SECURITY FOR COST
DEFINITION
PROVISION
ENGLISH CASES
ARTICLES/BOOK
MALAYSIAN CASES
Security for costs is a common law legal concept of application only in costs jurisdictions, and is an order sought from a court in litigation.
ORDER 23 RULE 1(1)
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(1) Where, on the application of a defendant to an action or other proceedings in the Court, it appears to the Court-
(a) that the plaintiff is ordinarily resident out of the jurisdiction;
(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so;
(c) subject to paragraph (2), that the plaintiff's address is not stated in the writ or originating summons or is incorrectly stated therein; or
(d) that the plaintiff has changed his address during the course of the proceedings with to evading the consequences of the litigation, then, if a having regard to all the circumstances of the case, the Court thinks it just to do, it may order the plaintiff to give such security for the defendant's costs of the action or other proceedings as it thinks just.
Shaik Ali v Shaik Mohamed [1963] 1 MLRA 341
“It is quite clear that the Court has a discretion in the matter. It is also clear that in the case of a Plaintiff, and the applicant should be treated as a Plaintiff in the present circumstances, who is out of the jurisdiction and who has no property or assets in the country, that the discretion seems to be invariably exercised in favour of making an order for security for costs.”
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Mas Anita bt. Abdullah v. Lew Wai Kuong (No. 1) [2013] 3 CLJ 737
The Plaintiff had not disclosed that she has assets in Malaysia. She also did not give any statement, supported by documentary evidence, of her financial capability to pay all cost, if ordered against her. There are ample authorities on security for cost being ordered by the court when a Plaintiff does not have assets within the jurisdiction”.
S & S Power Switchgear Ltd v Toprank Corp Sdn Bhd [2005] 2 MLJ 69
whereby the Defendant has a meritorious application because the Plaintiff is ordinarily resident out of the jurisdiction of this Court. Moreover, the Defendant has already succeeded in the originating forum before the Registrar of Trade Marks which gives the Defendant a better prospects of success over the Plaintiff in regards to obtaining security of costs.The court has allowed the Defendant to ask for security for cost on the ground that the Plaintiff is ordinarily resident out of the jurisdiction of this Court
Adarsh Pandit v Viking Engineering Sdn Bhd [1996] 4 MLRH 250
“In the present case, there is not even the presence of a co-Plaintiff resident in these parts, who could be relied upon should the need arises to meet claims, if any.”
Faridah Begum bte Abdullah v. Dato' Micheal Chong [1995] 2 MLRH 72
“In this case even though the Plaintiff is resident in Singapore but until the dateof hearing of this application, the Plaintiff has not disclosed her Singaporeaddress and nor has she offered any explanation for not doing so. This, in myopinion is a point which should weigh against the Plaintiff an order for securityfor costs to be furnished by the Plaintiff on the main grounds that the Plaintiff,a Singaporean, was ordinarily resident out of jurisdiction, had failed to stateher permanent address, was a bankrupt and did not have sufficient assetswithin jurisdiction. It was held, ordering the Plaintiff to pay RM 15,000.00 intocourt as security for costs.”
Ananda Trading (Singapore) Pte. Ltd. V. Palmerston Holdings Sdn. Bhd. [1996] 1 MLRH 742
“Since the Plaintiffs are resident out of the jurisdiction of the Court, I think it is appropriate that they provide security for costs.”
Tradestock Pty Ltd v TNT (Management) Pty Ltd [1977] FCA 1
Once the jurisdiction is enlivened, the question of whether to order security is entirely discretionary and determined upon the facts of the particular case. The court will attempt to balance the interests of the litigants by considering the hardship a successful defendant will suffer if there is no security for its costs, against the hardship a plaintiff may suffer if ordered to give security
Aeronave SPA & Westland Charters [1971] 1 WLR 1146
“It is the usual practice of the courts to make a foreign Plaintiff give securityfor costs. But it does so, as a matter of discretion, because it is just to do so. After all, if the Defendant succeeds and gets an order for his costs, it is not rightthat he should have to go to a foreign county to enforce the order.”
