California Fitness: Refunds unlikely after gym's closure, say lawyers

A California Fitness outlet at Velocity in Novena.
A California Fitness outlet at Velocity in Novena.ST PHOTO: AZMI ATHNI

There may not be enough money to repay members, say lawyers

Her contract was due to expire this month, so she signed a new two-year contract with California Fitness last month, just weeks before the closure of all its outlets.

Now, Ms Esther Lim, 26, is in limbo as she has not even started using her new membership card nor finished the personal training sessions she previously paid for. Her potential losses? About $4,000.

The customer service executive is but one of many California Fitness members who are angry and disappointed in the gym's abrupt closure. But getting their money back could be an uphill task, according to lawyers.

After the club's Republic Plaza branch closed on Saturday, it was announced at 12.03am yesterday that California Fitness had shut down its other outlets in Novena and Bugis until further notice.

Recovery firm Ferrier Hodgson was appointed as the provisional liquidators of the club's owner, J.V. Fitness, as the latter had insufficient resources to continue operations.

Neither Ferrier Hodgson nor California Fitness replied to queries from The Straits Times by press time. A J.V. Fitness representative declined to comment.

California Fitness opened in Singapore in 1998 with its famed floor-to-ceiling glass windows at Orchard Road, allowing onlookers to see gym members work out.

Many members are now hoping to get back thousands of dollars worth of gym packages.

For Ms Lim, the $4,000 she stands to lose in unused packages is equivalent to two months of her pay. "(The gym) shouldn't have asked us to recontract if it had problems with money," she said.

A 27-year-old loan officer, who wanted to be known only as Mr Tan, could lose about $5,000.

He signed for a 30-month membership in May and paid for 30 personal training sessions, totalling $2,471.70. But due to some changes in payment, he paid California Fitness twice but the gym did not void his first payment.

"I am very angry. It is a huge sum of money," said Mr Tan, adding that he was very upset the club was still selling packages shortly before closing.

Some fitness clubs are trying to help affected members. True Fitness is extending a discounted sign-up rate to California Fitness members and a one-month free trial.

Since the closure of the gym's Republic Plaza outlet on Saturday, the Consumers Association of Singapore (Case) has received 331 complaints against the club.

Mr Seah Seng Choon, Case's executive director, said that "purchasing membership packages may be cheaper in the long run, but (consumers) will face the risk of losing their prepayment in the event that the company closes down".

Consumers who recently joined as members could argue they were misled into believing the club would still be in operation for a number of years. This might be an unfair practice under the Consumer Protection (Fair Trading) Act, he said.

To get their money back, members have lodged complaints with Case or the Small Claims Tribunal, while others have lodged police reports.

But lawyers The Straits Times contacted were pessimistic on the odds of getting refunds. Said lawyer Amolat Singh, referring to firms like Ferrier Hodgson: "A liquidator is like an undertaker of a company - it suggests a company's funeral.

"While (club) members can register their claims with the liquidator, there may not be any money to give to them." Once a company goes into liquidation, one cannot take legal action against it, he said.

Other channels, such as Case, the Small Claims Tribunal or the police, are worth a try, but the chances of successful refunds are remote, said lawyer Rajan Supramaniam.

A version of this article appeared in the print edition of The Straits Times on July 21, 2016, with the headline 'Refunds 'unlikely' after gym's closure'. Print Edition | Subscribe