SHANGHAI YUANYI TECHNOLOGY PTY LTD v 1. ) SYAHAZLIN HERRYTHA BINTI ZULKEPLI 2. ) VINOD SHARMA A/L BALBIR SINGH 3. ) VINOD SHARMA LAW FIRM 4. ) MOHD KHAIRIL NIZAM BIN MOHD K JABAYEE

Case Significance

A practical application of the Order 23 discretion to order security for costs against a foreign corporate plaintiff, including the court's approach to quantifying security when the applicant tenders no costs estimate.

This High Court decision in Shah Alam gives the reasons for ordering security for costs against a foreign plaintiff. The plaintiff, a company incorporated in the People's Republic of China and based in Shanghai, had sued four defendants over a face-mask supply arrangement entered into early in 2020, under which it agreed to buy protective equipment for onward supply to a purchaser in China. The reasons address the fourth defendant's application, made under Order 23 Rule 1 of the Rules of Court 2012, for security for the costs of defending the action. Order 23 allows a court, where a plaintiff is ordinarily resident outside the jurisdiction, to order that security be furnished for a defendant's costs, so that a successful defendant is not left unable to recover them against a party beyond the reach of local enforcement. Having heard the parties and read their submissions, the court was satisfied that an order was appropriate and turned to fixing the amount and the manner in which security was to be furnished. It observed that it would have been assisted by a draft bill of the probable costs of defending the proceedings, but none had been provided, so the court assessed for itself a sum that was appropriate without being excessive. In striking that figure the court balanced the defendants' legitimate interest in protection against costs they might be unable to recover against the risk that an inflated or oppressive order could stifle a genuine claim. It ordered the plaintiff to pay RM20,000 into court within thirty days as security for the costs of the action. The fourth defendant, who appeared in person, was dissatisfied with the quantum ordered and appealed to the Court of Appeal, which prompted the court to record these reasons. The judgment is a practical illustration of the exercise of the security-for-costs discretion against a foreign corporate plaintiff, including the court's approach to quantifying security where the applicant places no costs estimate before it.