In a recent appeal, the Kuala Lumpur High Court upheld the Senior Assistant Registrar’s decision to dismiss the Defendants’ application for Security for Costs (SFC) with costs. This decision reaffirms that our courts will not grant SFC as a matter of course against a foreign plaintiff, but only if it is deemed just based on the case’s specific circumstances. The principles surrounding SFC are therefore particularly crucial.
In this case, our Jonathan Khaw represented the foreign plaintiff (“our Client”) who successfully resisted the appeal.
Case Background
Our Client initiated proceedings to recover approximately SGD 2 million, alleging that the Defendants committed fraud. The Defendants sought SFC amounting to RM200,000 based on the following grounds:
- Our Client is a foreign litigant.
- Our Client has no assets in Malaysia.
- RM200,000 is fair and reasonable.
Jonathan Khaw argued that our Client had a reasonable chance of success and that the claim for additional security was oppressive, given that our Client had already lost SGD 2 million.
Court’s Decision
The High Court dismissed the Defendants’ application with costs.
While the Court has discretion to order SFC, this discretion must be exercised justly, considering the case’s circumstances. In this instance, the Court acknowledged the foreign residency and lack of assets in Malaysia but clarified that these factors alone were insufficient to justify SFC. The Defendants failed to provide compelling reasons for their application.
The Court noted that:
- Reciprocal Enforcement of Judgments (REJA): Malaysia and Singapore have a mutual agreement allowing for the enforcement of judgments, meaning the Defendants could seek recourse in Singapore if needed.
- Financial Standing: The business profile report did not indicate that our Client was in poor financial condition or that there was a risk of the Defendants not recovering costs if the claim was dismissed.
The Court concluded that the Defendants did not meet the burden of proving that they would be unable to recover costs. It agreed with Jonathan Khaw that the application was likely intended to stifle our Client’s genuine claim.
Final Words
The High Court’s ruling underscores the necessity of providing clear evidence when making or opposing an SFC application. The Defendants were ordered to pay costs, and their appeal was dismissed. This case highlights the importance of presenting solid evidence to support claims or defenses regarding Security for Costs.
Speak To Us
To discuss any points raised in this article or to request a copy of the reported case, please contact us at +603 6419 9511 or email us at info@chernco.com.my.
Note: This article is for informational purposes only and does not constitute legal advice. For further information, please reach out to our Kuala Lumpur office.