Things to Know about Security of Costs in Malaysia

What is a security of cost?

A defendant who is engaged in litigation, but feels the claimant may be unable to satisfy any costs order made against him may, in certain circumstances, apply to the court for an order for security for costs.

Purpose?

To ensure that a successful defendant (or a Plaintiff in a counterclaim) will have enough funds for him to make claims as to costs.

Requirements

The Defendant/Plaintiff have to satisfy the requirements under Order 23 Rule 1 of the Rules of Court 2012 (ROC 2012)

1. The Plaintiff is an ordinary resident out of jurisdiction,

Or

2. The Plaintiff is a nominal Plaintiff (suing in representative capacity) and there is reason to believe that he will be unable to pay D’s cost if ordered to do so,

Or

3. The Plaintiff’s address is not stated or deliberately incorrectly stated in the writ,

4. If the Plaintiff has changed his address during the course of the proceedings with a view of evading the consequences of litigation.

Procedure

1. Make a written request to the Plaintiff for security of cost.

2. If the Plaintiff does not comply with such request, apply to the court by Notice of Application in chambers supported by an affidavit stating which grounds the Defendant is relying on

3. Make sure to apply without delay

4. The Defendant must show that this case falls within the limbs of Order 23 Rule 1(1) of the ROC 2012

Then what happens?

Upon the application, the court will consider certain facts in exercising its discretion to order security for cost or not:

• Is the Plaintiff’s claim bona fide? Does he have reasonable prospects of success?
• Is there an admission by the Defendant of liability?
• Is the application oppressive or intending to stifle a genuine claim?
• Has the Plaintiff’s lack of means been caused by the Defendant?
• Has there been a delay in making the application?