Salchi SPA

- vs -

Ler

Judgment

RK Nathan, J

THE APPLICATION

1. The defendant filed an application (Encl 15) and sought a sum of RM40,000 or such sum as the court deems just and proper as security for costs against the plaintiff. The facts relating to this case have been dealt with fully by me in an early related judgment (see Salchi SPA v Ler Cheng Chye [1999] 3 MLJ 133). On November 17, 1998 the learned Deputy Registrar (DR), having heard arguments earlier and having reserved judgment, dismissed Encl 15 with costs.

   THE APPEAL

2. Dissatisfied with the said decision the defendant appealed to me (Encl 19). On August 12, 1999, having heard arguments I dismissed the said appeal with costs.

   FINDINGS OF THE COURT

3. The basis of the appellant's claim for seeking security for costs was that the plaintiff is an Italian company, domiciled in Italy. This is not in dispute. The question of security for costs has been well and truly canvassed in the Supreme Court Practice 1997 Volume 1 paragraph 23/1-3/2 which reads:

   Rule 1(1) provides that the court may order security for costs 'if, having regard to all the circumstances of the case, the court thinks it just to do so'. These words have the effect of conferring upon the court a real discretion, and indeed the court is bound, by virtue thereof, to consider the circumstances of each case, and in the light thereof to determine whether and to what extent or for what amount a plaintiff (or the defendant as the case may be) may be ordered to provide security for costs. It is no longer for example, an inflexible or rigid rule that a plaintiff resident abroad should provide security for costs.

   And a little down the same page, it says:

   Security cannot now be ordered as of course from a foreign plaintiff, but only if the court thinks it just to order such security in the circumstances of the case.

4. In fact in Kasturi Palm Products v Palmex Industries Sdn Bhd [1986] 2 MLJ 310 Mohamed Dzaiddin J (as he then was) held that under Order 23 r 1(1) of the Rules of the High Court 1980 security for costs cannot now be ordered as of right from a foreign plaintiff but only if the court thinks it just to order depending on the circumstances of the case. However, whilst the circumstances that the court ought to consider might vary from case to case it would be impossible to categorise such circumstances. It is here that the court exercises its discretion by weighing the circumstances emanating from each case and to consider whether the justice of the case requires the granting of such security for costs.

5. In Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] 2 All ER 273 at 285, 286 Lord Denning MR considered examples of circumstances fit for the court's consideration. He said:

   The court has a discretion which it will exercise considering all the circumstances of the particular case. So I turn to consider the circumstances. Counsel for Triplan helpfully suggests some of the matters which the court might take into account, such as whether the company's claim is bona fide and not a sham and whether the company has a reasonably good prospect of success. Again it will consider whether there is an admission by the defendants on the pleadings or elsewhere that money is due. If there was a payment into court of a substantial sum of money (not merely a payment into court to get rid of a nuisance claim), that too would count. The court might also consider whether the application for security was being used oppressively - so as to try to stifle a genuine claim. It would also consider 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.

6. I would include as a circumstance for the court's consideration the order made earlier by this court confirming the DR' s order that the defendant pay into court the full sum of RM300,000 claimed by the plaintiff, with costs. Whilst at this stage I ought not to go into the merits of the case, I cannot help but fall back on some of the findings made in respect of this case in the earlier reported decision. Obviously when an order is given that the defendant be given conditional leave to defend by paying the full sum into court, the court must have considered the bona fides of the plaintiffs claim and the reasonable prospect of success of the plaintiff.

7. Whilst I agree that the Reciprocal Enforcement of Judgments Act 1958 (as Revised-1972) does not apply in this case since Italy does not fall into the First Schedule as one of the reciprocating countries, this fact in itself should not be a ground for the court to consider granting security for costs without considering the circumstances referred to earlier. Where both countries are endeavouring to enhance bilateral trade and boost each other's economies, strictures set by this court in demanding security for costs in cases such as this will have a negative effect.

8. In fact in BMI Building Material International GmbH v Roberta Building Material Pte Ltd [1999] 2 SLR 39 the Singapore Court of Appeal held that even though its Reciprocal Enforcement of Judgments Act (Cap 265) did not apply in Germany, the onus was on the local company (the respondent / defendant in that case) to prove that it could not enforce a judgment in its favour in Germany, or that the delay on such enforcement would be so great as to constitute an exceptional circumstance. The Court of Appeal went on further to hold that the fact that Germany was not a country to which the Reciprocal Enforcement of Judgments Act (Cap 265) applied did not mean that there was no other redress available to the respondent under German law. Whilst conceding that a delay in enforcing a Singapore judgment in Germany could be expected, the court held that the respondent had not however established that such delay would be so great as to make it an exceptional circumstance.

9. I accept, adopt and will apply this same reasoning to the case before me.

10. The defendant herein has not shown that he has no other remedy based on Italian law, to recover costs in Italy if the plaintiff fails in this action. Even if there was such a law available, the defendant has failed to show that any delay that might be occasioned in the process of recovering its costs through such available law, would be so prejudicial as to fall within any of the circumstances that this court ought to consider in the defendant's favour. In fact in Abdul Fattah Mogawan v MMC Power Sdn Bhd [1997] 5 CLJ 1, I had held that if a foreign plaintiffs predicament and impecuniosity had been brought about by the action of the defendant, such conduct could constitute special circumstances for the court's consideration in refusing an application for grant of security for costs.

11. Having considered all factors and authorities, I dismissed the defendant's appeal with costs.

Cases

Abdul Fattah Mogawan v MMC Power Sdn Bhd [1997] 5 CLJ 1; BMI Building Material International GmbH v Roberta Building Material Pte Ltd [1999] 2 SLR 39; Kasturi Palm Products v Palmex Industries Sdn Bhd [1986] 2 MLJ 310; Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] 2 All ER 273; Salchi SPA v Ler Cheng Chye [1999] 3 MLJ 133

Legislations

Malaysia

Reciprocal Enforcement of Judgments Act 1958

Rules of the High Court 1980: Ord. 23 r 1(1)

Singapore

Reciprocal Enforcement of Judgments Act (Cap 265)

Representation

Izabella de Silva & Ranjan Chandran (Iza Ng Yeoh & Kit) for Defendant / Appellant

K Goik (Malik & Partners) for Plaintiff / Respondent

Notes:-

This decision is also reported at [2000] 1 AMR 1015