Syed Sazlee bin Syed Hamzah (Sebagai Wasi kepada Harta Pusaka Syed Hamzah bin Syed Abu Bakar, Si Mati) v 1. ) Puncak Kenangan (M) Sdn Bhd 2. ) Syed Mustaffa bin Syed Abdullah Shahabudin 3. ) Sitrac Development Holdings Sdn Bhd 4. ) AT Masters Sdn Bhd 5. ) Ngan Ching Woo 6. ) Adib Yasmin Aman 7. ) Syed Hashim bin Syed Ali 8. ) Sharifah Shaheera Shahab binti Syed Mustaffa 9. ) Richard Ho Onn 10. ) Loh Mee Lan

Case Significance

Illustrates that security for costs may be ordered against a litigation funder under Order 23 rule 1(2A) of the Rules of Court 2012, even where the nominal plaintiff sues in a representative capacity, with quantum set so as not to stifle genuine litigation.

This High Court decision at Kuala Lumpur concerns applications for security for costs under Order 23 rules 1(1) and 1(2A) of the Rules of Court 2012, in a complex multi-party commercial suit brought by the executor of a deceased's estate. Several sets of defendants applied for security for costs against both the plaintiff and a non-party who was said to be funding the litigation in return for a share of any recovery. The applications squarely raised the treatment of a plaintiff suing in a representative capacity and of a third-party funder whose involvement bore the hallmarks of maintenance and champerty.

The court accepted that the plaintiff, suing as executor of the estate in a representative capacity, was not directly subject to security for costs under Order 23 rule 1(1)(b), which is directed at plaintiffs suing for their own benefit. That, however, did not dispose of the applications, because the more recently introduced Order 23 rule 1(2A) allows the court to order security against a non-party in defined circumstances, including where the non-party has contributed, or agreed to contribute, to the plaintiff's costs in return for a share of the proceeds and there is reason to believe the costs may not be paid if ordered.

On the evidence, the court found that the funder had contributed or agreed to contribute to the plaintiff's costs in return for a share of the recoverable proceeds, and that there was reason to believe costs might not be paid, so that it was just to order security against him under Order 23 rule 1(2A)(b), given his substantial involvement and financial interest in the outcome. On quantum, the court reduced the sums sought to levels it considered reasonable in light of the complexity of the case, the number of defendants, the likely length of trial, and the magnitude of the claim, taking care not to stifle genuine litigation. It allowed both applications on those terms. The judgment is a useful illustration of security for costs being ordered against a litigation funder under Order 23 rule 1(2A), even where the nominal plaintiff sues in a representative capacity.