SINGAPORE — The two town councils that sued three Workers' Party (WP) leaders and town councillors for allegedly misusing public funds have been ordered to pay costs and disbursements of about S$388,800 in total for the appeals in the case.

This is the latest development in the long-running civil suits by Aljunied-Hougang Town Council (AHTC) and Sengkang Town Council (SKTC) against eight defendants: WP leaders Ms Sylvia Lim, Mr Low Thia Khiang and Mr Pritam Singh, as well as their former managing agent FMSS and four other former town councillors or employees.

Of the S$388,800, AHTC has to pay S$176,241.11 in costs and disbursements to the town councillors, employees and FMSS for two appeals.

SKTC has to pay a total of S$212,543.52 in costs and disbursements to the town councillors, employees and FMSS for three appeals.

In a 38-page judgment released on Wednesday (Nov 29), the Court of Appeal outlined why the two councils had to pay costs.

Costs are usually awarded to the party that wins, and in this case, the town councillors and employees had succeeded substantially in their appeals, overturning several of the trial judge's findings, the apex court said.

Between AHTC and SKTC, SKTC was more successful in the appeals, added the five-judge panel comprising Chief Justice Sundaresh Menon, Justice Judith Prakash, Justice Tay Yong Kwang, Judge of the Appellate Division Woo Bih Li and Senior Judge Andrew Phang.

In their judgment, the judges said that a successful party in litigation is entitled to recover costs of the litigation from the unsuccessful party.

SKTC had accepted that the town councillors, employees and FMSS succeeded on more key issues. However, AHTC had argued that costs should go to AHTC, as the defendants had not succeeded substantially in their appeals. 

The court rejected AHTC's argument that it should be seen as the successful party in the appeals and therefore entitled to costs.

The court said most of the issues in the appeals were not found in AHTC's favour.

Even though AHTC did "enjoy some success" against the town councillors and employees, with liability for some serious breaches established, it is clear that the defendants were successful in overturning the outcome given by the trial court, the apex court said.

The cost orders come some four months after the Court of Appeal gave its ruling on the parties' liability over the handling of town council funds.

Costs for the actual trial itself have not been settled and will be decided only after damages have been assessed.

The three WP leaders remain liable to SKTC for their negligence in allowing control issues to persist in its payment system.

Additionally, Ms Lim and Mr Low are liable to AHTC over the same payment issues, while Ms Lim is liable for a third issue — negligence to SKTC for awarding a contract to a more expensive vendor.

BACKGROUND 

The long-ranging case was mounted by AHTC and Pasir Ris-Punggol Town Council (which later handed the suit over to SKTC when it absorbed Punggol East constituency) against eight parties.

These are: WP leaders Ms Sylvia Lim, Mr Low Thia Khiang and Mr Pritam Singh; town councillors Mr David Chua Seck Hon and Mr Kenneth Foo; managing agent FMSS, and FMSS's owners Ms How Weng Fan and her late husband Mr Danny Loh.

Backed by a KPMG audit report, the town councils charged at trial that the defendants had made improper payments worth over S$33.7 million paid to FMSS and its subsidiary FMSI.

The trial judge found the defendants liable for multiple breaches of fiduciary duty, skill and care for various managing agent contracts, payments and awarding of contracts to vendors.

However, on appeal, the Court of Appeal overturned most of the liable findings by the trial judge, rejecting that the defendants were fiduciaries or owed equitable duties, on which most of the findings rested. 

The apex court accepted the defence rejected by the trial judge - that the town councillors had been acting in good faith for several of the claims levelled at them.

The court was also sympathetic to the situation the WP leaders were in.

Still, the apex court found that all the defendants were liable for negligence to SKTC for permitting control failures in a payment system to exist.

The court also found Ms Lim, Mr Low, Ms How and the late Mr Loh liable to AHTC for the same control failures. 

Mr Singh, Mr Chua and Mr Foo were not found liable for this as AHTC had not made a case for it in their pleadings.

Ms Lim was found liable to SKTC for a third issue — for causing a new contract to be awarded to Red-Power Electrical Engineering at many times more than the cheaper rates given by the existing vendors.

Even though the WP leaders and town councillors were found by the court to have substantially succeeded in their appeals, they were still found liable for certain issues and might have to pay damages for those.

At the next stage, the court will assess what damages are payable, who to pay the damages, and to whom.

According to the judiciary's public hearing list, the cases last came to court for a pre-trial conference for the damages segment in October. CNA