Qube Integrated Malaysia Sdn. Bhd. v Anggun Dinamik Holdings Sdn. Bhd. (WA-22NCvC-680-11/2025)

The Plaintiff ("Qube") commenced this action against the Defendant ("Anggun") in relation to premises at the L1 Lobby of the Malaysia International Trade & Exhibition Centre ("MITEC") that Anggun had occupied as a tenant pursuant to a Sub-Lease Agreement dated 26.12.2019 with Prisma Galeri Sdn. Bhd. ("PGSB"), the then concession holder of MITEC. Anggun had been granted a lease until 2030 and had spent in excess of RM1.4 million on converting the premises into a café, including commissioning custom-made kitchen equipment, which took more than six months to assemble.

A dispute arose between the parties from February to August 2024 regarding Anggun's departure from the premises and the removal of its equipment and furnishings. Anggun alleged that Qube acted oppressively, obstructed the peaceful delivery of vacant possession, committed trespass, and wrongfully detained Anggun's equipment (detinue). Anggun further alleged that Qube had been utilising the detained equipment without permission.

Qube obtained Judgment in Default ("JID") against Anggun, together with a Writ of Possession. Anggun applied to set aside the JID, and the Learned Magistrate allowed the application, finding that Anggun had demonstrated merits in its Defence and Counterclaim.

Anggun has since been wound up on 11.9.2024 pursuant to a petition filed by Small Medium Enterprise Development Bank (M) Berhad ("SME Bank") under ss 465(1)(e) and 466 of the Companies Act 2016 ("CA 2016") on the ground of inability to pay its debts. However, its director and contributory, Wan Noormie Azura Binti Wan Mohamad ("Wan Noormie"), obtained the sanction of the Insolvency Department to defend Qube's action and to prosecute Anggun's Counterclaim. Leave was also obtained from the Winding Up Court to add the Counterclaim, the Learned Winding Up Judge being satisfied that Anggun had a bona fide Counterclaim.

On 4.3.2026, Qube withdrew its entire Statement of Claim against Anggun, with the Court ordering costs of RM10,000.00 to be paid by Qube to Anggun, subject to allocatur. What remains to be tried is therefore solely Anggun's Counterclaim.

It is in this context that Qube filed Enc. 64 in respect of its application for an order that the Defendant furnish security for costs in the sum of RM100,000.00 pursuant to s 580A CA 2016, before the Defendant is permitted to proceed to trial on its Counterclaim. Qube did not seek to move this Court under O 23 R1 of the Rules of Court 2012 ("ROC 2012") for security of costs, which I find odd. Nonetheless, since Anggun did not raise any preliminary objection on this point, I set aside my qualm and shall proceed straight to the issues arising.

S 580A(1) CA 2016 provides: "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."

The operative word is "may". The provision is discretionary and not mandatory. As Kingsmill Moore J observed in Peppard and Co Ltd v Bogoff [1962] IR 180 at 188, the section does not make it mandatory to order security for costs in every case where the plaintiff company appears unable to pay the costs of a successful defendant; there remains a discretion in the court which may be exercised in special circumstances (see: Skrine & Co v MBF Capital Bhd & Anor [1998] 3 MLJ 649 CA).

The principle in Skrine established that applications under s 580A CA 2016 involve a two-stage inquiry:

First, whether there is credible evidence before the Court; and

Second, whether that evidence, when found to be credible, supports the belief that the company will be unable to pay the costs of a successful defendant.

In Re Unisoft Group Ltd (No 2) [1993] BCLC 532, as applied by the High Court in Tay Eng Tian & Anor v Koh Koh Kian [2021] 1 LNS 1594 CA, it was clarified that the phrase "will be unable to pay" means inability to pay costs as and when they fall due for payment, assessed at the time the application is heard, with appropriate inferences drawn from the totality of the evidence. The Court must reach its conclusion on the basis of all evidence placed before it, not merely on the assertion of one party's witness.

In Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609, Lord Denning MR set out factors the court should consider in exercising its discretion:

whether the company's claim is bona fide and not a sham;

whether the company has a reasonable prospect of success;

whether there is an admission by the defendants on the pleadings or elsewhere that money is due;

whether any payment into court has been made;

whether the application for security is being used oppressively to stifle a genuine claim; and

whether the company's want of means has been brought about by the conduct of the defendants.

Lord Denning further noted that Scrutton LJ had cautioned that there were too many applications against companies for security for costs and that the powers of the section should be carefully used. Maugham LJ similarly observed that there may be many cases in which a company is insolvent and yet the court would not order the lodging of security.

In Tan Sri Abdul Aziz Zain & Others v United Overseas Land Ltd & Ors [1998] 4 CLJ 321 HC, the Court confirmed that the provision is discretionary and that a winding-up order does not automatically entitle the applicant to security for costs. The factors outlined by Lord Denning are to be weighed in the circumstances of each case. Abdul Hamid Mohamad J (as he then was) further observed that it is not a question of burden of proof one way or another; it is a discretion to be exercised in all the circumstances.

This position is reinforced by Gateway Land Pte Ltd v Turner (East Asia) [1988] 1 MLJ 416 HC and Stone Master Corporation Bhd v Ong Kow Ee [2023] MLRHU 2319 HC, both of which affirm the court's residual discretion notwithstanding the impecuniosity of the plaintiff company.

As held by the Court of Appeal in North Plaza Sdn Bhd v United Securities Sdn Bhd [2010] 1 MLJ 631 CA, the fact of a company being wound up is a sufficient reason to believe that it would be unable to pay costs unless evidence to the contrary is given. This principle, derived from Northampton Coal, Iron and Waggon Company v Midland Waggon Company (1878) 7 Ch D 500, was also applied in Rudy Petroleum Sdn Bhd (dalam likuidasi) v HSAP Sdn Bhd [2021] 1 LNS 1214 HC.

However, satisfying the threshold of the first stage of the inquiry does not end the matter. As the authorities consistently establish, the Court retains a broad discretion at the second stage. A winding-up order shifts the evidential landscape but does not compel the Court to grant security. The Court must still weigh all relevant circumstances before deciding whether it would be just to make the order (see: Tan Sri Abdul Aziz Zain and Gateway Land).

On the basis that the first stage of the Skrine inquiry is satisfied that there is credible evidence, by virtue of the winding-up order, that Anggun will be unable to pay Qube's costs if the Counterclaim fails. The central question, however, is whether the exercise of the Court's discretion warrants the making of the order sought in the particular circumstances of this case.

The Bona Fides and Merits of Anggun's Counterclaim

The evidence before me establishes that Anggun's Counterclaim has already been scrutinised and found to have merit at two separate stages of these proceedings:

The Learned Magistrate, in setting aside the JID, accepted that Anggun had a bona fide Defence and Counterclaim. In that application, Anggun had provided full particulars of its capital outlay exceeding RM1.4 million and exhibited invoices and receipts in support.

Subsequently, the Learned Winding Up Judge granted Anggun leave to prosecute its Counterclaim, having been satisfied of its bona fides. The proposed Counterclaim, together with all supporting particulars, was placed before the Winding Up Court.

These interlocutory determinations by two courts carry reasonable weight in satisfying this court that the Counterclaim is bona fide and not a sham, and that it possesses a reasonable prospect of success.

The Counterclaim centres on the valuation of kitchen equipment and inventory amounting to approximately RM1.4 million, as well as claims in trespass and detinue, supported by invoices and receipts. These are tangible, particularised claims which are not speculative or vexatious in nature. The trial will be centred on the valuation of the kitchen equipment and inventory (including the cost of installation, the value as at February 2024, and the value of any sale by the Insolvency Department), as well as on trespass by Qube and aggravated damages. It is estimated to be completed in one day via Written Witness Statements.

