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2025 MarsdenLR 1377
HIGH COURT MALAYA KUALA LUMPUR
SYED SAZLEE SYED HAMZAH – Appellant
Versus
PUNCAK KENANGAN (M) SDN BHD & ORS – Respondent
[Civil Suit No: WA-22NCC-829-11/2023]
Court orders security for costs against a non-party who financed litigation, emphasizing the need to prevent champerty and protect the integrity of legal proceedings.
Headnote:(A) Rules of Court 2012 - Order 23 rr 1(1) and 1(2A) - Application for security for costs against plaintiff and non-party - Plaintiff, as executor of deceased's estate, claims dividends exceeding RM21 million - Defendants argue plaintiff is nominal, acting for non-party who financed litigation - Court finds plaintiff suing in representative capacity but orders security against non-party for costs due to financial interest in outcome. (Paras 28, 34, 82)
(B) Champerty - Definition and implications - Court considers arrangements between plaintiff and non-party as potentially champertous, justifying security for costs - Court emphasizes public policy against champerty. (Paras 49, 56)
Facts of the case:
Plaintiff is executor of deceased's estate, claiming dividends from deceased's shareholding in a company. Defendants seek security for costs, arguing plaintiff is nominal and non-party has financed litigation. (Paras 2-3, 8-12)
Findings of Court:
Court finds plaintiff is suing in representative capacity but orders security for costs against non-party due to significant control and financial interest in litigation. (Paras 82-83)
Issues: Whether plaintiff is a nominal plaintiff; whether non-party should provide security for costs; whether arrangements constitute champerty. (Paras 28, 39, 49)
Ratio Decidendi: Court affirms that while the plaintiff is an executor, the non-party's financial interest and control over litigation warrant security for costs; arrangements may breach public policy against champerty. (Paras 34, 56)
Result: Applications allowed; non-party ordered to provide security of RM250,000.00 and RM150,000.00 respectively. (Paras 84-85)
| Table of Content |
|---|
| 1. background facts of the case. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. defendants' applications for security for costs. (Para 8 , 9 , 10 , 11 , 12) |
| 3. arguments presented by the defendants. (Para 14 , 15 , 16 , 17 , 19 , 20) |
| 4. court's analysis on delay in filing applications. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27) |
| 5. determination of the plaintiff's status as nominal. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37) |
| 6. application against kkc as a non-party. (Para 39 , 40 , 41 , 42) |
| 7. relevance of previous judgments. (Para 45 , 46 , 48) |
| 8. discussion on champerty and maintenance. (Para 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57) |
| 9. assessment of plaintiff's ability to pay costs. (Para 59 , 60 , 61 , 62) |
| 10. determination of quantum for security. (Para 63 , 64 , 65 , 66 , 67 , 68) |
| 11. conclusion and order of the court. (Para 82 , 83 , 84 , 85) |
Introduction
[1] Before the court is the 1st, 2nd, 3rd, 6th, 7th and 8th Defendants' application for security for costs vide encl 153 and the 4th and 5th Defendants' application for security for costs vide encl 155. Both applications seek security for costs against the Plaintiff and/or a non-party, one Khoo Kiam Chong (NRIC No: 560731-06-5189) ("KKC"), pursuant to O 23 rr 1(1) and 1(2A) of the Rules of court 2012.
Background Facts
[2] The Plaintiff is suing in his capacity as the executor of the estate of his late father, Syed Hamzah bin Syed Abu Bakar ("the Deceased'), who passed away on 18 July 2021. The Deceased was, at the material times, allegedly a shareholder of the 1st Defendant, Puncak Kenangan (M) Sdn Bhd.
[3] The Plaintiff's claim exceeds RM21 million and is essentially for dividends allegedly due to the Deceased from the 1st Defendant. The claim involves disputes relating to the shareholding of the Deceased in the 1st Defendant and/or entitlements flowing from such shareholding.
[4] There exists three significant documents bearing on this application:
a) Power of Attorney dated 19 May 2016 ("POA") executed between the Deceased, KKC and KKC's son, Ruben Khoo Sheng Luen;
b) Declaration of Trust dated 13 May 2016 ("Declaration of Trust'); and
c) Agreement for Shares dated 26 February 2021 ("Agreement for Shares').
[5] These documents, collectively referred to as "the Instruments", form the basis of the Defendants' applications. The POA granted KKC powers to prosecute actions on behalf of the Deceased, while the Declaration of Trust indicated that the Deceased would hold 47.5% of his interest in the 1st Defendant for KKC. The Agreement for Shares similarly reflected the Deceased's agreement to grant 47.5% of his 50% shareholding in the 1st Defendant to KKC in consideration of KKC's assistance and financial services.
[6] The dispute has prompted extensive litigation, including Kuala Lumpur Suit No WA-22NCC-221-05/2022 ("Suit 221") and Kuala Lumpur Suit No WA-22NCC-319-07/2022 ("Suit 319"), which are partly heard but have yet to be concluded.
[7] It is also pertinent to note that there have been costs and damages orders against the Plaintiff in a separate proceeding, Kuala Lumpur Suit No WA-22NCC-623-11/2019 ("Suit 623"), amounting to RM375,041.56, which remain unpaid to date.
The Applications
Enclosure 153 — The 1st, 2nd, 3rd, 6th, 7th And 8th Defendants' Application
[8] By Notice of Application dated 15 November 2024 filed as encl 153, the 1st, 2nd, 3rd, 6th, 7th and 8th Defendants seek an order that the Plaintiff and/or KKC provide security for costs in the sum of RM720,000.00 or any other amount deemed just and reasonable by the court.
[9] The application is supported by an Affidavit in Support affirmed by Sharifah Shaheera Shahab binti Syed Mustaffa on 15 November 2024 (Enclosure 154), which annexes, among other documents, the three Instruments and an estimated bill of costs.
[10] The primary grounds for the application, as stated in the Notice of Application and Affidavit in Support, are:
a) That the Plaintiff is a nominal plaintiff suing on beh
