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HIGH COURT MALAYA SHAH ALAM
TIARA PASIR SDN BHD – Appellant
Versus
SKILL CITY INVESTMENT LIMITED & ANOR – Respondent
Key Points: - Plaintiff company must present credible evidence of financial ability to pay costs; otherwise security for costs may be unjust. (!) (!) - Section 351(1) permits security for costs and stay pending security if credible evidence shows potential inability to pay. (!) (!) - The court applies a two-stage (credibility and capability) discretionary test under Haidakota guidelines; factors include impecuniosity, delay, bona fides, and proportionality to avoid oppression. (!) (!) (!) (!) (!) - Impecuniosity alone is not sufficient; burden on applicant to prove with credible evidence. (!) - Delay in filing and potential impact on justice weigh against ordering security. (!) - If security would unjustly hinder a plaintiff's ability to pursue its claim, security may be refused. (!) (!) - The defence/counter-claim may share the same factual basis; ordering security could indirectly aid the defendant's counterclaim. (!) (!)
| Table of Content |
|---|
| 1. implication of impecuniosity in security for costs (Para 1) |
| 2. statutory framework for security for costs (Para 2 , 3) |
| 3. discretionary power of the court (Para 4) |
[1] This is an interlocutory application (Enclosure 31) commenced pursuant to s 351 of the Companies Act, 1965 ('C/A') and/or under the inherent jurisdiction of the Court for inter-alia the following orders:
(1) That the Plaintiff, within 7 days, give security for costs to the Defendants in the sum of RM 200,000.00;
(2) That all proceedings in this matter be stayed until the above security for costs is furnished by the Plaintiff;
(3) If the Plaintiff fails to furnish the security for costs to the Defendants within the prescribed time, this proceedings be struck out forthwith with costs; and
(4) Costs of and incidental to this application be borne by the Plaintiff.
Grounds In Support of Enclosure 31
(1) Based on a company search on the Plaintiff with the Companies Commission of Malaysia ('CCM'), the Plaintiff was a dormant company whose liabilities exceeded its total assets. Hence, it was technically insolvent and impecunious.
(2) The Defendants had a credible defence to the Plaintiff's claim
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