Suriyadi Halim Omar JCA:

[1] The appeal before us was allowed with costs whereupon the High Court's decision was set aside. Pursuant to this order the senior assistant registrar's order allowing the first to the fourth defendants' (hereinafter merely referred to as the appellants) application for security for costs was reinstated. The only difference was that the sum of RM75,000 was varied to RM40,000.

[2] We now touch on the background of this appeal. The plaintiff (hereinafter referred to as the respondent) had sued Wan Muhamad Ibrisam bin Wan Ibrahim, Tuan Haji Mohd Salleh bin Zakaria, Said @ Shuaib bin Bakar, Salwan Corporation Berhad and Sateras Resources (Malaysia) Berhad (respectively the first until fifth defendants) for a breach of contract. On 24 August 2005, the four appellants with the exception of the fifth defendant (hereinafter referred to as Sateras), pending the main suit, filed a summons-in-chambers seeking security for cost for the sum of RM75,000 against the respondent. As said above, before the senior assistant registrar, the appellants succeeded and the full sum of RM75,000 sought for was granted as security for costs. Dissatisfied with that order, the respondent appealed to the judge-in-chambers and on 6 June 2007 successfully overturned the earlier order. It was then the turn of the appellants to appeal to the Court of Appeal hence our involvement.

[3] To appreciate the matter more comprehensively, a need arises for us to lay down the antecedents as well as the factual matrix of this case. Sateras was undergoing a restructuring scheme under s. 176 of the Companies Act 1965 . In a word it was classified as a PN4 company by Bursa Malaysia. Prior to this suit the fourth appellant had entered into a Definitive Agreement dated 9 May 2003, wherein on completion of the restructure of Sateras, it was supposed to be taken over by the fourth appellant. In anticipation of the take over exercise between the fourth appellant and Sateras, the respondent was established on 15 April 2003. As provided for in the agreement, Sateras would become the wholly owned company of the fourth appellant, thereafter followed up by a disposal of Sateras to the respondent for RM1. The respondent, which was a dormant company with a paid-up capital of RM2, thus was merely created as a Special Purpose Vehicle ("SPV") to facilitate the takeover exercise. From these facts so far adduced, without prejudging the matter conclusively, in the event the scheme of restructure were to fail the Definitive Agreement would be functionless and the respondent redundant. The learned judge had not missed this point regarding the function factor and the respondent's poverty when he said:

It is clear that all the defendants knew right from the start that the plaintiff was a company which was set up for a purpose of taking over the business of the 5th defendant in the event that the Section 176 scheme of arrangement was successful. A company of this nature is not expected to carry a large asset _ its principal objective being merely to take over the 5th defendant business.

[5] This termination of the Definitive Agreement did not go down too well with Sateras, and it filed a suit ie, D6-22-465-2005 and ex parte interlocutory injunctions against the appellants, purposefully to restrain the termination of the Definitive Agreement. On 1 August 2005 the ex parte injunctions were dissolved and the inter partes applications were dismissed with costs. On