Neo Chiew Yueh v Nanopac Innovation Limited (B-02(IM)(NCC)-1488-08/2025)

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NEO CHIEW YUEH KOH CHUN PING …APPELLANTS

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IDIA INVESTMENT LIMITED TETUAN FARID, WONG & WEE (sued as a firm) …RESPONDENTS (In The High Court of Malaya in Shah Alam In the State of Selangor Darul Ehsan Suit No.: BA-22NCC-10-01/2020 Between

Tee Chong Teck

Tee Kok Kiong

Tan Soon Chuan

Tee Say Phang 16/07/2026 08:32:45 Kand. 18 2 5. Tan Kwong Keong

Tey Chiam Chee

Tracy Lim Ying Lin

Lee Chee Shoong

9.

Lee Chui Lian

Liew Teng Yi

Yim Pow Sing

Yap Wee Min

Teh Kian Hook

Kwan Chun Yap

Yong Fong Yun

Lee Choon Boon

Yong Yuen Woon

Ng Bee Hui

Chong Kok Wai

Lee Tin Loy

Ang Ching Chuan

Chua King Giap

Lee Tong Kok

Neo Chiew Yueh

Yap Nai Shuan

Chin Hen Yow

Kok Chun Ping

Yap Siew Chu

Soo Poh Chin

Chua Chou Chen

Koh Chun Wei Lee Fung Kuen …Plaintiffs

And

Nanopac Innovation Limited

Nanopac (M) Sdn Bhd

Cheng Kok Leong

Gain Angel International Sdn Bhd

Idia Investment Limited Tetuan Farid, Wong & Wee (sued as a firm) …Defendants) CORAM MOHAMED ZAINI BIN MAZLAN, JCA FAIZAH BINTI JAMALUDIN, JCA ALIZA BINTI SULAIMAN, JCA GROUNDS OF JUDGMENT Introduction [1] This appeal raises a recurring question in the management of civil trials. Pre-trial case management (“PTCM”) directions are orders of the Court. They are not optional. Parties who fail to comply with them cannot expect the Court to treat non-compliance as a mere administrative lapse. [2] At the same time, the sanction imposed for non-compliance must be proportionate. Striking out is a final and drastic order. It shuts a party out from having its claim determined at trial. The Court must therefore balance the need to enforce discipline in compliance with PTCM directions against the need to ensure that the response to non-compliance is proportionate and meets the justice of the case. [3] The question in this appeal is therefore not whether there was default. There plainly was. The question is whether the default justified the final sanction of striking out the appellants’ claims, or whether the justice of the case could have been met by strict directions and costs. [4] The appeal is against the order of the High Court dated 7 July 2025 striking out the claims of 13 plaintiffs for non-compliance with PTCM directions relating to the filing of witness statements. Only five of those 13 plaintiffs have appealed to this Court. They are the 18th, 20th, 23rd, 24th and 27th plaintiffs in the High Court proceedings. We shall refer to them as “the appellants”. [5] The order under appeal was made pursuant to Order 34 rule 1(3) of the Rules of Court 2012. It was made on the first day fixed for full trial. It struck out the claims of the 7th, 11th, 12th, 16th, 17th, 18th, 19th, 20th, 23rd, 24th, 26th, 27th and 30th plaintiffs, with no order as to costs. [6] After considering the appeal record and the written and oral submissions of the parties, we allowed the appeal. These are our reasons. Background [7] The action in the High Court was commenced by 32 plaintiffs. The plaintiffs’ claim concerns alleged misrepresentation and related causes of action arising from their subscription for shares in the 1st respondent. [8] The suit was filed on 17 March 2020. It went through a number of case managements over a period of more than five years before the order under appeal was made on 7 July 2025. The relevant chronology is largely undisputed. [9] The first direction for the filing of witness statements was given on 25 May 2021. The witness statements were to be filed on or before 25 August 2021. That direction was not complied with. Further directions were subsequently given and the time for filing witness statements was extended more than once. [10] The High Court chronology shows that on 24 March 2025, the Court was informed that 19 witness statements had been filed. On 28 April 2025, the plaintiffs informed the Court that there remained 13 witness statements to be filed. On 2 May 2025, the matter was fixed for trial on 7 July 2025 and 29 July 2025. [11] On 7 July 2025, the first day fixed for full trial, the plaintiffs had filed six new witness statements. The defendants objected to the filing of those witness statements. The High Court allowed the objection and struck out the claims of the 13 plaintiffs. [12] The appellants accept that their witness statements were filed on 26 June 2025. They also accept that the witness statements were filed without prior leave of the High Court. The decision of the High Court [13] The learned Judge held that there had been a long history of non-compliance with the directions of the Court. The learned Judge observed that the first direction for the filing of witness statements had been given as early as 25 May 2021, with the witness statements to be filed by 25 August 2021. The learned Judge noted that many hearing dates had been fixed and adjourned without the witness statements being filed. [14] The learned Judge relied on Order 34 rule 1(3) of the Rules of Court