Qube contends that at the interlocutory stage, the Court ought not to undertake a detailed merits-based inquiry, relying on Raju Rajaram Pillai v MMC Power Sdn Bhd & Anor [2000] 6 MLJ 551 HC, CNLT (Far East) Berhad (Dalam Likuidasi) v JCT Limited [2018] 1 LNS 1127 HC, and Muehlbauer Technologies Sdn Bhd v Muehlbauer Holding AG & Ors [2026] MLJU 796 HC. I accept that this Court should not conduct a full merits inquiry at this stage. However, the factor of bona fides and reasonable prospect of success, as set out by Lord Denning in Sir Lindsay Parkinson, remains a relevant consideration in the exercise of discretion. The question is not whether the Court can conclusively determine the merits, but whether there is sufficient indication that the claim is genuine and has reasonable prospects. I find that the threshold that has been met here by virtue of two prior judicial determinations. As the Court of Appeal in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 held that the court will have regard to the plaintiff company's prospects of success, though it should not go into the merits in detail unless it can clearly be demonstrated that there is a high degree of probability of success or failure. The merits factor is therefore treated as weighing in Anggun's favour, without any conclusive determination.

(ii) Oppressive Use of the Security for Costs Application

I am mindful of the factor identified by Lord Denning in Sir Lindsay Parkinson, regarding whether the application for security is being used oppressively to stifle a genuine claim. Several circumstances lead me to conclude that an element of oppression is present in the instant application.

The quantum sought of RM100,000.00 is found to be wholly unsupported by any particulars or breakdown. The Plaintiff offered no explanation of how this figure was arrived at. The Defendant rightly characterises it as a figure plucked from the air. Qube relies on the principle from Adarsh Pandit v Viking Engineering Sdn Bhd [1996] CLJU 350 HC and Golden Affinity Development Sdn Bhd v ES Eng Soon Holding Sdn Bhd & Ors [2021] 1 LNS 2595 HC, which suggests that security may appropriately be fixed at approximately 25% of the sum claimed. Qube submits that RM100,000.00 is less than 10% of the RM1.4 million Counterclaim and therefore reasonable.

With respect, I am unable to accept this submission. Whilst I acknowledge that there is no mandatory requirement for a detailed bill of costs to justify the quantum sought (see: Customer Loyalty Solutions Sdn Bhd v Advance Information Marketing Bhd [2017] CLJU 1894, and Mas Anita bt Abdullah v Lew Wai Koung (No 1) [2013] 8 MLJ 698 HC), the Court must still assess whether the quantum is just and proportionate in the circumstances. The 25% formula from Adarsh Pandit is a guideline, not an inflexible rule; the Court retains discretion to determine what is just having regard to the actual circumstances of the case. Here, the trial is straightforward: a one-day hearing via witness statements. All pre-trial work from the filing of the Statement of Claim through to the Reply to Defence and Defence to Counterclaim has already been absorbed in the costs award of RM10,000.00 made by this Court on 4.3.2026 when Qube withdrew its claim. If those accumulated costs over the life of the suit were assessed at RM10,000.00, the claim of RM100,000.00 for the trial of a straightforward Counterclaim is plainly disproportionate. The quantum sought bears no rational relationship to the likely costs of the remaining trial.

Also, Qube's litigation conduct is telling. Qube obtained a JID and a Writ of Possession, resisted the setting aside of the JID, filed a Summary Judgment application, and ultimately withdrew its entire claim on 4.3.2026. This pattern of aggressive litigation, followed by a complete withdrawal, only to then seek to impose a substantial financial barrier to Anggun's Counterclaim, supports the inference that the security for costs application is being used as a tactical measure to shut out a genuine claim. As Anggun's solicitors aptly submitted, having realised it faces a substantial Counterclaim, Qube is devising means to escape liability. The Court must be vigilant in recognising such oppressive motives: see Doree Industries (M) Sdn Bhd & Ors v Ti Ham & Co & Ors [2007] 1 MLJ 722 FC, where it is cautioned that the court must always be reluctant to allow applications for security for costs to be used as a measure to stifle proceedings or for some other oblique motive.

