High Court allows AHTC to add new claims against WP members but rejects some applications that may affect judgement

• Justice Kannan Ramesh said that allowing some of AHTC’s claims to be added would require his judgement made 10 months ago to be amended
• He allowed some changes to be made, such as those that would not prejudice two of the defendants — Mr Low Thia Khiang and Ms Sylvia Lim
• Justice Ramesh said that he would hear the parties’ submission on costs and asked them to file their submissions within the week

SINGAPORE — The High Court has allowed the Aljunied-Hougang Town Council (AHTC) to make some amendments to its claims against Workers’ Party (WP) members for losses it suffered while under their management. But the court also dismissed certain applications that, had they been allowed, would mean the final judgement, which was made 10 months ago, may have to be altered.

Many of the proposed amendments that were rejected had sought to extend claims of breaches of duty of skill and care to current WP chief Pritam Singh and two other former town councillors, Mr David Chua Zhi Hon and Mr Kenneth Foo. These claims were originally made against only WP chairman Sylvia Lim and former party chief Low Thia Khiang.

However, Justice Ramesh allowed some amendments to be made, such as those involving Ms How Weng Fan and her late husband Danny Loh. Both were directors of FM Solutions & Services (FMSS), which was appointed by WP to be the managing agent of AHTC after the opposition party won the Aljunied Group Representation Constituency in the 2011 General Election.

These amendments are allowed because Mr Low and Ms Lim would not suffer any prejudice and merely makes clear the real controversy between the parties that the judgement had already addressed, the High Court judge said.

BACKGROUND TO THE AHTC COURT CASE

Ms Lim, Mr Low and Mr Singh were found liable by Justice Ramesh last October in a landmark case investigating misuse of town council funds.

At the time, the High Court judge found that Ms Lim and Mr Low had breached their fiduciary duties in appointing FMSS as managing agent of AHTC, failing to act in the town council's best interests and acting for "extraneous purposes".

Mr Singh had not breached his fiduciary duties to AHTC, but he had breached his "duties of skill and care".

The civil suits had been brought against them and five other defendants by Pasir Ris-Punggol Town Council (PRPTC), which is run by the ruling People’s Action Party and an independent panel acting on behalf of AHTC.

AHTC is asking for claims of S$33.7 million from the defendants, with costs, due to improper payments found by independent accountant firm KPMG.

The case was supposed to go back to court again for a second tranche to determine the amount of damages. However, the AHTC application for amendments came up before the case resumed and after the end of the first tranche when the judgement was delivered.

AHTC’s lawyers from Shook Lin & Bok, who filed the application on May 18, argued that their proposed new claims were similar to claims made by the other plaintiff PRPTC and should thus be permissible.

But the WP members’ lawyers from Tan Rajah & Cheah objected, stating that the new claims were “entirely new” and — if they had been made out earlier — would have changed the way the WP Members of Parliament (MP) and town councillors conduct their 17-day trial in October 2018.

JUDGEMENT WOULD NEED TO BE AMENDED

In explaining his rationale for rejecting some of the new claims, Justice Ramesh said that allowing the proposed changes would require changing the original judgement.

This was a point emphasised by WP’s lawyers as well, he pointed out.

“Notably, counsel for AHTC did not challenge the point in his response, choosing instead not to deal with it,” Justice Ramesh said in the oral judgement that was uploaded on WP’s blog, In Good Faith, on Friday.

“Amending or supplementing the judgement will, in turn, require consideration of whether the trial ought to be re-opened for the purpose of considering fresh evidence and submissions,” he added.

While the court has the power to amend a judgement before it is perfected, it would only be allowed if the original verdict “would result in an erroneous order”.

“It is clear that this consideration does not apply here. AHTC does not suggest that the application has been made to correct any error in the judgement,” the High Court judge said.

WHAT WAS AMENDED AND WHAT REMAINED?

In his judgement, Justice Ramesh grouped the amendments proposed by AHTC into three broad categories.

Category 1: The first category covered amendments related to Ms Lim and Mr Low. The amendment asserted that both parties had failed to exercise proper scrutiny in causing AHTC to improperly waive the tender for the contract to provide services by the Essential Maintenance Service Unit (EMSU) in 2011 and awarding it to FMSS.

The amendments also sought to claim loss and damages for Ms Lim and Mr Low’s breach of their equitable duty of care and skill in relation to the contract.

Approved: Justice Ramesh allowed amendments in this category as they did not do much other than to “make clear the real controversy” between AHTC and Ms Lim and Mr Low — something that the judgement had already addressed.

“This is not a case of AHTC having a second bite of the cherry or re-litigating the same issues on different grounds. The issues were already before the court,” Justice Ramesh said in his judgement, making reference to claims by the WP MPs that AHTC was trying to benefit from the court decision in favour of PRPTC.

Category 2: The second category covered amendments related to Mr Singh and former town councillors, Mr Chua and Mr Foo. The amendments asserted that the trio had breached their equitable duty of care and skill by failing to exercise proper scrutiny in causing AHTC to award the ESMU contract and two managing agent contracts to FMSS without calling for a tender.

In addition, the proposed amendments asserted that the trio had breached their equitable duty of care and skill in relation to “control failures” in the payment system by permitting AHTC knowingly or by failing to enquire into or rectify the flaws in the system.

Dismissed: Amendments in this category were dismissed because Justice Ramesh said that this would introduce new claims that the defendants have not had a chance to address.

He said that he did not agree that the “bedrock of facts” supporting allegations of breach of duties against the other defendants would also apply to Mr Singh, Mr Chua and Mr Foo.

While PRPTC had made similar allegations against the trio, Justice Ramesh noted that AHTC had failed to make the necessary amendments in a timely manner despite being aware of PRPTC’s allegations.

“AHTC has also not furnished any explanation for why it had failed to do so,” he added.

Likewise, the proposed amendments that alleged that the trio had breached their equitable duty of care and skill in relation to the payment system was “a new cause of action” against them, Justice Ramesh said.

He said it was “inconceivable” that the original allegations made against Ms Lim, Mr Low, Ms How and the late Loh over their involvement in setting up the payment system and processing payments could “implicitly” be made against Mr Singh, Mr Chua and Mr Foo.

Category 3: The proposed amendments in this category claimed that Ms How and her late husband had breached their equitable duty of care and skill by approving payments under the payment system and failing to rectify flaws in the system.

Approved: The amendments were approved because they form part of AHTC’s pleaded case and did not change the substance of the pleadings on which the judgement was awarded, Justice Ramesh said.

The pleadings had made the case that Ms How and the late Loh had effectively approved payments they were interested in from AHTC to FMSS without any independent checks. As a result, they had breached their fiduciary duties owed to AHTC.

This amounted to the claim that they had breached their fiduciary duties, including their equitable duty of care and skill, by approving payments to FMSS and FMSI under the payment system. By extension, they had also failed to rectify the flaws in the payment system, the High Court judge said.

WHAT’S NEXT

Justice Ramesh said that he would hear the parties’ submission on costs and asked them to file their submissions within the week.