The learned Judge also referred to Sunway PMI-Pile Construction Sdn Bhd v Pembinaan Chan & Chua Sdn Bhd [2002] 7 MLJ 538; [2003] 5 CLJ 63; [2001] 5 MLRH 665 and Ho Shee Jan v Emas Nominees Sdn Bhd & Ors [2002] 3 MLJ 374; [2002] 8 CLJ 476; [2002] 2 MLRH 867 as authorities supporting the Court’s power to take firm action where there is non-compliance with court directions. [15] The learned Judge found that there was a “nonchalant attitude” on the part of the plaintiffs and an “obvious history of failure” to comply with the Court’s directions. The learned Judge concluded that, due to the general disinterest shown by the plaintiffs in complying with pre-trial directions, there was only one option available to the Court. The claims of the 13 plaintiffs were therefore struck out. The parties’ respective cases [16] The appellants accept that there was delay. Their complaint is that the sanction of striking out was disproportionate. They rely principally on Dr Sim Kui Hian v Chong Chieng Jen and Other Appeals [2021] MLJU 562; [2021] 6 CLJ 305; [2021] 4 MLRA 348 and Hatara (M) Sdn Bhd v Petroliam Nasional Bhd (Petronas) & Anor [2010] 4 MLJ 17; [2010] 3 CLJ 550. They submit that there was no prior warning, unless order or peremptory order; that their witness statements were filed before the trial date; that the trial was not derailed; and that lesser sanctions remained available. [17] The respondents submit that the appeal should be dismissed. They emphasise that the appellants had failed to comply with several deadlines, filed their witness statements without leave, and provided no proper explanation by affidavit for the long delay. They rely on Conlay Construction Sdn Bhd v Perembun (M) Sdn Bhd [2014] 1 MLJ 80; [2013] 9 CLJ 828; [2013] 6 AMR 526, FC on appellate restraint against discretionary decisions and Syed Mohamed v Perbadanan Nasional Bhd [2013] 1 MLJ 461; [2012] 9 CLJ 557; [2013] 1 AMR 1, FC on the Court’s control over the progress of litigation under Order 34. [18] The respondents also submit that the trial has since proceeded for four days without the appellants. They say that witnesses have been called and that their trial strategy was formulated on the footing that only 19 plaintiffs remained in the action. They submit that reinstatement would cause substantial prejudice. The Issues [19] The issues which arise for our determination are these:

(a) whether the High Court had power under Order 34 rule 1(3) to strike out the appellants’ claims;

(b) whether, in the absence of a prior warning, unless order or peremptory order, the order of striking out was proportionate;

(c) whether the respondents’ prejudice, including the fact that trial has since proceeded, precludes reinstatement;