I also find that the practical risk to Qube is minimal. It is a fact that Anggun's equipment is in Qube's possession, custody and control. The value of the Counterclaim exceeds the RM100,000.00 requested as security. Even if the equipment's actual value does not reach the amount counterclaimed, there is no real risk that Qube will be unable to recover costs. Any costs awarded can readily be set off against sums Qube may be ordered to return, or against the equipment it holds. This factor significantly diminishes the justification for the order sought.

(iii) The Stifling of a Genuine Claim

Qube contends that Anggun has failed to demonstrate that an order for security would stifle its Counterclaim, relying on Sonic Finance Inc & Anor v Halim bin Mohammad & Ors [2016] 1 LNS 1794 HC, Customer Loyalty Solutions, Government of Sarawak v Sami Mousawi-Utama Sdn Bhd [1998] 4 CLJ 175 HC, and Muehlbauer Technologies. The thrust of these authorities is that the burden lies on the plaintiff resisting a security application to demonstrate that those who stand behind the company and who stand to benefit from the litigation are also without means to fund the action.

While I stand firm on the general principle, it must be remembered that the burden to demonstrate stifling must be assessed in context. The question of whether an order would stifle the claim is but one factor in the overall exercise of discretion, not the sole determinant. Even if Anggun has not fully discharged this evidential burden, the Court is not obliged to grant the order if the totality of circumstances weighs against it. As observed in Tan Sri Abdul Aziz Zain, it is not a question of the burden of proof one way or the other.

In any event, the practical consequence of ordering security in the disproportionate amount sought is clear: if Anggun, a wound-up company, is unable to furnish it, the Counterclaim will be stayed or struck out. Any damages that might otherwise be recovered would be paid to the Insolvency Department for distribution to Anggun's creditors. Imposing an insurmountable security requirement would therefore prejudice not only Anggun but its creditors as a class. This consideration weighs against the making of the order sought.

It is appropriate to distinguish the cases relied on by Qube, particularly KD Resources Sdn Bhd v Ng Boon Jieh & Son Realty Sdn Bhd [2003] 1 CLJ 333 HC and Mechanalysis Sdn Bhd (in Liquidation) v Appraisal Property Management Sdn Bhd [2016] 11 MLJ 566 HC. Both cases involved dormant or liquidating companies, with no evidence of financial capability adduced and no countervailing factors. Here, there are many countervailing factors, as confirmed by the two earlier courts, including oppressive conduct, disproportionate quantum, availability of set-off, and creditor prejudice.

The other case of Tan See Meng & Ors v Able Oils & Fats Sdn Bhd [2024] 7 CLJ 90 CA concerned companies under the Judicial Management Order (JMO) or dormant entities with no income stream. Given that all the defendants were unable to pay the respondent the past costs ordered by the High Court, the Court of Appeal holds that they should be recovered through enforcement proceedings rather than by an order for security for costs. Moreover, the impecuniosity of the first defendant in being a bankrupt is not per se a cogent factor to ordering security for costs, and the case of Faridah Begum bt Abdullah v Dato Michael Chong [1995] 2 MLJ 404 HC is referred to.

(iv) The Conduct of the Plaintiff Contributing to Anggun's Losses

The Counterclaim alleges that Anggun's losses were caused by Qube's own oppressive, unlawful, and wilful conduct between February and August 2024, including obstruction of Anggun's removal of its equipment, trespass, unauthorised use of Anggun's equipment, and refusal to accommodate Anggun's reasonable requests for time to dismantle custom-made equipment that required at least three months to remove.

