Shanghai Yuanyi Technology Pty Ltd v Syahazlin Herrytha Binti Zulkepli (BA-22NCvC-467-11/2024)

SYAHAZLIN HERRYTHA BINTI ZULKEPLI [I/C NO.: 830908-11-5186] [TRADING UNDER THE NAME AND STYLE OF EAGLE NORTHERN SEVICES, A SOLE PROPRIETOR BUSINESS] [COMPANY NO.: 201603104052 (002528761-D)]

VINOD SHARMA A/L BALBIR SINGH [I/C NO: 790621-14-5819]

VINOD SHARMA LAW FIRM [SUMMONSED AS A FIRM]

MOHD KHAIRIL NIZAM BIN MOHD K JABAYEE [I/C NO: 840216-10-5197] … DEFENDANTS 29/12/2025 16:00:12 BA-22NCvC-467-11/2024 Kand. 94 S/N QvWtrdkT0yl94R53ffTFw

Enclosure 38 is the 4th Defendant's (D4) application for security for cost under Order 23 Rule 1 of the Rules of Court 2012

After hearing both parties and read the submissions, I have allowed the application and ordered that the amount of RM20,000.00 be paid into Court as security for any costs incurred upon the disposal of the action.

D4 was not satisfied with the amount ordered and has appealed to the Court of Appeal; below are my reasons.

Plaintiff is a company incorporated in the Republic of China, based in Shanghai, China.

The 1st Defendant (D1) is the owner of Eagle Northern Services, which carries out the business of wholesaling personal protective equipment (PPE) and products related to pharmaceuticals and medical supplies.

The 2nd Defendant (D2) is a practising lawyer at Messrs Vinod Sharma Law Firm (D3).

D4 is an individual who introduced D2 to the Plaintiff.

Based on the Statement of Claim, the brief facts are as follows:

Around January 2020, the Plaintiff reached an understanding with Ji Lin Sheng Zhong Xiong Yao Ye Pty Ltd (Ji Lin), a company based in the People's Republic of China, to make arrangements under which the Plaintiff would sell and supply face masks to Ji Lin.

D4 contacted the Plaintiff and recommended D1, representing that D1 could supply and deliver face masks from Malaysia to the Plaintiff's location in China.

On 30.1.2020, relying on D4's representations, the Plaintiff entered into a purchase agreement with D1 for a contract price of USD 177,800.00, with delivery of face masks by 6.2.2020. The Plaintiff then entered into a supply agreement with Ji Lin, under which the Plaintiff agreed to supply face masks at a price of RMB 4,250,000.00.

The Plaintiff subsequently appointed Shenyang Huayue Foreign Economic and Trade Company (SYHY) as a commercial financier to make payment to D1.

Payment was made, but D1 failed to deliver the face masks.

The Plaintiff informed D4 of D1's failure, and D4 recommended that the Plaintiff appoint D3 as a law firm to claim against D1.

Following D4's recommendation, on 2.3.2020, the Plaintiff appointed D3 and D2 as lawyers and as the law firm to pursue action against D1.

D2 informed the Plaintiff that legal action had been initiated against D1, that a default judgment had been successfully obtained, and that enforcement proceedings were now being arranged.

On 3.11.2021, D2 emailed the Plaintiff, stating that CIMB Bank Berhad would release RM124,000.00 to the Plaintiff and that D3 had taken steps to register a caveat over D1's assets.

However, in September 2023, the Plaintiff discovered that the court documents sent by D2 and D3 were fake and/or forged, and that in reality, D2 and D3 had never initiated any legal action against D1.

Plaintiff, through their solicitor, has now filed this action against all Defendants, alleging fraud against D2 and D3, and professional negligence and misrepresentation against D4.

After the filing of this action, D1 had not entered an appearance, but Plaintiff had not taken any action to record judgment in default of appearance as yet.

D2, D3 and D4 filed applications for security for costs pursuant to Order 23 of the ROC to secure payment of costs if they succeed in defending this claim. I have heard only D4's application (enclosure 38), and have adjourned D2 and D3's applications, as several other interlocutory applications filed by D2 and D3 remain to be addressed separately.

D4 is unpresented and acted on his own. He filed this application on the following grounds:

Plaintiff's company is based in China, which is outside the jurisdiction of the Court.

Plaintiff had no visible assets in Malaysia.

Plaintiff is demanding a high amount against D4.

The possibility of the Plaintiff evading or avoiding payment of the cost to D4.

D4 is not privy to the agreement between Plaintiff and D1; there are no merits in the Plaintiff's claim against him. S/N QvWtrdkT0yl94R53ffTFw

Plaintiff objected to this application and states as follows:

There is a strong prima facie presumption that D4 will not be successful in his defence against the Plaintiff's claim;

D4's application is oppressive and intended to stifle the Plaintiff's genuine claim against him.