Merck Kgaa v Xtalic Corporation [2019] 3 MLRH 215
“Even assuming the Plaintiff has property within jurisdiction, it is not sufficient ground for this court to disallow security. Moreover the mere fact of Plaintiff owning property in a country which has reciprocal enforcement of judgment agreement with Malaysia, is not also a ground for the court refusing to order security, since the enforcement is not automatic.”
Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] 2 All ER 273
Lord Denning, MR set out some factors which the court might take into consideration in exercising its discretion on whether or not to award security for costs, as follows:- (a) whether the company’s claim is bona fide and not a sham; (b) whether the company has a reasonably good prospect of success; (c) whether there is an admission by the Defendants on the pleadings or elsewhere that money is due; (d) if there was payment into court of a substantial sum of money (not merely a payment into court to get rid of a nuisance claim); (e) whether the application for security was being used oppressively - so as to try and stifle a genuine claim; (f) whether the company’s want of means has been brought about by any conduct of the Defendants, such as delay in payment or delay in doing their part of the work.”
The Cost and Funding in Civil Litigation - Oxford: Hart Publishing (2010)
Security for costs orders require a party to provide a security to cover the estimated costs that the other party will incur in the proceeding, including arbitration costs and legal fees.
Sugawari Ikuo - Quantitative Analysis on Civil Litigation Procedure (Tokyo, Shuji Homu) 2008ng
A defendant served with a commercial proceeding issued by a corporate plaintiff should immediately consider applying for security for their costs of defending the proceding. Such an application may provide protection from a costs.
R. Samuel, “All Change: Security outside the jurisdiction”
(2003) 153 New Law Journal 1710
The risk of an order for security for costs might be regarded as a natural price to be paid by the forum-shopping claimant choosing to institute proceedings away from home. What is apparent from recent development of the case law in this jurisdiction is that the exercise of power to award security against a putative future costs award is no longer based on the “foreignness” of the claimant but explicitly conceived of as related to difficulty of enforcement of that costs award; a gloss that does not appear in the rule as it is set out in the CPR.
MALCOM BURROWS in
https://www.dundaslawyers.com.au/what-is-security-for-costs/
The reality of any litigious proceedings is that they cost money (sometimes, lots of money). Where a party is successful in the proceeding; whether that be successfully proving the claim (Plaintiff) or defending it (Defendant), that party will generally be entitled to their ‘costs’. Costs refers to the legal expenses incurred by the successful party in prosecuting or defending the claim (as the case may be). Where a Defendant successfully defends a claim, they may be placed in the frustrating circumstance of facing a Plaintiff who does not have sufficient money to pay the Defendant’s costs. In this article we consider a Court order designed to alleviate this problem – a security for costs order.
Stephen R. Bond: The Nature of Conservatory and Provisional Measures,
in CONSERVATORY AND PROVISIONAL MEASURES IN INTERNATIONAL ARBITRATION
One of the most neglected and misunderstood forms of interim relief: the “security for costs” order, which conditions the right of a claimant or counterclaimant to proceed on its claim upon the putting up of a bank guarantee or other forms of surety to guarantee, in the case of lack of success, aims to cover any eventual award of legal fees assessed against the claimant or counter-claimant.
PROCEDURE
WHEN
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The Application may be dealt when:
Plaintiff's resident is out of court jurisdiction.
Plaintiff is a nominal plaintiff and Defendant believe that he will be unable to pay the cost if ordered to do so.
1ST STEP
Apply for Interlocutory Application by filing a Notice of Application supported with Affidavit in Support according to
Order 23 Rule 1 (2B)
2ND STEP
A copy of supporting Affidavit shall be served with the Notice of Application onevery person on whom the Notice of Application is required to be served.
According to Order 23 Rule 1 (2C)
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