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2025 MarsdenLR 1554
HIGH COURT MALAYA KUALA LUMPUR
NAUTILUS TUG & TOWAGE SDN BHD – Appellant
Versus
DATO SRI SURESH EMMANUEL ABISHEGAM & ORS – Respondent
[Writ Summons No: WA-22NCC-403-06/2024]
A security for costs order may only be sought against the named plaintiff, not against a non-party controller, unless exceptional circumstances warrant it.
Headnote:(A) Companies Act 2016 - Sections 347 and 348 - Rules of Court 2012 - Order 23 - Application for security for costs - Plaintiff is ordinarily a resident out of jurisdiction and lacks assets within jurisdiction - Court retains discretion to grant security for costs but such discretion requires exceptional circumstances - Defendants failed to demonstrate any malice, impropriety, or grounds justifying costs against non-party Timor, who is not a named plaintiff in these proceedings - Application for security for costs dismissed. (Paras 1, 5, 12, 21, 49, 60)
(B) Derivative Action - Control of proceedings - Control of a derivative action does not make the controller personally liable for costs, as costs are typically borne by the plaintiff company - Derivative claimant acts on behalf of the company, not in a personal capacity. (Paras 13, 17, 20)
Facts of the case:
Defendants sought security for costs against Timor, an individual from California, who initiated a derivative action on behalf of a company against multiple defendants for alleged breaches of duty. Grounds for application involved Timor's residency out of jurisdiction, lack of local assets, financial incapacity, and prior court order for security for costs in another suit against him.
Findings of Court:
The court found that defendants did not present sufficient grounds for granting security for costs against Timor, as he is not the named plaintiff but rather acting on behalf of the company under a derivative action. The allegations made against the defendants did not warrant exceptional circumstances for such an order.
Issues: Whether Timor, though in control of the derivative proceedings, should provide security for costs; whether the defendants could seek costs against an individual who is not a named plaintiff.
Ratio Decidendi: The court emphasized that security for costs may be sought only against named plaintiffs, and Timor's role as a controller of the proceedings does not automatically render him personally liable for costs. The assessment of whether to grant security for costs must consider the bona fides of the action.
Result: Application for security for costs dismissed.
| Table of Content |
|---|
| 1. application for security for costs (Para 1 , 2 , 4) |
| 2. timor's status as non-party (Para 3 , 12 , 13) |
| 3. discretionary nature of court's decision (Para 5 , 6 , 7 , 8 , 10 , 11) |
| 4. sufficient grounds required for security (Para 34 , 41 , 58) |
(Enclosure 22)
A. Introduction
[1] This is the application of the 6th and 8th Defendants for security for costs against Dato' Seri Timor Shah Rafiq ("Timor").
[2] Timor had initiated an application for leave to institute a derivative action on behalf of the Plaintiff against the Defendants, inter alia, for alleged breaches of the Defendants' duties to the plaintiff. This application was heard by Justice Atan and on 23 May 2024 was given leave to institute these proceedings in the civil suit no: WA-24NCC-629-11/2023 [Dato' Seri Timor Shah Rafiq v. Nautilus Tug & Towage Sdn Bhd [2024] MLRHU 1794; [2024] 3 MLJ 433; [2024] 10 CLJ 757]. Justice Atan had made the following, inter alia, orders:
"(3) The plaintiff be authorised to control the conduct of the derivative proceedings;
(4) The management fee payable by the defendant to Azimuth Marine Sdn Bhd be reduced to USD8,000.00 per month pending final resolution of the derivative proceedings initiated by the defendant against Dato' Sri Suresh Emmanuel Abishegam, Dato' Ahmad Johari Bin Abdul Razak, Ajaib Hari Dass, Dato' Abd Latiff Bin Ahmad, Jaya Sudhir A/L Jayaram, Mak Lin Kum, Ahmad Lutfi Bin Abd Latiff, Dato' Sri Abd Rahim Bin Jaafar and Azimuth Marine Sdn Bhd;
(5) The defendant pays all reasonable legal fees and disbursements incurred by the plaintiff in connection with this application or pending the grant of leave or any other interim relief on a full indemnity basis;
(6) The defendant pays the costs incurred by the plaintiff for the derivative proceedings to be initiated on behalf of the defendant against Dato' Sri Suresh Emmanuel Abishegam, Dato' Ahmad Johari Bin Abdul Razak, Ajaib Hari Dass, Dato' Abd Latiff Bin Ahmad, Jaya Sudhir A/L Jayaram, Mak Lin Kum, Ahmad Lutfi Bin Abd Latiff, Dato' Sri Abd Rahim Bin Jaafar and Azimuth Marine Sdn Bhd on a full indemnity basis;"
[3] The grounds relied on by the said defendants in seeking this application are summarised as follows:
(i) That Timor is ordinarily out of jurisdiction of this court. He is a resident of California, United States.
(ii) That Timor does not have assets within the jurisdiction of this court.
(iii) That Timor is not within a jurisdiction where the First Schedule of the Reciprocal Enforcement of Judgments Act .
(iv) That Timor is financially impecunious and is unable to pay the award of costs, if any, is granted against him.
(v) That the High court in the Civil Suit No: WA-22NCC-151-03/2023 [Nautilus Tug & Towage Sdn Bhd V. Dato' Seri Suresh Emmanuel Abishegam & Ors; Dato' Wan Mohamed Yaccob Dato' Wan Sailadin (Third Party) [2025] MLRHU 360; [2025] 6 CLJ 623] had granted security for costs against him to the sum of RM120,000.00 for each application filed by the defendants in those proceedings.
(vi) That this suit is malicious and is an abuse of process.
(vii) That Timor is usually resident in Malaysia in a Hotel.
(viii) Timor does not hold any executive positions in other Malaysian companies and has no interest in any companies in Malaysia or any business entity.
(ix) That the claim against the defendants could not be sustained as they are not liable for actions of co-directors.
(x) Indemnity orders entered by Atan J do not preclude the application for security for costs against Timor.
[4] The defendants seek the sum of RM500,000.00 as security for costs.
B. Decision Of This court
[5] After hearing the parties, this court decided to dismiss the application with no order as to costs. This court finds that the Defendants have failed to show that the facts of this case, as disclosed in the affidavits before this court, fall within the circumstances laid down under O 23 of the Rules of court 2012. My reasons for this decision are as stated in the following
