Kensington Group Management Limited v Dato Chew Hun Seng (BA-22NCC-71-04/2024)

TAN SRI LEE KIM TIONG @ LEE KIM YEW

CHUA HEE BOON

KENSINGTON GROUP MANAGEMENT LIMITED (NO. SYARIKAT: 262347) …DEFENDAN-DEFENDAN (MELALUI TINDAKAN BALAS) JUDGMENT Introduction [1] The present matter relates to an application in Enclosure 47 by the Defendant (in the Main Action) for security for costs. The reliefs sought by the Defendant in Enclosure 47 are as follows:

The Plaintiff to pay RM250,000.00 as security for costs to the Defendant within 7 days from the date of order;

The proceedings to be stayed until the payment of RM250,000.00 is made;

The proceedings to be dismissed in the event the Plaintiff fails to pay RM250,000.00;

Costs to be paid by the Plaintiff to the Defendant. The Overriding Issue [2] The key issue in this application is whether this is a proper case for this Court to exercise its discretion to invoke Order 23 of the Rules of Court 2012 and order the Plaintiff to provide security for costs. The Main Action and the Counterclaim [3] The Plaintiff’s main action against the Defendant is premised on an alleged breach of agreements by the Defendant which the former averred has resulted in losses of RM24,722,176.26 suffered by the Plaintiff. The said agreements concerned a substantial block of 20,886,910 shares in Country Heights Holdings Berhad, where one Tan Sri Lee Kim Tiong @ Lee Kim Yew, who is now the First Defendant in the counterclaim, was the founder and former Executive Chairman until his resignation in 2023 after being made a bankrupt. [4] The counterclaim is for, inter alia, a declaration that Tan Sri Lee Kim Tiong @ Lee Kim Yew (First Defendant in the counterclaim) is a director of the Plaintiff in the main action (Third Defendant in the counterclaim) and that the agreements are void, unenforceable and of no legal effect. The Respective Contentions [5] The grounds advanced by the Defendant in support of his application are as follows. [6] First, that Tan Sri Lee Kim Tiong @ Lee Kim Yew is a bankrupt. The Defendant also alluded to the fact that the solicitors of Tan Sri Lee Kim Tiong @ Lee Kim Yew had on 26 July, 2024 moved this Court to stay the Original Action and added that the Counterclaim may affect Tan Sri Lee Kim Tiong @ Lee Kim Yew financially. [7] Crucially, the Defendant raised the point that the Plaintiff is an entity incorporated in British Virgin Islands with no assets in Malaysia or has not shown proof of any asset in Malaysia. [8] Another contention put forward by the Defendant is that the “Plaintiff is not within this Court’s jurisdiction”. [9] Last but not least, the Defendant argued that “there is risk the Plaintiff being unable to pay the costs”. [10] In support of his application, the Defendant referred this Court to Order 23 of the Rules of Court 2012, and in particular to rule 1(1)(b), highlighting that the Plaintiff is a “nominal plaintiff”. [11] In opposing the Defendant’s application, the Plaintiff submitted that the Defendant has failed to fulfil the requirements mentioned under the said Order 23 rule 1 of the Rules of Court 2012. [12] The Plaintiff also averred that “the Defendant’s Affidavit in Support (Enclosure 48) merely consists of bare allegations that since the Plaintiff is a foreign company, the Plaintiff is believed to be unable to pay for costs”. [13] In addition, the Plaintiff alluded to a delay of seven months on the part of the Defendant in making this application. The Plaintiff cited the case of Menon v Abdullah Kutty [1974] CLJU 92; [1974] 1 MLJ 130; [1974] 1 MLRA 460 for the proposition that it is a “paramount rule” that an application for security for costs must be made as soon as possible. The Law and Applicable Principles [14] The provision governing security for costs is Order 23 of the Rules of Court 2012. It provides as follows: Security for costs of action (O. 23, r. 1)

1.

Where, on the application of a defendant to an action or other proceedings in the Court, it appears to the Court —

that the plaintiff is ordinarily resident out of the jurisdiction;

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;

subject to paragraph (2), that the plaintiff’s address is not stated in the writ or originating summons or is incorrectly stated therein; or

that the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation, then, if, 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.

The Court shall not require a plaintiff to give security by reason only of subparagraph (1)(c) if he satisfies the Court that the failure to state his address or the misstatement thereof was made innocently and without an intention to deceive.

Where, on the application of a defendant to an action or other proceedings in the Court, it appears to the Court that —

a party, who is not a party to the action or proceedings (which is referred to as a “non-party”), has assigned the right to the claim to the plaintiff with a view to avoid his liability for costs; or

the non-party has contributed or agreed to contribute to the plaintiff’s costs in return for a share of any money or property which the plaintiff may recover in the action or proceedings, and the non-party is a person against whom a costs order may be made, then, if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the non-party to give such security for the defendant’s costs of the action or other proceedings as the Court thinks just.

