Update on 8 Jul. at 11.30am: This article has been updated with the press release from the Ministry of National Development.
The Court of Appeal has cleared Workers' Party chief Pritam Singh of liability for negligence in the Aljunied-Hougang Town Council (AHTC) payments process because he was not given the chance to defend himself against the claim.
However, WP leader Sylvia Lim and former party secretary-general Low Thia Khiang were still found liable.
The case was originally brought against the then-WP MPs over the alleged misuse of S$33.7 million of town council funds in 2017.
Chief Justice Sundaresh Menon said in a written judgement on Jul. 7, 2023 that the two leaders were liable to AHTC for negligence in permitting control failures to persist in the town council's payments process.
Lim and Low might have to pay damages, but only after further hearings to determine the quantum.
Then-AHTC councillors Chua Zhi Hon and Kenneth Foo were also previously implicated in the case for negligence, but have been cleared of liability as well.
Court of Appeal previously overturned some of trial judge's findings
The three WP leaders were previously found liable in October 2019 by the trial judge, who said the finding cast "serious doubt" on their integrity.
But in November 2022, the Court of Appeal overturned a number of the findings by the trial judge, including the finding that Singh breached duties of skill and care.
The apex court also still found that the town councillors and employees had allowed control failures to exist in the system and are liable for negligence.
It found that an inherent risk of overpayment came about because managing agents working for AHTC also held positions in AHTC, making them conflicted parties. There was also an absence of safeguards contributing to this risk.
The court also found Lim liable to Sengkang Town Council (STC) for negligence as she had caused AHTC to award a new contract to Red-Power Electrical Engineering.
She failed to prove that she had acted in good faith by choosing not to renew existing contracts at significantly cheaper rates.
Why was there another judgment after November 2022?
The Court of Appeal found in November 2022 that there were still issues requiring the parties to make further submissions. The most recent judgment addresses these issues.
The issues arose out of "what appeared to be AHTC’s inadequate pleadings", explained Chief Justice Menon.
AHTC's original case was that control failures in the payment process were breaches of fiduciary duties, but did not bring a case based on negligence. Thus, there was a question of whether it was appropriate to find liability for negligence.
A five-judge panel comprising the Chief Justice, Justice Judith Prakash, Justice Tay Yong Kwang, Justice Woo Bih Li and Justice Andrew Phang presided over the matter.
They found that since AHTC did not bring a case against Singh, Chua, and Foo over the payment process, the three of them did not know they had to defend a case against AHTC.
Chief Justice Menon said it would therefore prejudice the three of them for the court to now find them liable to AHTC for breaching their duties in allowing control failures to exist.
The judges also disallowed an application by AHTC to amend its original case. AHTC sought to amend its case to include a claim of negligence. Allowing this, the judgment explained, "would be giving AHTC a second bite at the cherry".
The judgment also noted that the application was a belated one, coming after the initial judgment on the case, and after judgment on the appeals.
Thus, the court found that Singh, Chua, and Foo "cannot be made liable to AHTC for the control failures".
MND "notes with concern the judgement in the lawsuit brought by STC and AHTC"
MND notes with concern the Court of Appeal’s judgement in the lawsuit brought by SKTC and AHTC, in its press release on Jul. 7.
MND noted that the Court of Appeal has found that AHTC’s Town Councillors, including Lim, Low and Singh, and two former AHTC employees to be grossly negligent in implementing AHTC’s payment process.
MND added that the Court of Appeal found that the Town Councillors and two former AHTC employees had been grossly negligent when making $23 million worth of payments to FMSS, out of public funds.
The Court of Appeal also found that all the payments to FMSS and FMSI, totalling $33.7 million, were “co-signed by Conflicted Persons or FMSS employees”.
Lastly, MND noted that Lim "was found to have not acted in good faith" when she awarded the contracts to Red-Power Electrical Engineering Pte Ltd at rates that were four to seven times higher than those offered by the incumbent vendors for the same services.
MND said that it will continue to monitor the proceedings brought by STC and AHTC against the town councillors, including the assessment of damages by the High Court, as public funds are involved.
Top photo via In Good Faith blog