Qube contends that Anggun's financial difficulties pre-dated its involvement, pointing to the chronology of PGSB's JID (on 2.11.2023) for rental arrears since January 2022, and SME Bank's judgment (on 15.12.2023) which ultimately led to the winding up. Qube submits that Anggun's allegation of causation is therefore wholly unfounded.

Muehlbauer Technologies recognised that allegations of causation regarding the plaintiff's impecuniosity cannot be determined conclusively on affidavit evidence at an interlocutory stage and must instead be resolved at trial following the full ventilation of evidence. The question before me is not whether Qube definitively caused Anggun's financial ruin, but whether the allegation is sufficiently credible to constitute a relevant factor in the exercise of discretion. The Counterclaim particularises specific instances of alleged wrongdoing, namely obstruction, trespass, detinue, and unauthorised use. If they are made out at trial, it would establish that Anggun's losses giving rise to the Counterclaim were substantially contributed to by Qube's conduct. This is a relevant factor militating against the imposition of security, as recognised in Sir Lindsay Parkinson.

The Position of the Director/Contributory

The Enc. 64 application does not seek security from Wan Noormie, who is the director and sole contributory of Anggun and effectively its alter ego. She is the person who obtained the sanction of the Insolvency Department and has been actively prosecuting the Counterclaim.

Qube contends, relying on Tan Sri Abdul Aziz Zain, that the presence of a financially capable contributory renders a security order unnecessary. Qube's solicitors submit that there is no evidence before the Court that Wan Noormie would be unable to satisfy any costs order that may be made against her personally, and that any eventual costs order could be made against her individually. In those circumstances, Qube is not without recourse and is therefore not prejudiced by the absence of security from the wound-up company.

Qube (as Applicant) challenges this reliance on Tan Sri Abdul Aziz Zain, arguing that:

the Court in that case did not lay down any principle requiring security to be sought against a contributory;

the decision turned on the presence of the 1st plaintiff who is a party to the proceedings and capable of meeting costs, which rendered security unnecessary;

extrapolating a general rule about contributories is an impermissible extension of the ratio; and

Wan Noormie is not even a party to the proceedings, and s 580A CA 2016 only contemplates security against a named plaintiff, not a non-party.

I have carefully considered both positions. I accept that Tan Sri Abdul Aziz Zain did not establish a mandatory rule requiring that security be sought against a contributory. However, the reasoning in that case is instructive on a different point: where a person closely connected to the litigation is capable of satisfying any adverse costs order, the absence of security from the impecunious company causes less prejudice to the applicant. The significance lies not in any procedural requirement to join or target the contributory, but in the practical assessment of prejudice. The Court in Tan Sri Abdul Aziz Zain declined security precisely because the applicant was not without recourse since the 1st plaintiff could meet costs.

Applying that reasoning to the present case: Wan Noormie is not a party, and I make no order against her. But the fact remains that Qube has not demonstrated that it would be left entirely without recourse. Wan Noormie has been the driving force behind this litigation. There is no evidence before me that she would be unable to satisfy any costs order. This factual circumstance on the availability of a potential avenue for costs recovery beyond the wound-up shell is a relevant consideration in the overall exercise of discretion. It diminishes the degree of prejudice that Qube claims it would suffer without security.

(vi) Prejudice to Creditors

If security for costs is ordered in the amount sought and Anggun is unable to furnish it, the practical consequence is that the Counterclaim will be stayed or struck out. Any damages that might otherwise be recovered would be paid to the Insolvency Department for distribution to Anggun's creditors. Imposing an insurmountable security requirement would therefore prejudice not only Anggun but its creditors as a class.

Qube argues, relying on Customer Loyalty Solutions, that creditors and contributories stand to gain from the upside of the litigation without bearing any corresponding downside risk, and that, absent security, Qube would suffer manifest injustice. Whilst I appreciate this concern, the answer lies in the proportionality of the order sought. A properly calibrated security order might address Qube's legitimate concerns without extinguishing the Counterclaim. However, the quantum sought, RM100,000.00, is not properly calibrated, as it is manifestly disproportionate. In these circumstances, the prejudice to creditors posed by a draconian order outweighs the risk to Qube, particularly given the minimal practical risk identified earlier.