D4's application is frivolous in nature and intended to delay the Plaintiff's claim from being heard by this Court.

The paramount consideration is the strength and bona fides of the Plaintiff's claim, assessed on the pleadings and available affidavit evidence, without a detailed examination of the merits.

The Court must also consider whether the application is oppressive or would stifle a genuine claim.

An application for security for costs under Order 23 rule 1 ROC is discretionary and not granted as of right merely because a Plaintiff is resident outside the jurisdiction.

The legal burden rests squarely on D4 applying for security to justify why such an order ought to be made. S/N QvWtrdkT0yl94R53ffTFw

Order 23 Rule 1 provides: "1. Security for costs of action (O. 23 r. 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; (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;

…

… 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."

It is a trite law that this Court has a discretion to order security for costs. Based on precedented case law rulings, the following matters are relevant in the exercise of the Court's discretion:

The Court should not shut out Plaintiff from ventilating a genuine grievance (Haidakota (M) Sdn Bhd v Tan Tiam Chai (2008) MLJU 654 (CA)).

Whether the suit was brought in good faith by the Plaintiff (Quality Tractors (M) Sdn Bhd v United Asian Bank Berhad (1980) 1 MLJ 95 (HC)).

Whether the application was intended to stifle a legitimate claim (Mesra Associates Sdn Bhd v Goh Choon Aun

3 CLJ 105 (HC)).

Whether the application oppresses a Plaintiff (Haidakota, supra).

Without going into the merits in detail, the Court may consider the prospect of success of the claim. However, the Court should not delve into the merits of the case unless it can be clearly demonstrated one way or another that there is a high degree of probability of success (Adarsh Pandit v Viking Engineering Sdn Bhd (1996) MLJU 594 (HC)). S/N QvWtrdkT0yl94R53ffTFw

Whether Plaintiff is impecunious and whether the Plaintiff's impecuniousity is caused by the Defendant (Mechanalysis Sdn Bhd (in liquidation) v Appraisal Property Management Sdn Bhd (2016) 11 MLJ 566 (HC)).

Whether a Plaintiff has been incorporated and has assets in a country which has a reciprocal arrangement with Malaysia for the enforcement of judgments or orders, if yes, this consideration does not support an order for security for costs. If no, this consideration supports an order for security for cost (Pacific Bunkers Pte Ltd v Owners of Ships "Geneki Sarawak" and "Geneki Johor" (2015) 2 AMR 887(HC).

Whether there has been an unreasonable delay in applying for security for cost, although it can be made at any time (Haidakota, supra).

Upon considering the background facts stipulated in the pleadings, I am inclined to exercise my discretion in favour of D4, as this case involves a foreign entity that is not a company and has no prior experience in commercial dealings in Malaysia. The Plaintiff has not disclosed in their affidavits that they are a trusted company, nor have they persuaded this Court that, alternatively, D4 can secure payment of costs against them, as they reside outside Malaysian jurisdiction.

However, the above indication should not be regarded as a finding of the Court on the legitimacy or genuine status of the Plaintiff as a company incorporated outside Malaysia, as this should be adequately addressed at trial. However, for the purpose of considering the payment of security, that is my concern and the reason for allowing this application.

D4 had, in his submission, raised the issue on the authority of the deponent of the Plaintiff's affidavit, Gao Zhenyu, being an inappropriate person to affirm on behalf of the Plaintiff.

On this issue, I reiterate my findings in my grounds of judgment whilst deciding enclosure 32, that is, D2 and D3's application to expunge the affidavit deposed by Gao Zhenyu (on similar grounds as stated by D4), and reproduced below are the relevant findings: "36. I am of the considered view that Gao Zhenyu, being the business representative of the Plaintiff whom the Plaintiff had engaged to handle matters in Malaysia, was authorized by the Plaintiff's company and therefore should be allowed to affirm the Plaintiff's affidavit in this action. The truthfulness or accuracy of the facts deposed is still open to dispute between the parties, and this Court will later decide the weight to be given to the facts posited."

Having allowed the application for security for cost, an amount must be ordered by this Court and the manner in which the security is to be furnished by the Plaintiff. In this regard, it would be helpful if D4 prepared a skeleton bill of costs for the probable expenses that may be incurred in defending these proceedings. However, since there is none, I would consider a sum that, in my opinion, is appropriate and not excessive.

I hereby order a sum of RM20,000.00 to be paid into Court within 30 days from the date of this order. Dated this: 24th December 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR S/N QvWtrdkT0yl94R53ffTFw For the Plaintiff : Megan Choo Wen Shin Messrs Chang Chooi & Co. For the 2nd and 3rd Defendants: Vinod Sharma A/L Balbir Singh Messrs Vinod Sharma Law Firm For the 4th Defendant : Mohd Khairil Nizam bin Mohd K Jabayee (Unrepresented)