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Inability to Pay - Main points and insights
The primary consideration for granting security for costs is whether the defendant or applicant will be able to pay the costs if awarded, rather than their ability to pay at the present moment. Inability to pay is defined as the inability to meet costs when they fall due for payment, not merely being insolvent or having insufficient assets. For instance, [](https://supremetoday.ai/doc/judgement/MY_MLRH_2014_2_MLRH_455) states: Inability to pay in this context I take to mean inability to pay the costs as and when they fall due for payment. Similarly, ["
TAY ENG TIAN & ANOR vs KOH KOH KIAN (ENCL 22) - High Court
"] emphasizes that insolvency alone (e.g., winding up or bankruptcy) does not automatically prove inability to pay costs, unless it can be shown they cannot be met when due.
The courts generally require credible evidence that the party will be unable to pay costs if required, rather than relying solely on financial status such as winding-up or bankruptcy. ["
ERA UNIVERSE DEVELOPMENT SDN BHD & ANOR vs TANG TWANG LOI & ANOR - High Court
"] notes: whether the Defendants were unable to pay... was the crux of the issue, supported by credible testimony.
The applicant must establish this inability at the time the security is ordered, not based on speculation or past unpaid costs. ["
TAY ENG TIAN & ANOR vs KOH KOH KIAN (ENCL 22) - High Court
"] emphasizes: the question is, will the company be able to meet the costs order at the time when the order is made and requires to be met?
The fact that a company has been wound up or declared bankrupt is not automatically proof of inability to pay costs, but it is a relevant factor indicating potential insolvency. [](https://supremetoday.ai/doc/judgement/MY_MLRH_1998_2_MLRH_319) states: the fact that a company has suffered the fate of being wound up... is not ipso facto proof of inability to pay costs.
Delay as a Disqualifying Factor - Main points and insights
Delay in applying for security for costs is generally viewed negatively unless adequately explained. Unexplained delay can prejudice the opposing party and weigh against granting security. ["
TIARA PASIR SDN BHD vs SKILL CITY INVESTMENT LIMITED & ANOR - High Court
"] notes: Delay is a good reason for the Court to exercise discretion against the parties applying for security.
The courts prefer that applications for security are made promptly after the commencement of proceedings. ["
TIARA PASIR SDN BHD vs SKILL CITY INVESTMENT LIMITED & ANOR - High Court
"] and [](https://supremetoday.ai/doc/judgement/MY_MLRH_2011_1_MLRH_130) highlight that the application for security for costs must be made with reasonable promptitude after the issue of the writ.
Delay without explanation can lead to the application being denied, as it might be seen as tactical or an abuse of process. ["2024 Supreme(HK)(HKDC) 34"] states: Delay in making an application for security for costs, particularly where there is no good explanation for the delay, is itself sufficient to deny the application.
However, some courts have found that delay alone is not necessarily fatal if there is no prejudice or tactical intent. ["
TAN SEE MENG & ORS vs ABLE OILS & FATS SDN BHD & OTHER APPEALS - Court Of Appeal
"] and ["
RHB BANK BHD vs BACTRA PROPERTIES SDN BHD & ORS (NO 2)
"] mention that delay alone, especially if not inordinate or if the application is not made late, may not prevent granting security.
Merits and Other Considerations - Main points and insights
The merits of the case are generally not a decisive factor in security for costs applications. Courts focus on the financial ability and conduct of the applicant rather than the substantive case. ["
RHB BANK BHD vs BACTRA PROPERTIES SDN BHD & ORS (NO 2) - 2011 MarsdenLR 416
"] and ["
TIARA PASIR SDN BHD vs SKILL CITY INVESTMENT LIMITED & ANOR - High Court
"] emphasize that the question of merits is not really crucial to the ultimate outcome of this application.
The discretion to grant security is unfettered, but courts aim to prevent abuse, such as using inability to pay as a weapon against a more prosperous party. ["
Customer Loyalty Solutions Sdn Bhd vs Advance Information Marketing Bhd & Anor
"] states: the discretion is unfettered... but it must also be remembered that the court should not be so reluctant to order security that it becomes a weapon.
The amount of security should be reasonable; excessive amounts may be rejected. ["
TAN SEE MENG & ORS vs ABLE OILS & FATS SDN BHD & OTHER APPEALS - Court Of Appeal
"] and [](https://supremetoday.ai/doc/judgement/MY_MLRH_2011_1_MLRH_130) highlight that courts may order a fair and proportionate sum, e.g., RM50,000 for security for costs is a fair and reasonable amount.
The prospect of success, while relevant, is not the sole determinant; the main focus remains on the applicant’s ability to pay if ordered. ["
Customer Loyalty Solutions Sdn Bhd vs Advance Information Marketing Bhd & Anor
"] notes that the prospect of success is a pertinent factor but not decisive.
Conclusion
Delay alone should not prevent the grant of security for costs; the critical factor is whether the party will be unable to pay costs when they are due. Courts are cautious to balance preventing abuse with ensuring justice, and they require credible evidence of inability to pay at the relevant time. The application of these principles ensures that security for costs is used appropriately, not as a tactical weapon or a means of undue prejudice.
References: ["
BM CITY REALTY & CONSTRUCTION SDN BHD vs MERGER INSIGHT BUILDERS SDN BHD & ANOR - 2024 MarsdenLR 882
"], ["2024 Supreme(HK)(HKDC) 34"], ["
BERJAYA AIR SDN BHD & ANOR vs MALAYSIA AIRPORTS SDN BHD & ANOR - High Court
"], ["
Perbadanan Pengurusan City Plaza vs Sigma Elevator (M) Sdn Bhd - Court Of Appeal
"], ["
PERBADANAN PENGURUSAN CITY PLAZA vs SIGMA ELEVATOR (M) SDN BHD - Court Of Appeal
"], ["
TIARA PASIR SDN BHD vs SKILL CITY INVESTMENT LIMITED & ANOR - High Court
"], ["
TAN SEE MENG & ORS vs ABLE OILS & FATS SDN BHD & OTHER APPEALS - Court Of Appeal
"], ["
RHB BANK BHD vs BACTRA PROPERTIES SDN BHD & ORS (NO 2) - 2011 MarsdenLR 416
"], [](https://supremetoday.ai/doc/judgement/MY_MLRH_2011_1_MLRH_130), ["
TAY ENG TIAN & ANOR vs KOH KOH KIAN (ENCL 22) - High Court
"], ["
ERA UNIVERSE DEVELOPMENT SDN BHD & ANOR vs TANG TWANG LOI & ANOR - High Court
"], [](https://supremetoday.ai/doc/judgement/MY_MLRH_1998_2_MLRH_319), [](https://supremetoday.ai/doc/judgement/MY_MLRH_1997_6_MLRH_69), ["
GOVERNMENT OF SARAWAK vs SAMI MOUSAWI-UTAMA SDN BHD - High Court
"], ["
GOVERNMENT OF SARAWAK vs SAMI MOUSAWI-UTAMA SDN BHD
"], [](https://supremetoday.ai/doc/judgement/MY_MLRH_2014_2_MLRH_455), [](https://supremetoday.ai/doc/judgement/MYS_MARSDENLR_2011_4745).

