Security for costs is discretionary and not granted solely based on a plaintiff's foreign residency or lack of assets within jurisdiction.

Introduction

[1] The present matter relates to an application in encl 47 by the Defendant (in the Main Action) for security for costs. The reliefs sought by the Defendant in encl 47 are as follows:

1. The Plaintiff to pay RM250,000.00 as security for costs to the Defendant within 7 days from the date of order;

2. The proceedings to be stayed until the payment of RM250,000.00 is made;

3. The proceedings to be dismissed in the event the Plaintiff fails to pay RM250,000.00;

4. Costs to be paid by the Plaintiff to the Defendant.

The Overriding Issue

[2] The key issue in this application is whether this is a proper case for this Court to exercise its discretion to invoke O 23 of the Rules of Court 2012 and order the Plaintiff to provide security for costs.

The Main Action And The Counterclaim

[3] The Plaintiff's main action against the Defendant is premised on an alleged breach of agreements by the Defendant which the former averred has resulted in losses of RM24,722,176.26 suffered by the Plaintiff. The said agreements concerned a substantial block of 20,886,910 shares in Country Heights Holdings Berhad, where one Tan Sri Lee Kim Tiong @ Lee Kim Yew, who is now the First Defendant in the counterclaim, was the founder and former Executive Chairman until his resignation in 2023 after being made a bankrupt.

[4] The counterclaim is for, inter alia, a declaration that Tan Sri Lee Kim Tiong @ Lee Kim Yew (First Defendant in the counterclaim) is a director of the Plaintiff in the main action (Third Defendant in the counterclaim) and that the agreements are void, unenforceable and of no legal effect.

The Respective Contentions

[5] The grounds advanced by the Defendant in support of his application are as follows.

[6] First, that Tan Sri Lee Kim Tiong @ Lee Kim Yew is a bankrupt. The Defendant also alluded to the fact that the solicitors of Tan Sri Lee Kim Tiong @ Lee Kim Yew had on 26 July 2024 moved this Court to stay the Original Action and added that the Counterclaim may affect Tan Sri Lee Kim Tiong @ Lee Kim Yew financially.

[7] Crucially, the Defendant raised the point that the Plaintiff is an entity incorporated in British Virgin Islands with no assets in Malaysia or has not shown proof of any asset in Malaysia.

[8] Another contention put forward by the Defendant is that the "Plaintiff is not within this Court's jurisdiction".

[9] Last but not least, the Defendant argued that "there is risk the Plaintiff being unable to pay the costs".

[10] In support of his application, the Defendant referred this Court to O 23 of the Rules of Court 2012, and in particular to r 1(1)(b), highlighting that the Plaintiff is a "nominal plaintiff".

[11] In opposing the Defendant's application, the Plaintiff submitted that the Defendant has failed to fulfil the requirements mentioned under the said O 23 r 1 of the Rules of Court 2012.

[12] The Plaintiff also averred that "the Defendant's Affidavit in Support (encl 48) merely consists of bare allegations that since the Plaintiff is a foreign company, the Plaintiff is believed to be unable to pay for costs".

[13] In addition, the Plaintiff alluded to a delay of seven months on the part of the Defendant in making this application. The Plaintiff cited the case of Menon v. Abdullah Kutty 1974 MarsdenLR 97 ; 1974 MarsdenLR 274 for the proposition that it is a "paramount rule" that an application for security for costs must be made as soon as possible.

The Law And Applicable Principles

[14] The provision governing security for costs is O 23 of the Rules of Court 2012. It provides as follows:

Security for costs of action (O 23