Court exercises rarely invoked power to strike out and expunge irrelevant materials from affidavits filed in an opposed application for a judicial management order.

Contentious insolvency or restructuring proceedings can become unruly.

In fact, it is not uncommon to see satellite litigations spawning from contentious insolvency or restructuring proceedings. Certain stakeholders like creditors or shareholders may view the proceedings as providing a convenient battlefield to ventilate issues that may be far removed from the solvency or potential turnaround of the distressed entity.

Others caught in the crossfire may be prejudiced, not least by the delay and additional expense caused by the satellite litigation.

There is a rarely invoked provision in the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 (“CIR Rules“), r 21 CIR, that provides the Court the power to order to strike out from an affidavit any matter which is “scandalous, irrelevant or otherwise oppressive”. It is phrased similarly to Order 46 r 6 of the now defunct Rules of Court 2014.

Most wouldn’t be surprised by the Court having the power to order to strike out matters from affidavits that are scandalous or oppressive. However, the power to order to strike out matters which are “irrelevant” might raise some eyebrows.

Why should it be necessary for the Court to order irrelevant matters to be struck out, when the Court can simply disregard them when making the final merits assessment?

But I would argue that the power to strike out irrelevant matters is necessary. It provides the Court the tool to prevent proceedings from turning into satellite litigations. When allegations are made on affidavits, parties affected by the allegations may feel compelled to address them. This, in turn, may lead to endless filings and exchanges of
evidence, which may turn out to be entirely unnecessary, if the allegations and evidence are ultimately irrelevant to the merits analysis.

In contentious insolvency and restructuring proceedings, which typically involve multiple parties and stakeholders, the Court needs to have the ability to control proceedings and enforce discipline.

The decision in Re X Diamond Capital Pte Ltd (Metech International Ltd, non-party) [2023] SGHC 201 is one rare instance where the Court exercised its r 21 CIR power to strike out and expunge irrelevant materials from affidavits filed in an opposed application for a judicial management order.

Setia’s Yam Wern-Jhien, Bethel Chan, and Lee Jin Loong, acted for the successful applicant in the matter.

Lee Jin Loong 
Associate
jin.loong.lee@setialaw.com

Bethel Chan 
Associate Director
bethel.chan@setialaw.com