Does Procedural Delay Bar Security for Costs Applications in Malaysian Litigation?

Delay Alone Won't Bar Security for Costs Applications

In litigation, defendants often seek security for costs to protect against the risk of unpaid legal expenses if they prevail. But what happens when the application comes late in the proceedings? A common concern is whether delay alone can derail such an application. The answer, as established in Malaysian case law, is no—delay alone cannot and should not prevent the grant of security. The crucial factor remains the applicant's inability to pay costs if awarded.

This principle offers reassurance to defendants while guiding courts in exercising their discretion judiciously. In this post, we'll explore the legal foundation, key cases, exceptions, and practical recommendations, drawing from authoritative precedents. Note: This is general information based on case law and not specific legal advice. Consult a qualified lawyer for your situation.

The Core Legal Question

For an Application for Security for Costs, delay alone cannot and should not prevent the grant of security. The crucial factor is the inability to pay cost if awarded.

This statement encapsulates a consistent judicial stance in Malaysian courts. While procedural timeliness matters, it is secondary to substantive evidence of financial risk.

Main Legal Finding: Financial Incapacity Trumps Delay

Courts exercise discretion in ordering security for costs, with the primary consideration being the plaintiff's inability to pay costs if ordered against them [

#SecurityForCosts, #CourtDiscretion, #LegalDelay