually in cases involving uninsured defendants), the process can take several months to over a year, depending on the complexity of the enforcement actions needed," said Mr Razeen.

Mr Shergill said cases in Singapore typically take anywhere from six months to three years to resolve.

Some may take even longer in scenarios where it takes time for long-term disabilities to emerge; where parties cannot agree on costs and disbursements; or in cases involving overseas accidents or defendants.

This is because permission must be obtained from the court to serve proceedings overseas, said Mr Shergill.

Enforcement proceedings may also have to be initiated against motor insurers or defendants if they do not pay out.

If claimants need funds to tide them over while they're waiting to receive the damages, they can apply for interim payments to be given upfront and to be offset from the eventual damages, said Mr Shergill.

"To do so, the claimant must establish that the defendant is insured, will be substantially liable, and the advance sought is proportionate to the prospective damages."

Could lawyer fees be so high that the claim isn't worth it?

Lawyers told CNA this was a "misconception" and "not entirely accurate".

Such fees in Singapore for motor accident injury claims are regulated to be fair and transparent, and are typically reasonable relative to the damages awarded, said Mr Andy Yeo, partner at Eldan Law.

The Public Trustee will review the amount of legal fees claimed by the representing lawyer, in cases involving damages exceeding S$5,000. There are also guidelines set by the Law Society of Singapore.

On average, claimants can expect to receive between 70 to 85 per cent of the awarded sum after deducting legal fees and other costs, said Mr Razeen.

"The exact percentage can vary based on the complexity of the case and the fee arrangement with the lawyer," he added.

Lawyers in Singapore typically charge on an hourly basis or fixed fees, and these costs are usually agreed upon at the outset of the case. Lawyers in Singapore also cannot charge contingency fees -  a sum that they receive only if they win the case.

Mr Razeen noted that many law firms offer initial consultations at no cost or at a reduced fee, to evaluate the merits of the case. Some firms might agree to defer fees until the conclusion of the case, providing claimants with financial flexibility.

The court also considers legal costs when awarding damages for the claimants, which helps claimants retain a significant portion of the awarded compensation even after legal fees are deducted, said Mr Razeen.

When a court awards damages, it will order the defendant to contribute to the claimant's costs, which are intended to cover the bulk of the legal expenses and the court's, said Mr Shergill.

The motor insurer then pays the lawyer and the balance goes directly to the claimant.

"This mechanism also ensures that lawyers do not handle the damages directly, which also eliminates the risk of unscrupulous lawyers absconding with such damages or trying to pocket the damages under the guise of legal fees," he said.

Singapore law has an additional safeguard for claimants who are minors or people with disabilities: The court's approval is mandatory for any settlement payable to their lawyers.

A Singaporean has an accident in Malaysia. Can they make a claim in Singapore?

Singapore law provides for the courts to exercise jurisdiction where the losses are largely incurred in Singapore, and where witnesses such as medical experts are based in Singapore with a sufficient connection to Singapore, said Mr Shergill.

Upon filing the claim in court, the claimants' lawyers will apply to serve the papers on overseas defendants and provide preliminary justification for this.

This was the case for Mr Lim Chun Yong, who won a S$4.7 million payout after his accident in Malaysia.

"Thereafter, none of the defendants or their motor insurers challenged the jurisdiction of the Singapore courts. Instead (save for two defendants who did not participate), all the motor insurers and defendants submitted to the jurisdiction of the Singapore High Court by actively participating in the proceedings," said Mr Shergill, who handled the case.

He noted that the court rules require defendants to expressly raise challenges to the jurisdiction of the Singapore Court at the outset.

"This would also impact adversely on Malaysian insurers who choose to ignore Singapore proceedings but subsequently try to contest the jurisdiction of the Singapore court during enforcement proceedings in Malaysia," said Mr Shergill.

How then does a Singapore court's judgment get enforced in Malaysia?

Mr Shergill, whose firm specialises in personal injury cases, said Singapore and Malaysia operate similar frameworks to deal with foreign judgments.

"These laws enable judgments from the Singapore High Court to be registered and enforced in Malaysia, without the necessity for a new trial," he said.

But there are exceptions in Malaysian proceedings for judgments to do with gratuitous passengers, or those who hitch a ride without paying. This group is excluded from Malaysian statutory requirements for motor insurance coverage against the risk of death or injury.

On how payment for a Singapore judgment could be enforced in Malaysia, Mr Shergill used Mr Lim's case again as an example.

Even in the unlikely event that all of the motor insurers involved refused to make payment, Mr Lim simply needed to " register the judgment in Malaysia against the defendants".

After that, he would have been able to enforce payment against any of the motor insurers for the full sum, under Malaysian law.

So should one claim in Singapore or Malaysia?

There are certain advantages for a Singapore claimant to obtain a Singapore judgment, even if there are similarities between Singapore and Malaysia's legal networks, said Mr Shergill.

First, it's easier to monitor the progress in local jurisdiction. Second, if the witnesses are predominantly based in Singapore, it's more practical to have them testify here.

There's also potential for more compensation, said the lawyer.

"Singapore may award a potentially higher multiplier (number of years) for future losses, such as loss of earnings," he said, pointing to an updated compensation system which takes into account current investment returns, mortality rates and inflation.

In contrast, the computation of such awards in Malaysia has yet to be revised, potentially resulting in lower compensation amounts.

But the most significant advantage may be in the structure of legal costs.

"In Malaysia, the party and party costs may be comparatively minimal whilst lawyers may levy significantly higher fees as solicitor and client costs, which may include a percentage of the damages," said Mr Shergill.

Singapore prohibits lawyers from charging victims a percentage of the damages.

Malaysian lawyer Andrew Teh told CNA that the assessment of solicitor-client costs in Malaysia is at the discretion of the trial court. There is also no Malaysian equivalent of Singapore's scheme for court-approved settlements for minors or persons with disabilities.

Editor's note: This article has been edited for clarity, specifically in the section on what claimants can do if the defendant is not insured or cannot be traced.