Having weighed all factors, I am satisfied, in exercising my discretion under s 580A CA 2016, that it warrants the dismissal of Enc. 64 with costs to Anggun. Dated: 4 June 2026 Arziah binti Mohamed Apandi Judge Kuala Lumpur High Court NCvC 8 Wilayah Persekutuan Kuala Lumpur Plaintiff's Counsel : Ms. Gabby Yow Yong Wei Messrs Jeffrey Tan & Chng Selangor Darul Ehsan Tel. No.: 03-7931 2080 Email: info@jtclaw.com.my / qabby@jtclaw.com.my Defendant's Counsel : Ms. Velary Velayathan (together with her Mr. V.S Visvanathan) Messrs Low & Partners Kuala Lumpur Tel. No.: 03-2389 0293 Email: KL@LowPartners.com Cases referred Peppard and Co Ltd v Bogoff [1962] IR 180 at 188 Skrine & Co v MBF Capital Bhd & Anor [1998] 3 MLJ 649 CA Re Unisoft Group Ltd (No 2) [1993] BCLC 532 Tay Eng Tian & Anor v Koh Koh Kian [2021] 1 LNS 1594 CA Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 Tan Sri Abdul Aziz Zain & Others v United Overseas Land Ltd & Ors [1998] 4 CLJ 321 HC Gateway Land Pte Ltd v Turner [1988] 1 MLJ 416 HC Stone Master Corporation Bhd v Ong Kow Ee [2023] MLRHU 2319 HC North Plaza Sdn Bhd v United Securities Sdn Bhd [2010] 1 MLJ 631 CA Northampton Coal, Iron and Waggon Company v Midland Waggon Company (1878) 7 Ch D 500 Rudy Petroleum Sdn Bhd (dalam likuidasi) v HSAP Sdn Bhd [2021] 1 LNS 1214 HC Raju Rajaram Pillai v MMC Power Sdn Bhd & Anor [2000] 6 MLJ 551 HC CNLT (Far East) Berhad (Dalam Likuidasi) v JCT Limited [2018] 1 LNS 1127 HC Muehlbauer Technologies Sdn Bhd v Muehlbauer Holding AG & Ors [2026] MLJU 796 HC Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 at 540d CA Adarsh Pandit v Viking Engineering Sdn Bhd [1996] CLJU 350 HC Golden Affinity Development Sdn Bhd v ES Eng Soon Holding Sdn Bhd & Ors [2021] 1 LNS 2595 HC Customer Loyalty Solutions Sdn Bhd v Advance Information Marketing Bhd [2017] CLJU 1894 HC Mas Anita bt Abdullah v Lew Wai Koung (No 1) [2013] 8 MLJ 698 HC Doree Industries (M) Sdn Bhd & Ors v Ti Ham & Co & Ors [2007] 1 MLJ 722 FC Sonic Finance Inc & Anor v Halim bin Mohammad & Ors [2016] 1 LNS 1794 HC Customer Loyalty Solutions, Government of Sarawak v Sami Mousawi-Utama Sdn Bhd [1998] 4 CLJ 175 HC KD Resources Sdn Bhd v Ng Boon Jieh & Son Realty Sdn Bhd [2003] 1 CLJ 333 HC Mechanalysis Sdn Bhd (in Liquidation) v Appraisal Property Management Sdn Bhd [2016] 11 MLJ 566 HC Tan See Meng & Ors v Able Oils & Fats Sdn Bhd [2024] 7 CLJ 90 CA Acts/Law referred: ss 465(1)(e) and 466 of the Companies Act 2016 O 23 R1 of the Rules of Court 2012 s 580A Companies Act 2016