(d) whether appellate intervention is warranted; and

(e) the appropriate consequential orders. Issue 1: Whether the High Court had the power to strike out the appellants’ claims [20] We begin with the Court’s power. Order 34 rule 1(3) of the Rules of Court 2012 provides that where a party fails to comply with any order or direction given by the Court under paragraph (1), the Court may dismiss the action, strike out the defence or counterclaim, or make such order as it thinks fit. [21] There is no dispute that the High Court had the power under Order 34 rule 1(3) to make an appropriate order where there had been non-compliance with PTCM directions. That power includes, in a proper case, the power to dismiss an action. [22] The High Court was therefore entitled to be concerned with the appellants’ delay and non-compliance. PTCM directions are orders of the Court. They must be complied with. [23] The authorities relied on by the learned Judge, namely Sunway PMI-Pile Construction and Ho Shee Jan, support the proposition that courts are entitled to act firmly where a party fails to comply with pre-trial or case management directions. In Sunway PMI-Pile Construction, the Court dismissed the defence and counterclaim due to repeated failure to cooperate in relation to documents for the agreed bundle. In Ho Shee Jan, the Court set aside the writ due to failure to comply with the Court’s instructions to file agreed facts. The High Court referred to these authorities for the proposition that the Court is not powerless where its directions are not obeyed. Those authorities establish the existence and seriousness of the Court’s case management power. They do not mean that striking out follows automatically upon every breach. The sanction must still be justified by the facts of the case. [24] We accept that proposition. Litigation cannot be left to the pace or convenience of the parties. This is consistent with Syed Mohamed v Perbadanan Nasional Bhd (supra), where the Federal Court emphasised that under Order 34, the Court no longer leaves the pace of litigation to the parties but assumes the role of setting the timetable for the progress of the case. [25] But the existence of the power does not answer the appeal. The real question is whether, on the facts of this case, the power was exercised proportionately. The Court has the power to strike out. But it does not follow that every breach of PTCM directions must result in striking out. [26] In our view, the proper approach may be stated as follows. First, PTCM directions are orders of the Court and must be obeyed. Secondly, non-compliance engages the Court’s power under Order 34 rule 1(3), including the power to strike out in a proper case. Thirdly, the sanction must be proportionate to the nature and consequences of the breach. Fourthly, in deciding proportionality, the Court should consider the length and seriousness of the default, the explanation offered, whether leave or extension was sought, whether there was a prior warning or unless order, whether the default was intentional or contumelious, whether the trial was derailed or fairness compromised, whether the opposing party suffered irremediable prejudice, and whether a lesser sanction would meet the justice of the case. Fifthly, striking out should ordinarily be reserved for cases where the breach and its consequences justify shutting the party out altogether. Issue 2: Whether, in the absence of an unless order or prior warning, the order of striking out was proportionate [27] The appellants submit that there was no prior warning, unless order or peremptory order before their claims were struck out. The respondents submit that Order 34 rule 1(3) does not require an unless order before the Court may strike out. [28] We accept the respondents’ submission to this extent. Order 34 rule 1(3) does not make an unless order a condition precedent to striking out. There may be cases where the default is so serious, deliberate, contumelious or prejudicial that the Court is entitled to strike out without any further warning. [29] However, the absence of a prior warning, unless order or peremptory order remains a material consideration in deciding whether the sanction imposed was proportionate. [30] This is the point made by the Court of Appeal in Dr Sim Kui Hian v Chong Chieng Jen (supra). In that case, the Court of Appeal accepted that Order 34 does not expressly require a prior peremptory or unless order. However, the Court held that unless the nature of the non-compliance is sufficiently serious to defeat the purpose of case management directions, the drastic step of dismissing an action without warning should not be resorted to. The Court also took into account the fact that the trial schedule had not been disrupted and that a costs sanction could have marked the Court’s disapproval. [31] The same theme appears in Hatara v Petroliam Nasional Bhd(supra). The Court of Appeal there treated a peremptory or unless order as an order of last resort, and emphasised that all the circumstances of the case must be considered before penalising a defaulting party, including whether the failure to comply was intentional and contumelious. [32] The respondents seek to distinguish these authorities. They submit that Dr Sim Kui Hian involved different facts and that Hatara involved a shorter delay which was explained by affidavit. We accept those distinctions. We also accept that