AHTC trial: WP's Pritam Singh, Sylvia Lim, Low Thia Khiang found liable for damages against town councils

SINGAPORE — Workers’ Party (WP) Members of Parliament (MPs) Pritam Singh, Sylvia Lim and Low Thia Khiang have been found liable for damages suffered by the Aljunied-Hougang Town Council (AHTC) and the Pasir Ris-Punggol Town Council (PRPTC), the High Court ruled on Friday (Oct 11).

All three MPs could now owe part of the S$33.7 million in claims by AHTC and PRPTC, which will be determined in a “future second stage of the trial” where the court will assess the quantum of compensation that the town councils are entitled to from the defendants.

In his written judgment, High Court Judge Kannan Ramesh said that Ms Lim and Mr Low had breached their fiduciary duties to the AHTC, “as they had failed to act in AHTC’s best interests and had acted for extraneous purposes”.

As for Mr Singh, Justice Ramesh said “it cannot be said that he has breached his fiduciary duties to AHTC”. However, he has breached his “duties of skill and care” to AHTC.

Among other things, the judge found that all three MPs were “clearly involved from the beginning to effect the appointment” of AHTC’s former managing agent FM Solutions and Services (FMSS) without tender and they had “collateral motives in doing so”. 

“Their conduct was improper and the attempt to cloak the same with a veneer of truth and credibility collectively leads to the conclusion that they had not acted honestly and therefore breached their duty of unflinching loyalty to AHTC as fiduciaries,” said Justice Ramesh. 

The judgment is the latest development in a saga which has been going on for over six years and follows a 17-day trial that took place in October last year.

AHTC sought to claim S$33.7 million of “improper” payments made to FMSS and contractor FM Solutions and Integrated Services (FMSI).

FMSS was brought in by the WP MPs after the 2011 General Election to provide estate management services, and was owned by the late Danny Loh and his wife How Weng Fan, who were later revealed to be the secretary and general manager of the town council respectively.

PRPTC also sued the WP MPs to recover any losses allegedly incurred back when the WP-led town council managed the Punggol East constituency.

These were the key arguments made by each side earlier in the trial: 

WP MPS 'ACTED IN GOOD FAITH'

Senior Counsel Chelva Retnam Rajah from Tan Rajah & Cheah, representing the WP MPs, wrote in his closing submission at the end of the trial:

Town councils are of “a political nature and are intended to be managed by the elected MPs with as much latitude as possible within the broad and general rules laid”.

At all times, the WP MPs acted in “good faith and in execution” of the Town Councils Act (TCA) and Town Councils Financial Rules (TCFR).

While the town councillors owe statutory duties under the TCA, that does not mean there is a fiduciary obligation unless Parliament “clearly intended otherwise”.

There was nothing improper about the appointments and payments as they were based on AHTC’s due processes. The town councils’ lawyers have not proven that AHTC paid FMSS more than what is due under the contracts.

The sum of money that AHTC seeks to claim is unreasonable, as it amounted to all payments made to FMSS and FMSI. This contradicts the previous assessment made by accounting firm KPMG, which stated that there was an alleged improper payment of slightly over S$1.5 million, with only about S$624,000 to be recovered.

Neither AHTC nor PRPTC can make claims for equitable compensation unless they have suffered a loss, such as a shortfall in service delivery to residents.

The two town councils relied only on KPMG and PwC reports as basis for their claims. In addition, the town councils’ witnesses had no personal knowledge of the facts and circumstances that the town councillors faced on the ground.

AHTC’S FINANCIAL POSITION SEVERELY DAMAGED

In their closing submissions, AHTC's lawyer David Chan from Shook Lin and Bok LLP and PRPTC’s lawyer Senior Counsel Davinder Singh of Davinder Singh Chambers said:

There was a “particularly disturbing consequence” from the appointment of FMSS as a managing agent.

Both FMSS and FMSI “were effectively given carte blanche over AHTC’s payment process”, allowing it to enjoy “extraordinary profits”, which rose over 300 per cent between 2011 and 2015. In contrast, AHTC’s financial position was “severely damaged”.

The decision to enter into contracts with FMSS or FMSI “is void in public law” as town councillors “unquestioningly” followed Ms Lim and Mr Low’s lead, failing to take into account that certain information was withheld or misrepresented.

The WP MPs are “not entitled” to Section 52 of the TCA, which says that no suit or other legal proceedings can be filed against any member, officer, or employee of a Town Council for anything which is done in good faith.

The MPs have gotten that section “completely wrong”, as “good faith is hardly an apt description” of their conduct. Based on evidence and testimonies provided by the WP MPs, they were determined to “hide the truth”.

Ms Lim misrepresented the facts. Mr Chan, for example, said she would not hesitate to “concoct evidence or be evasive to avoid making admissions under oath”, and that her cross-examination revealed that her previous statements on the issue in Parliament were “at best, inaccurate and, at worst, untruthful”.

WP SAYS

In a statement released on the WP blog, In Good Faith, Mr Low, Ms Lim and Mr Singh said: "The court judgment for the first tranche of our case was released this morning. We are in the midst of reviewing the judgment and will take advice from our lawyers. We will share more details on our next step/s in due course."