JUDGMENT

Sir Denys Roberts CJ:

Nature of application

The defendants applied by the above summons for an order requiring the plaintiff to give sufficient security for the costs of the defendants in this action.

It was not disputed by the plaintiff that there is jurisdiction to make an order in the terms sought, by virtue of s. 320 of the Companies Act , which states -

320 . Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given.

The plaintiff being a limited company, the first question which falls to be decided is whether the plaintiff is able to pay the defendants' costs, if the latter should succeed.

Evidence in support

In his affidavit of 9 February 1993, sworn by Mr. Andrew Ong on behalf of the defendants, several matters were listed, the effect of which was, it was said, to render the plaintiff unable to meet the costs of the defendants if it loses.

A search of the company register on 10 August 1991 showed that there was a deed of debenture created by the plaintiff in favour of the Chartered Bank to secure general banking facilities granted to the plaintiff.

In his affidavit of 10 March, Dato Noordin bin Haji Mohd. Noor, a director of the plaintiff, admits that this assertion is correct. Neither party to the action states what the deed of debenture relates to, nor the value of the property or other assets which must be the subject of the debenture. In the absence of any such information, I must discount this debenture as indicating the inability of the plaintiff to pay its debts.

The share capital of the company is said to amount to BD2 only, though there is a nominal share capital of BD5000,000. Dato Noordin replies that it is open to the shareholders of the company to call for additional capital. While this is correct, there has been no such call since the plaintiff was formed, which seems to have been at least ten years ago, so that only the smaller amount is available to meet the plaintiff's debts.

On 1 September 1986, the Overseas Union Bank Ltd. obtained judgment in default against the plaintiff for BD192,122.59. On 1 April 1991, judgment was obtained against the plaintiff's guarantors, which included Dato Noordin, for BD252,729.69. The latter amount included interest and costs and related to the same debt as that owed by the plaintiff in the first action.

It was said by the plaintiff, in reply, that the amount due from Dato Noordin and others as guarantors, had been met by Dato Noordin. This is, however, some indica- tion that the plaintiff itself is unable to pay its debts.

Solicitors for the defendants wrote to the plaintiff's solicitors on 20 October 1992, asking them to provide verifiable information that would establish the ability of the plaintiff to pay the costs of the defendants, if the latter were successful.

In reply, on 2 December 1992, the plaintiff's solicitors enclosed letters and other documents, the effect of which was, it was said, to prove that the plaintiff had assets worth BD371,627.

Without commenting in detail on the items listed in that letter, it is sufficient to say that some of them appear to be in the ownership of GRP Marine Ind. Sdn. Bhd. and others to be the property of Dato Noordin. None of the items appears to belong to the plaintiff.

The accounts of the plaintiff, which were produced, show that the plaintiff maintained a largely dormant account in the International Bank of Brunei (IBB). In December 1990 the plaintiff's balance was BD12,008. Thereafter, the next transaction was in July 1991, at the end of which the balance was BD27,152. The next use of the account was in July 92, at the end of which there was a balance of BD1009. The account was next used in