the appellants’ delay here was long and that their explanation is weak. But the relevance of those authorities lies in the principle that striking out is not a mechanical consequence of non-compliance. The Court must still consider proportionality, the effect of the breach, and whether a lesser sanction would meet the justice of the case. [33] Thus, the absence of a prior warning or unless order is not decisive. It is, however, relevant to proportionality. Where the Court imposes the final sanction of striking out, the grounds should show why that sanction was necessary despite the absence of a final warning or peremptory order. [34] In this case, there was no prior unless order or express warning that the appellants’ claims would be struck out if the witness statements were not filed by a final date. The grounds of judgment do not show that the absence of a prior warning, unless order or peremptory order was considered in the proportionality exercise. That omission is material. [35] We next consider the nature of the appellants’ default. The appellants were plainly in default. The first direction to file witness statements was given as early as 25 May 2021. The appellants’ witness statements were only filed on 26 June 2025, shortly before the trial date of 7 July 2025. They were filed without prior leave of the Court. [36] The respondents are correct that this was not a minor breach. The delay was long. The appellants had missed several deadlines. They did not apply for leave before filing the witness statements out of time. They also did not provide a satisfactory affidavit explanation for the delay. [37] The appellants’ explanation that there were 32 plaintiffs and several defendants is unsatisfactory. Multi-party litigation may make preparation more difficult. It does not excuse non-compliance with court directions. If more time was required, the proper course was to apply for leave or an extension of time. [38] The respondents’ reliance on Syed Mohamed is relevant here. That authority underscores the importance of Order 34 case management and the Court’s control over the timetable for the progress of litigation. It also supports the respondents’ submission that a party who fails to comply with directions should properly explain the default, preferably by affidavit. [39] We are not trivialising the appellants’ breach. It was serious. Our decision should not be read as condoning their conduct. It does not. [40] However, the question is whether the breach justified striking out. In answering that question, a material distinction must be made. The five appellants before us had filed their witness statements before the trial date. They were late, and they had not obtained leave. But they were not in the same position as plaintiffs who had filed no witness statement at all. [41] The High Court struck out the claims of 13 plaintiffs together. But only five plaintiffs are before us. Those five plaintiffs had filed their witness statements on 26 June 2025. The problem was that the witness statements were filed late and without leave. It was not a case where these five plaintiffs had no witness statement before the Court at all. [42] That distinction is important. It goes directly to proportionality. The Court could have considered whether the late filing should be regularised on strict terms, whether the appellants should be confined to the witness statements already filed, whether further evidence should be prohibited without leave, whether costs thrown away should be ordered, or whether a peremptory order should be made. [43] The learned Judge’s grounds do not show that this proportionality exercise was undertaken. The learned Judge found that there was a history of failure and that the plaintiffs had been nonchalant. Those findings were open to the learned Judge. But the inquiry could not stop there. The Court still had to consider whether, as against these five appellants whose witness statements had been filed before trial, the final sanction of striking out was necessary. The grounds do not show consideration of that distinction. Nor do they show consideration of lesser sanctions. [44] The appellants also submit that their underlying claim is arguable and raises serious issues to be tried. They relied on Phang Yeong Hau v Click Internet Traffic Sdn Bhd & Ors [2025] 7 MLJ 890; [2025] 1 AMR 193, HC in support of the proposition that claims arising from alleged unlawful investment schemes may have merit. [45] We do not consider it necessary or appropriate to express any view on the merits of the appellants’ underlying claim. That is for the High Court at trial. The fact that a claim is arguable does not immunise a party from the consequences of non-compliance with court directions. Conversely, the Court should not shut out a claim without trial unless the sanction of striking out is justified by the breach and its consequences. Our decision is confined to the propriety of the striking out order for non-compliance with PTCM directions. [46] In our view, the omission to consider proportionality is material. The final sanction of striking out was disproportionate in relation to the five appellants before us. Issue 3: Whether the respondents’ prejudice, including the fact that trial has since proceeded, precludes reinstatement [47] The respondents’ strongest point is prejudice. The respondents submit that the trial has since proceeded for four days. They