Court of Appeal finds Sylvia Lim, Low Thia Khiang liable for negligence in AHTC payments process, but not Pritam Singh

SINGAPORE: The Court of Appeal has found Workers' Party leader Sylvia Lim and former party secretary-general Low Thia Khiang liable for negligence in the Aljunied-Hougang Town Council (AHTC) payments process, but cleared WP chief Pritam Singh over this issue.

This is the latest update on a long-running civil trial over the alleged misuse of S$33.7 million (US$25 million) of town council funds by the WP leaders and other town councillors who helmed AHTC at the time.

On top of these fresh findings released on Friday (Jul 7), the Apex Court reaffirmed that the town councillors and employees are liable to Sengkang Town Council for negligence in allowing control failures to exist in the system.

These failures stemmed from the involvement of conflicted parties - managing agents working for AHTC who also held positions in AHTC - and the absence of safeguards, which created an inherent risk of overpayment.

The court also upheld that Ms Lim is liable to Sengkang Town Council for negligence in causing AHTC to award a new contract to Red-Power Electrical Engineering. 

This was after she failed to prove that she had acted in good faith by choosing not to renew existing contracts at significantly cheaper rates.

The Court of Appeal overturned all other findings by the trial judge, who had previously found all three WP leaders liable and cast "serious doubt" on their integrity.

Following the Workers' Party's victory in Sengkang at the 2020 General Election, assets and liabilities relating to the area under Pasir Ris-Punggol Town Council (PRPTC) which had been absorbed into Sengkang GRC were transferred to Sengkang Town Council. These included relevant legal proceedings.

Previously, PRPTC took over control of Punggol East from Workers' Party-run AHTC, when the constituency was won by the People's Action Party in the 2015 General Election.

Sengkang GRC comprises Punggol East, Sengkang West and Sengkang Central.

The latest findings mean that of the WP leaders embroiled in the trial, Ms Lim and Mr Low might have to pay damages to AHTC - the quantum will likely be determined only after further trial hearings.

In a judgment issued on Friday, Chief Justice Sundaresh Menon said the court found Ms Lim and Mr Low liable to AHTC for negligence in permitting control failures to persist in the town council's payments process.

Others who were found liable for negligence were managing agent director Ms How Weng Fan and her late husband Danny Low. These were the "conflicted parties" who had interests in both AHTC and the managing agent FMSS, a service provider which AHTC hired to help run day-to-day operations in the town.

Then-AHTC councillors Mr Chua Zhi Hon and Mr Kenneth Foo, along with Mr Singh, were cleared over the payments process on a legal technicality.

The appeals were heard by a five-judge panel comprising the Chief Justice, Justice Judith Prakash, Justice Tay Yong Kwang, Justice Woo Bih Li and Justice Andrew Phang.

BACKGROUND

The latest judgment comes after the Court of Appeal reversed several of the findings of the trial judge, who in October 2019 found Mr Singh, Ms Lim and Ms Low liable for breaching different types of duties in the handling of about S$33.7 million in town council funds.

Among other things, the Apex Court found that the town councillors and employees did not owe fiduciary or equitable duties to AHTC.

The bulk of the accusations levelled at the WP Members of Parliament and AHTC councillors had rested on this purported breach of fiduciary or equitable duties.

The court also held that they had acted in good faith in the award of various contracts on behalf of AHTC.

However, the Apex Court also found that the town councillors and employees were grossly negligent in implementing AHTC's payments process, which led to the persistence of control failures in the system.

FRESH FINDINGS

The Court of Appeal on Friday said that the lawyers representing AHTC in the suit did not make any claim against Mr Singh and the two town councillors over the control failures.

AHTC also did not cross-examine or put its cases to the town councillors and employees, relying instead on the cross-examination by counsel for Pasir Ris-Punggol Town Council, Senior Counsel Davinder Singh.

"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 the Chief Justice.

"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."

Chief Justice Menon said it would therefore prejudice the trio for the court to now find them liable to AHTC for breaching their duties in allowing control failures to exist.

In response to CNA's queries, the Ministry of National Development (MND) on Friday evening said it noted "with concern" the Court of Appeal’s judgement in the lawsuit brought by Sengkang Town Council and AHTC. 

MND also noted the Court of Appeal had 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 the ministry.

"The Court of Appeal found that 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," MND added.

The Court of Appeal also found that all the payments to FMSS and FM Solutions and Integrated Services (FMSI), totalling S$33.7 million, were “co-signed by conflicted persons or FMSS employees”, the ministry noted.

"In addition, Ms Lim was found to have not acted in good faith when she awarded the contracts to Red-Power Electrical Engineering at rates that were four to seven times higher than those offered by incumbent vendors, Digo Corporation and Terminal 9 for the same services."

MND said it will continue to monitor the proceedings brought by Sengkang Town Council and AHTC against the town councillors, including the assessment of damages by the High Court, as public funds are involved.

CNA has also contacted WP for comment.