Striking Out a Claim – When is a Claim Factually Unsustainable?

Introduction

While disputants have a right of access to justice, not all claims warrant being fully heard before the courts. To ensure efficiency and prevent the misuse of resources, the court may strike out a claim in certain situations. In Ever Strategy Consultants Ltd v PSA International Pte Ltd and others [2026] SGHC 76, the Singapore High Court struck out a claim in the interest of justice as the claim was factually unsustainable.

The Claimant in this matter was a company with an indirect shareholding in a joint venture. The Claimant’s case rested largely on an alleged oral agreement that its shareholding could not be diluted without its consent. However, the Court found that alleged agreement was factually unsustainable against the backdrop of the contemporaneous documentary evidence, and the claim was struck out accordingly.

The Court further found that certain claims based on a first instance of dissolution were time-barred, as they were commenced more than six years after the relevant acts of breach.

This decision demonstrates the Court’s approach to striking out applications and provides insight as to the circumstances in which the Court will find a claim to be factually unsustainable.

The first to sixth Defendants in this matter were successfully represented by Lee Eng Beng SC, V Bala, Jeremy Gan, Wayne Yeo, Shawn Tien and Tessa Teo of Rajah & Tann Singapore LLP.

Brief Facts

The dispute arose out of a joint venture to develop a container terminal in Panama via a company, PSA Panama International Terminal SA (“PPITSA“), which managed and operated the terminal. The Claimant held an indirect 10% interest in PPITSA. The first to fourth Defendants were companies in the PSA group of companies (“PSA Group“), which also held an interest in the joint venture. The fifth to sixth Defendants were directors in the PSA Group.

In the course of the project, when additional funding was required, PPITSA’s authorised share capital was increased, and new shares were allotted, reducing the Claimant’s indirect interest from 10% to approximately 3.94% (“First Dilution“). A subsequent restructuring led to a further reduction of the Claimant’s indirect interest. 

The Claimant alleged that, before the First Dilution, it had entered into a joint venture agreement with the first Defendant and the eleventh Defendant, and that the parties had verbally entered a “Collateral Agreement” (“Collateral Agreement“) under which any change to the Claimant’s 10% indirect shareholding in PPITSA required its prior consent. On this basis, the Claimant advanced claims against the Defendants for breach of the Collateral Agreement, inducement of breach, breach of fiduciary duty, dishonest assistance, and conspiracy to injure by unlawful means.

The Defendants applied to strike out the Claimant’s claims. The Assistant Registrar dismissed the applications, finding that although the evidence suggested the existence of the Collateral Agreement was “not very probable“, it could not be said with confidence that it was “entirely without substance“.

The Defendants appealed against the Assistant Registrar’s decision.

Holding of the High Court

The Court allowed the appeal, striking out the Claimant’s claims against the Defendants for being factually unsustainable.

In reaching its decision, the Court considered:

1. Whether the Claimant’s assertion that the Collateral Agreement existed was factually sustainable;

2. Whether claims based on the First Dilution were time-barred under the Limitation Act 1959; and

3. Whether the Claimant’s claims for conspiracy by unlawful means were factually and legally sustainable.

Collateral Agreement

The Court held that the contemporaneous documentary evidence overwhelmingly proved the Collateral Agreement was a fiction. In particular: 

1. Consultancy Agreement: The written consultancy agreement (“Consultancy Agreement“) was signed by the Claimant after the alleged Collateral Agreement and contained provisions that were clearly inconsistent with the Collateral Agreement. The Consultancy Agreement provided that the Claimant had no voting or management rights, was not entitled to further share allotments unless agreed in writing, and had only the right to receive dividends. These terms permitted actions that would dilute the Claimant’s indirect shareholding without its consent, which was plainly inconsistent with the Collateral Agreement.

2. Memorandum and Articles of Association: The Claimant became a shareholder of Balboa Hospitality Services Ltd (“Balboa“), one of the companies through which the Claimant held its indirect interest in PPITSA, subsequent to the alleged Collateral Agreement. Balboa’s Memorandum and Articles of Association contained no protections against dilution of the Claimant’s indirect interest, and the Claimant had not entered into any shareholders’ agreement to protect itself.

3. Correspondence: The Court assessed correspondence between the Claimant and the Defendants, spanning nearly three years of emails and letters, discussing the dilution of the Claimant’s interest and whether it was prepared to inject funds. The Court found that the correspondence made no reference whatsoever to the Collateral Agreement or any assertion that the Claimant’s consent was required. The complaints raised by the Claimant’s representative were also inconsistent with the Collateral Agreement.

4. Email: The Assistant Registrar, in finding that the claim was not entirely without substance, had relied heavily on an email stating that the Claimant’s consent was needed before any dilution of its stake. The Court found that this email carried “little weight” when viewed against the subsequent overwhelming documentary evidence.

5. Shareholders’ Agreement: The parties had entered into an Amended and Restated Shareholders’ Agreement which permitted dilution of a non-funding shareholder’s interest. This was clearly inconsistent with the Collateral Agreement. 

Time Bar

The Court agreed with the Defendants that the claims based on the First Dilution were time-barred, as proceedings were commenced more than six years after the First Dilution occurred in December 2015. The Court rejected the Claimant’s argument that the obligation under the Collateral Agreement was a “continuing obligation” to maintain the shareholding structure, holding instead that the term merely imposed an obligation to seek prior consent, and did not give rise to a continuing breach.

The Court further held that no continuing obligation could be implied, as the proposed implied term was unnecessary for business efficacy and failed the “Oh, of course!” test, particularly given that the Amended and Restated Shareholders’ Agreement already contemplated that dilution could occur in certain circumstances.

Conspiracy Claims

To the extent the conspiracy claims relied on unlawful acts dependent on the Collateral Agreement, they were unsustainable for the same reasons.

As for the remaining conspiracy claims based on unlawful acts independent of the Collateral Agreement (breaches of directors’ duties and Panamanian law), the Court held that the Claimant had failed to plead how the alleged conspirators combined together to take concerted action, and it was impossible to discern from the pleadings how the combination was formed.

Concluding Words

The Court’s decision highlights that not all claims warrant their day in court. Importantly, claims must be grounded on sufficient legal and factual basis. A mere allegation will not suffice to sustain a claim. It must be supported by documentary evidence and not contradicted by contemporaneous evidence.

Disputants should also be aware of the timelines for initiating proceedings, as claims filed outside of the time limit will be barred, as demonstrated in this case.

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