say that their trial strategy was formulated on the footing that only 19 plaintiffs remained in the action because the claims of the 13 plaintiffs had been struck out. They contend that reinstating the five appellants would disrupt the continued trial and cause prejudice. [48] We accept that this is a serious point. It is not a mere complaint of inconvenience. It concerns the orderly conduct of the trial and the fairness of the respondents’ strategy and preparation for the trial. [49] We also accept that the appellants’ delay and the subsequent progress of the trial have occasioned prejudice to the respondents. [50] However, that subsequent development does not by itself determine whether the order of 7 July 2025 was proportionate when made. The validity of the striking out order must primarily be assessed by reference to the circumstances when the order was made. The later progress of the trial cannot retrospectively justify a sanction if that sanction was disproportionate when imposed. It may, however, affect the terms on which reinstatement is ordered. [51] The subsequent progress of the trial is relevant to the consequential orders to be made if the appeal is allowed. It requires this Court to ensure that any reinstatement does not create unfairness to the respondents or make the continued trial unmanageable. [52] The respondents rely on Conlay Construction to remind this Court that appellate intervention against a discretionary order should be restrained. We accept that principle. An appellate court should not interfere merely because it may have exercised the discretion differently. [53] But this appeal is not allowed because we would have exercised the discretion differently. It is allowed because the grounds do not show that the learned Judge considered the relevant matters bearing on proportionality before imposing the most drastic sanction. That is an appealable error. [54] The respondents also rely on Syed Mohamed to say that Order 34 gives the Court control over the progress of litigation and that the Court may consider all factors causing delay. We accept that. But Syed Mohamed does not mean that reinstatement can never be ordered where a trial has progressed. The question remains whether a fair trial is still possible and whether the prejudice can be cured by appropriate directions and costs. [55] In the present case, we are not satisfied that reinstatement would render a fair trial impossible. The prejudice can be addressed by strict terms. [56] The appellants will be confined to the witness statements already filed on 26 June 2025. They will not be permitted to file any further witness statements or call any additional witnesses without leave of the High Court. Any application to recall witnesses who have already testified must be made formally before the High Court and will be determined by the High Court according to the interests of justice. [57] The High Court is in the best position to decide what further directions are necessary to preserve fairness to all parties. That includes the management of any application to recall witnesses, any limited responsive directions, and the continued trial dates. [58] The respondents’ prejudice is also addressed by costs. The appellants were responsible for the default. They must bear the costs consequences. At the hearing before us, counsel for the appellants offered to pay costs of RM10,000.00 to the respondents. In our view, having regard to the length of the delay, the absence of prior leave, the prejudice caused to the respondents and the fact that the trial has already proceeded for four days, that sum is insufficient to meet the justice of the case. Issue 4: Whether appellate intervention is warranted [59] The order under appeal was discretionary. We remind ourselves that this Court does not interfere with a discretionary order merely because it may have reached a different conclusion. [60] However, appellate intervention is warranted where the discretion was exercised on a wrong principle, where relevant matters were not taken into account, where irrelevant matters were taken into account, where there was a misapprehension of the facts, or where the decision was plainly wrong or resulted in injustice. [61] In the present appeal, the appellants were plainly in serious default. However, the learned Judge’s grounds do not show any consideration of material matters bearing on proportionality. These include the fact that the five appellants before this Court had filed their witness statements before the trial date; that their position was not the same as plaintiffs who had filed no witness statement at all; that there was no prior unless order or express warning; whether the respondents suffered prejudice incapable of being remedied by directions and costs; and whether a lesser sanction could meet the justice of the case. [62] In reaching this conclusion, we have applied the caution in Conlay Construction on appellate restraint. We have also taken into account the importance of court-controlled case management under Syed Mohamed. Those principles are important. They ensure that parties do not dictate the pace of litigation and that appellate courts do not lightly interfere with discretionary case management orders. But they do not preclude intervention where the sanction imposed is disproportionate. On the facts before us, the principles in Dr Sim Kui Hian and Hatara support the conclusion