SINGAPORE — Workers' Party (WP) chair Sylvia Lim and former party secretary-general Low Thia Khiang are liable for negligence to the Aljunied-Hougang Town Council (AHTC) over failures in the payments process while WP leader Pritam Singh is not, the Court of Appeal ruled on Friday (July 7). 

This is because AHTC did not make a claim against Mr Singh regarding the issue nor was he aware that he had a chance to defend against AHTC.

Any damages to be paid by Ms Lim and Mr Low over the finding that they are liable for negligence to AHTC will be assessed later, along with a decision on who will bear the legal costs.

In a decision that updates an earlier ruling last year, the apex court also found that former AHTC town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo, are not liable for negligence over the payments process at the council. 

The process involved the disbursing of more than S$23 million over at least three years to AHTC's managing agent FMSS.

The decision on Friday is the latest development in a saga spanning over nine years, and follows the apex court’s decision in 2022 to reverse several findings made in the original trial of the matter in 2018. 

In 2017, an independent panel acting on behalf of the WP-run AHTC as well as by the People’s Action Party-run Pasir Ris-Punggol Town Council (PRPTC) sued the three WP leaders, who are also town councillors, and some others.

In its ruling, the Court of Appeal also maintained that the town councillors and employees are liable to Sengkang Town Council (SKTC) for negligence as a result of allowing control failures to exist in the payments system.

In 2020, SKTC appointed an independent panel to handle matters over the legal case ahead of a transfer of all assets and liabilities of PRPTC relating to the area of Pasir Ris-Punggol that is now part of Sengkang Group Representation Constituency, which was won by WP in the General Election earlier that year.

BACKGROUND OF LEGAL CASE

In its 2022 decision, the Court of Appeal ruled that Ms Lim, Mr Singh and Mr Low did not owe fiduciary or equitable duties to AHTC. This refers to legal obligations.

The trio were also found to have acted in good faith over the awarding of contracts to two engineering firms on behalf of the council. 

However, the trio, along with others involved in the case, were found to be “grossly negligent” in implementing AHTC’s payments process, which led to the persistence of what were called “control failures”, which created an inherent risk of overpayment. 

Ms Lim was also found to be liable in negligence for AHTC’s award of an electrical contract to Red-Power Electrical Engineering. 

She had failed to prove that she acted in good faith when she did not renew contracts with Digo Corporation and Terminal 9, which offered the same services at significantly cheaper rates. 

Friday’s judgment centred on two specific issues:

• The liability of the town councillors in implementing the payment process which led to the control failures and the misuse of AHTC’s funds
• Ms Lim's liability in awarding the contract to Red-Power

'UNDULY PREJUDICE'

The latest chapter of the legal saga was heard by Chief Justice Sundaresh Menon, Justice Judith Prakash, Justice Tay Yong Kwang, Justice Woo Bih Li and Justice Andrew Phang.

In the ruling, the court said that where there are two plaintiffs in PRPTC and AHTC, it is important to distinguish between their individual claims and not conflate one party’s claim with another party’s claim, especially as the two suits were not consolidated but merely heard together.

PRPTC had pleaded its case against the town councillors and the employees regarding their breach of duty of care for the control failures in the payment system.

However, the court ruled that AHTC did not make any claim against Mr Singh, Mr Chua and Mr Foo regarding the control failures in its trial closing submissions. 

AHTC also did not cross-examine the trio regarding the control failures. Instead, it had relied on the cross-examination by PRPTC’s lawyers.

AHTC also did not submit in its closing submissions that the trio breached any duties regarding the control failures in the system.  

“In these circumstances, we find that AHTC did not run any case — much less a clear case — against Mr Singh, Mr Chua, and Mr Foo regarding the system,” said Chief Justice Menon. 

Consequently, the three of them did not know that they had to defend a case against AHTC that they had breached any duties in relation to the system.

As such, it would “unduly prejudice” them for the court to now find them liable to the town council for breach of duty in permitting the control failures to exist. 

CAN AHTC MAKE A FRESH APPLICATION? 

The apex court said that AHTC has asked to make a fresh application to amend its pleading after the High Court trial and before the appeals were heard, without prejudicing the town councillors. A pleading is a legal document that outlines the basis for a lawsuit.

However, the apex court said that it cannot accept this submission. 

It added that there must be two primary considerations before allowing an amendment.

Firstly, the amendment sought would enable the real issue in dispute to be determined, ensuring the “ends of substantive justice are met”. 

Secondly, procedural fairness to the opposing party must be maintained. 

This includes whether the amendments would cause any prejudice to the other party which cannot be compensated in cost and whether the amendments are giving the party — AHTC in this case, a “second bite of the cherry”. 

But in this case, a fresh application would cause Mr Singh, Mr Chua and Mr Foo “substantial prejudice” that could not be adequately compensated in costs. 

“It would be giving AHTC a second bite at the cherry when no case was ever run against them from AHTC at the trial below,” said Chief Justice Menon. 

It also noted that this fresh application is belated as it has been made after judgement has been rendered in the court and after an appeal judgement has been made.

WHAT MND SAYS

In a statement on Friday night, the Ministry of National Development (MND) said it “notes with concern” the court of appeal's judgement.

MND noted that the apex court has found that:

• AHTC’s town councillors, including Ms Lim, Mr Low and Mr Singh, and two former AHTC employees were grossly negligent in implementing AHTC’s payment process. “The involvement of conflicted persons and the absence of safeguards created an inherent risk of overpayment,” said MND
• The town councillors and two former AHTC employees had been grossly negligent when making S$23 million worth of payments to FMSS, out of public funds. All the payments to FMSS and FMSI, totalling S$33.7 million, were “co-signed by conflicted persons or FMSS employees”
• Ms Lim was found to have not acted in good faith when she awarded the contracts to Red-Power at rates that were four to seven times higher than those offered by incumbent vendors for the same services

“MND will continue to monitor the proceedings brought by SKTC and AHTC against the Town Councillors, including the assessment of damages by the High Court, as public funds are involved,” it added.