An application for an order under paragraph (2A) shall be made by a notice of application, which shall be served on the non-party personally and on every party to the proceedings. (2C) A copy of the supporting affidavit shall be served with the notice of application on every person on whom the notice of application is required to be served.

The references in the foregoing paragraphs to a plaintiff and a defendant shall be construed as references to the person (howsoever described on the record) who is in the position of plaintiff or defendant, as the case may be, in the proceedings in question, including the proceedings on a counterclaim. Manner of giving security (O. 23, r. 2)

Where an order is made requiring any party to give security for costs, the security shall be given in such manner, at such time, and on such terms, if any, as the Court may direct. Saving for written law (O. 23, r. 3)

This Order is without prejudice to the provisions of any written law which empowers the Court to require security to be given for the costs of any proceedings. [15] It is also relevant that reference be made to section 580A(1) of the Companies Act 2016, which provides as follows: Security for costs

Where a company is the plaintiff in any action or other proceedings and if it appears by a credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if the defendant is successful in his defence, the Court may order the plaintiff to give sufficient security for all the costs and to stay all action or proceedings until the security is given. [16] The cases that have explicated the principles governing this aspect of practice and procedure include Kasturi Palm Products v Palmex Industries Sdn Bhd [1985] CLJU 149; [1986] 2 MLJ 310; [1985] 2 MLRH 213 (“Kasturi Palm Products”), Ooi Meng Khin v Amanah Scotts Properties (KL) Sdn Bhd & Ors and another appeal [2013] 5 AMR 68; [2013] CLJU 1517; [2013] 5 MLJ 773; [2013] 6 MLRA 219 and Taimoku Corporation v Mutiara Motors Performance Products Sdn Bhd [2020] AMEJ 0296; [2020] CLJU 355; [2020] MLJU 568; [2020] MLRHU 315 (“Taimoku Corporation”). [17] In support of his application for security for costs, the Defendant relied on the Court of Appeal decision in North Plaza Sdn Bhd v United Securities Sdn Bhd [2010] 1 CLJ 470; [2009] MLJU 0697; [2009] 3 MLRA 104 (“North Plaza”) and Raju Rajaram Pillai (t/a Dhanveer Enterprise) v MMC Power Sdn Bhd & Anor [2000] AMEJ 0168; [2000] 4 CLJ 189; [2000] 6 MLJ 551; [2000] 1 MLRA 489. The Decision of this Court [18] This Court has examined the caused papers, namely the affidavits filed by the respective parties and considered the written and oral submissions of the parties, together with the authorities relied by the parties. [19] With respect to the Plaintiff’s argument that there was a delay on the part of the Defendant in making this application, this Court finds the contention unmeritorious. The case of Menon v Abdullah Kutty is distinguishable, as it concerned an application for additional security for the costs of an appeal. [20] This Court finds itself perplexed by the Defendant’s assertion that the Plaintiff falls outside its jurisdiction. Notably, this directly contradicts the position the Defendant previously took in opposing Enclosure 19 (the Second Defendant’s application to strike out the counterclaim). When pressed to address this inconsistency during the hearing, the Defendant ultimately conceded that the argument was without merit and withdrew it. [21] An order for security for costs involves a two-stage process. First, the applicant must establish that at least one of the requirements under Order 23 rule 1 of the Rules of Court 2012 is met. If none of these requirements are satisfied, the application must fail. However, even where one or more requirements are fulfilled, an order for security for costs does not follow as of right. The court retains a discretionary power to determine whether such an order should be granted, having regard to all relevant circumstances of the case. [22] This Court regards the phrase “if, having regard to all the circumstances of the case, the Court thinks it just to do so” as central to the exercise of its discretion under Order 23 rule 1 of the Rules of Court 2012. [23] As noted in Kasturi Palm Products, “it is no longer, for example, an inflexible or rigid rule that a plaintiff resident abroad should provide security for cost”. [24] The principle to be drawn from Taimoku Corporation is that “the Plaintiff being a foreign company does not necessarily entail security for costs”. [25] Having regard to all the circumstances of this case, the application in Enclosure 47 is dismissed with costs. [26] The Defendant to pay costs of RM10,000 to the Plaintiff, subject to allocatur. Dated: 13 March, 2025 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Andrian a/l Silvarajoo and Nur Amalina binti Mohamad Rosli for the Plaintiff (Messrs. Adrian & Co.) Mohd Rizal Bahari bin Md. Noor and Mohd Amirfarid bin Mohd Nawawi for the Defendant (Messrs. Bahari & Bahari)