that the final sanction of striking out was not warranted. [63] We emphasise that our decision does not weaken the obligation to comply with PTCM directions. It does not. The appellants’ default was serious. It warrants strict terms and costs. But on the facts of this case, striking out was disproportionate in relation to the five appellants before us. [64] We add this. This judgment should not be read as a licence to ignore PTCM directions. A party that fails to comply takes a serious risk. In an appropriate case, striking out may well be justified. The result in this appeal turns on its particular facts: the appellants had filed their witness statements before trial; there was no prior unless order or express warning; the grounds did not show consideration of lesser sanctions; and the prejudice to the respondents, though real, was capable of being addressed by strict terms and costs. Issue 5: The appropriate consequential orders [65] Having found that appellate intervention is warranted, we now turn to the appropriate consequential orders. [66] The appellants’ claims should be reinstated. However, reinstatement cannot be unconditional. The appellants were in serious default. Their witness statements were filed late and without prior leave. The trial has also proceeded for four days on the footing that only 19 plaintiffs remained in the action. It is therefore necessary to impose strict terms to preserve fairness to the respondents and to ensure that the continued trial remains manageable. [67] First, the appellants shall be confined to the witness statements filed on 26 June 2025. They shall not be permitted to file any further witness statements or call any additional witnesses without leave of the High Court. This is necessary because the indulgence granted by this Court is confined to regularising the witness statements already filed. It is not an opportunity for the appellants to recast or expand their evidential case. [68] Secondly, any application to recall witnesses who have already testified shall be made formally before the High Court. Whether any witness should be recalled, and on what terms, is a matter best left to the High Court which is seised of the trial. The High Court will be in the best position to determine whether recall is necessary in the interests of justice, having regard to the stage of the trial, the evidence already given, the issues remaining, and any prejudice to the respondents. [69] Thirdly, the High Court may give such further directions as are necessary to ensure that the continued trial is conducted fairly for all parties. This includes any directions on the use of the appellants’ witness statements, any limited responsive directions, the sequence of further witnesses, the continued trial dates, and any other matter necessary for the fair and orderly disposal of the suit. [70] Fourthly, the appellants shall pay costs thrown away occasioned by their non-compliance, to be assessed or fixed by the High Court if not agreed. The order is necessary because the default was the appellants’ default. The respondents should not be left to bear costs caused by the appellants’ failure to comply with PTCM directions. [71] Separately, for this appeal, the appellants shall pay costs of RM40,000.00 to the respondents, subject to allocatur. At the hearing before us, counsel for the appellants offered to pay costs of RM10,000.00. We consider that sum insufficient, having regard to the length of the delay, the absence of prior leave, the prejudice caused to the respondents, and the fact that the trial has already proceeded for four days. [72] The costs of RM40,000.00 shall be paid by the appellants to the respondents before the next trial date in the High Court. Decision [73] For these reasons, we allow the appeal. [74] The order of the High Court dated 7 July 2025 is set aside insofar as it struck out the claims of the appellants, namely the 18th, 20th, 23rd, 24th and 27th plaintiffs. [75] The appellants’ claims are reinstated. The matter is remitted to the High Court for further directions and continued trial. [76] The reinstatement is subject to the following terms:

(a) the appellants shall be confined to the witness statements filed on 26 June 2025;

(b) the appellants shall not file any further witness statements or call any additional witnesses without leave of the High Court;

(c) any application to recall witnesses who have already testified shall be made formally before the High Court and shall be determined by the High Court according to the interests of justice;

(d) the High Court may give such further directions as are necessary to ensure that the continued trial is conducted fairly to all parties; and

(e) the appellants shall pay costs thrown away occasioned by their non-compliance, to be assessed or fixed by the High Court if not agreed. [77] Separately, for this appeal, the appellants shall pay costs of RM40,000.00 to the respondents, subject to allocatur. The costs shall be paid by the appellants to the respondents before the next trial date in the High Court. Dated: 16 July 2026 -SGD- (FAIZAH BINTI JAMALUDIN) JUDGE COURT OF APPEAL, MALAYSIA COUNSEL: For the Appellants: Chew Chun Wei Phang Soon Mun Wong Chen Jie [Messrs. C P Ngoo & Co.] For the 1st, 2nd, 3rd and 4th Respondents: For the 6th Respondent: Fredric Kong Yat Sen [Messrs. SP NG & Associates] Krishnaaveni a/p Muniandy [Messrs. No-Noecker & Pragasam]