SNH Bumi Corporation Sdn. Bhd. v 1. ) Didi Automotive Sdn. Bhd. 2. ) Didi Resources Sdn. Bhd.

Case Significance

Illustrates that a plaintiff company's apparent impecuniosity does not automatically warrant an order for security for costs under Order 23 of the Rules of Court 2012, and that the court will refuse such an order where the application rests on little more than an assumption that the plaintiff will fail.

This High Court decision at Shah Alam, delivered by Rozi binti Bainon JC, concerns an application by two corporate defendants for security for costs under Aturan 23 Kaedah-Kaedah Mahkamah 2012 (Order 23 of the Rules of Court 2012). The defendants applied for security in the sum of RM150,000, to be deposited with their solicitors as stakeholder within seven days, and asked that if the plaintiff failed to provide the security the action be struck out with costs. The foundation of the application was the assertion that the plaintiff company "has no money" — that is, that it lacked the financial capacity to pay the defendants' costs if it lost the action after trial.

The Court examined the principles governing security for costs. The mere fact that a plaintiff company may prima facie be unable to pay costs is not, by itself, sufficient to compel it to furnish security; the court retains a discretion and must weigh all the circumstances, including any delay by the applicant in bringing the application and the risk of stifling a genuine claim. The Court noted that the defendants' central assumption was simply that the plaintiff would lose and the defendants would win, so that the defendants ought to be given a "deposit" against the fruits of the litigation — an assumption the Court did not accept.

Assessing the affidavit evidence of both sides, the Court found the application to be without merit and held there was no justification for ordering the plaintiff to provide security for costs. It dismissed the defendants' application for security for costs, and made no order as to costs. The judgment is a useful illustration of the principle that a plaintiff company's apparent impecuniosity does not automatically warrant an order for security for costs under Order 23, and that the court will refuse such an order where the application rests on little more than an assumption that the plaintiff will fail.