JUDGMENT

Nik Hashim JCA:

Background

On 24 September 2001, the learned judge, in the course of his pre-trial case management conference with solicitors for the parties pursuant to O. 34 of the Rules of the High Court 1980 (the RHC), directed the parties to file the following by 24 November 2001:

(a) bundle of pleadings;

(b) common bundle (s) of documents divided into parts;

(c) statement of agreed facts;

(d) issues;

(e) statement of each party's case and facts to be proved in relation to issues.

and also made a peremptory or an 'unless order' which reads:

if any party defaults in complying with the above directions, it/he will be precluded from prosecuting/defending its/his case and judgment will be given in favour of the party complying with the above directions.

The learned judge then fixed 7 December 2001 for the court to ascertain compliance with its directions and for further directions.

On 7 December 2001, upon finding that the appellants (the defendants in the court below) have failed to comply with the directions, the learned judge struck out with costs the appellants' counterclaim and forbade them from filing any document in support of their statement of defence without the leave of the court and or consent of the respondent (the plaintiff in the court below).

In making the orders, the learned judge said this:

The provisions of Order 34 of the Rules of the High Court 1980 are not intended to be a dead letter to merely embellish the Rules without any teeth. It is clear that the defendants have been tardy in compliance with the court's directions on 24/9/01, despite having been put on notice of the penalty that will follow for non-compliance. No attempt was made by the defendants to ask for the plaintiff's bundles although Encik Pari has said the defendants wanted to look at the plaintiff's bundle first.

In these circumstances, I am of the view that this is a proper case where the court would be properly exercising its powers to invoke Order 34 rule 7 of the Rules of the High Court 1980 to enter judgment for the plaintiff on its claim and strike out the defence and the counterclaim. However, since counsel for the plaintiff is only seeking to bar the defendants from pursuing their counterclaim, I hereby order that the counterclaim be struck off with costs and that the defendants pay the costs of today's proceedings to the plaintiff. The defendants are also precluded from filing any documents in support of the defences from here on without the consent of the plaintiff or the approval of the court.

It is pertinent to note that on 7 December 2001 both parties failed to file their respective statements of case as required under para. (e) of the directions.

The records showed that the respondent's claim and the appellants' counterclaim arose from the sale of the appellants' shares in a company known as Alfa Lagenda Sdn Bhd to the respondent pursuant to an agreement dated 20 September 1994.

According to the agreement the purchase price of RM13,000,000 was agreed to be paid by the respondent to the appellants in the following manner:

(i) RM3,000,000 upon execution of the agreement;

(ii) RM3,700,000 upon execution of a privatization agreement between Alfa Lagenda and State Government of Johor; and

(iii) RM9,000,000 within three years of execution of the privatization agreement.

The privatization agreement was executed on 28 March 1995 but the balance purchase price of RM9,000,000 was not paid. The respondent's claim is based on the alleged breaches and or frustration of the agreement by the appellants and as a result the respondent claimed that it had suffered loss and damage.

Appeal

It is the submission of learned counsel for the appellants that the learned judge had exercised his discretion on wrong principles and caused a miscarriage of justice. Learned counsel for the respondent however, maintained that the failure to comply with a peremptory order is serious and submitted that the learned judge was right in his decision.

Dec