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2023 MarsdenLR 418
HIGH COURT MALAYA SHAH ALAM
BERJAYA AIR SDN BHD & ANOR – Appellant
Versus
MALAYSIA AIRPORTS SDN BHD & ANOR – Respondent
[Civil Suit No: BA-22NCvC-110-03/2022]
The court has discretion to order security for costs against a foreign plaintiff based on their domicile and asset status, ensuring cost recovery in the event of a successful defense.
Headnote:(A) Rules of Court 2012 - Order 23 r 1(1)(a) - Security for costs - The Court ordered the 2nd Plaintiff, a foreign company, to pay RM100,000 as security for costs, citing the risk of non-recovery of costs if the Defendants succeed. The Plaintiffs failed to provide security or an alternative undertaking as required. (Paras 1, 3, 54)
(B) Discretion of the Court - The Court has discretion to order security for costs based on the circumstances, including the foreign status of the plaintiff and the absence of assets in the jurisdiction. (Paras 11, 12, 18)
(C) Factors for consideration - The Court considered the complexity of the case, the foreign plaintiff's domicile, and the absence of counterclaims in determining the necessity for security. (Paras 16, 18, 26)
Facts of the case:
The 2nd Plaintiff, a foreign company, claims damages for an aircraft accident, but neither Plaintiff provided security for costs as ordered by the Court. (Paras 1, 3, 5)
Findings of Court:
The Court found it appropriate to require security for costs given the foreign status of the 2nd Plaintiff and the absence of assets in the jurisdiction. (Paras 18, 26)
Issues: The main issues included whether the 2nd Plaintiff should provide security for costs due to its status as a foreign company and the implications of that status on cost recovery. (Paras 10, 12, 24)
Ratio Decidendi: The Court ruled that the foreign nature of the plaintiff and lack of assets in the jurisdiction justified the requirement for security for costs, emphasizing the need for a fund to ensure cost recovery. (Paras 18, 26)
Result: The Court ordered the 2nd Plaintiff to provide security for costs in the amount of RM100,000 and assessed costs of the application at RM5,000. (Paras 54)
Yes, the court granted security for costs. Specifically, the court ordered the 2nd Plaintiff, a foreign company, to pay RM100,000 as security for costs. This order was made because the court found it appropriate given the foreign status of the 2nd Plaintiff, the absence of assets within the jurisdiction, and the difficulties in cost recovery due to the lack of reciprocal enforcement agreements with Malaysia (!) (!) . The court also considered the complexity of the case and the value of the claims, and concluded that requiring security was just and necessary to ensure cost recovery in the event of a successful defense (!) (!) (!) .
| Table of Content |
|---|
| 1. security for costs ordered for foreign plaintiff. (Para 1 , 2 , 3 , 4) |
| 2. background facts of the plaintiffs' claim. (Para 5 , 6 , 7 , 8 , 9 , 10) |
| 3. application of order 23 r 1(1) for security. (Para 11 , 12) |
| 4. discretion of court on security for costs. (Para 13 , 14 , 15) |
| 5. factors favoring security for costs against foreign plaintiffs. (Para 16 , 17 , 18 , 19) |
| 6. absence of assets within jurisdiction supports security. (Para 20 , 21 , 22) |
| 7. risks in recovering costs from foreign plaintiffs. (Para 23 , 24 , 25) |
| 8. merits not to be considered at this stage. (Para 26 , 27) |
| 9. order for security for costs issued. (Para 28) |
| 10. assessment of quantum for security for costs. (Para 29 , 30 , 31) |
| 11. nature of claims affects security assessment. (Para 32 , 33 , 34) |
| 12. past cases inform security for costs decisions. (Para 35 , 36 , 37 , 38 , 39 , 40) |
| 13. final decision on security amount is rm100,000. (Para 41 , 42 , 43 , 44) |
| 14. summary of factors for security against foreign plaintiffs. (Para 45 , 46 , 47 , 48 , 49 , 50) |
| 15. court's orders and conclusion on security. (Para 51 , 52 , 53 , 54) |
Introduction
[1] In this suit whereby the 2nd Plaintiff, being a foreign company registered in British Virgin Islands and as the substantive plaintiff, claims for damages of US$4,412,447 (or equivalent to approximately RM20 million) against the Defendants in respect of an aircraft accident, at the application of the 1st Defendant this Court on 11 July 2023 ordered the 2nd Plaintiff/foreign company to pay security for costs in the amount of RM100,000 (or equivalent to about US$21,000) to be held by the 1st Defendant's solicitor as stakeholder pending the final disposal of the action.
[2] Alternative was also given for the 1st Plaintiff, a Malaysian company who is the nominal plaintiff in this action, to provide a written undertaking to pay the costs of action in the event the Defendants succeed intheir defence at the trial and the 2nd Plaintiff/foreign company fails to pay the Defendants the costs of action awarded in favour of the Defendants in such future contingent event.
[3] Neither of the Plaintiffs has provided the security for costs or the alternative undertaking as to costs.
[4] By Notice of Appeal dated 9 August 2023, the 2nd Plaintiff, as the foreign company who is the substantive plaintiff here, has appealed against this Court's decision dated 11 July 2023.
Background Facts
[5] The Plaintiffs' claim is premised on an alleged incident that occurred on 18 March 2019, where it was contended that the Plaintiffs had suffered losses from the collision between the 1st Plaintiff's Aircraft and the 1st Defendant's Escort Vehicle.
[6] It was pleaded in the Statement of Claim that the 2nd Plaintiff is a company incorporated in British Virgin Islands with its registered office at P.O Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.
[7] The Plaintiffs contend that the 2nd Plaintiff holds beneficiary interest in the Aircraft as the Aircraft has been mortgaged and assigned to the2nd Plaintiff as security for repayment of financing provided by the 2nd Plaintiff.
[8] At all material times, the 1st Defendant denies and put the Plaintiffs to strict proof that they have the necessary title to sue with respect to the Collision in the Suit.
[9] On 5 October 2022, the 1st Defendant's solicitors requested RM150,000.00 as security for costs from the Plaintiffs' solicitors, which was not agreeable by the Plaintiffs.
[10] By a Notice of Application dated 3 February 2023 (Encl 17) ("Application"), the 1st Defendant applied for an order that the 2nd Plaintiff to pay in the sum of RM150,000.00 or any other sum as directed by the Court as security for costs on inter alia the following grounds:- (a) the 2nd Plaintiff is a foreign company incorporated in the British Virgin Islands and as such there is a real risk that costs in the event of a successful defence would not be recoverable against it; (b) the 2nd Plaintiff
