CNA Explains: What the settlement between AHTC, SKTC and WP leaders means

SINGAPORE: On Wednesday (Jul 24), Workers' Party (WP) secretary-general Pritam Singh dropped a short joint statement on Facebook, indicating that a settlement had been reached with the Aljunied-Hougang Town Council (AHTC) and Sengkang Town Council (SKTC) over two long-running lawsuits concerning town council funds.

The town councils had sued eight defendants in separate civil suits: WP leaders Mr Singh, Mr Low Thia Khiang and Ms Sylvia Lim; former town councillors Mr Chua Zhi Hon and Mr Kenneth Foo; managing agent FM Solutions and Services (FMSS) and its owners Ms How Weng Fan and her late husband Mr Danny Loh.

In a nutshell, the case revolved around the alleged misuse of town council funds over the appointments of "conflicted" parties Ms How and Mr Loh, who held dual roles in both FMSS and the WP-held AHTC (and at one point AHPETC when WP won the Punggol East constituency).

Basing their cases on audit reports that used a figure of S$33.7 million (US$25 million) in alleged misused funds, the town councils launched civil suits against the eight defendants in an attempt to find them liable for damages.

The case went to court in October 2018. It spanned dozens of media reports and hundreds of pages of court judgements in the trial itself and the ensuing appeal over liability.

However, after years and hundreds of thousands in legal fees, and before the damages segment of the trial even began proper, the case closed quietly in a confidential agreement arranged via mediation at the Singapore International Mediation Centre.

Mr Singh's statement on Wednesday spoke only for the three WP leaders and the two former town councillors, but CNA checked with the lead lawyer for the remaining defendants - Mr Leslie Netto, who confirmed that his clients Ms How and Mr Loh were also part of the settlement.

FMSS had been cleared of all liability by the Court of Appeal and would not have been involved in the damages tranche.

But what does the settlement mean? Who has "won" or "lost", and what happens to the legal costs racked up by all sides?

CNA spoke to lawyers experienced in civil law to shed light on the matter.

What is a settlement?

An out-of-court settlement is an arrangement where both parties voluntarily agree to resolve a dispute without the court's intervention, said Mr Lau Kah Hee, founder and director of BC Lim & Lau law firm.

This is commonly done through mediation, he added.

It also means that parties have agreed on certain terms that bring the litigation to an end and that court proceedings stop, said Mr Chooi Jing Yen, partner at Eugene Thuraisingam's law firm.

"The need for a judge to consider the case falls away, along with any uncertainty over what the judge or judges might decide," said Mr Chooi.

"This is usually a key reason why parties would want to settle a long-running litigation. There is a sense of finality in it."

Mr Mohamed Baiross, partner at IRB Law, said settlements can occur at any stage of litigation, even after a trial has started or a verdict has been reached.

Was money exchanged? 

A settlement typically involves the defendant agreeing to provide some form of compensation or relief to the plaintiff, in exchange for the plaintiff agreeing to dismiss the lawsuit, said Mr Baiross.

However, it may not always be the case that monetary compensation is involved, as the specifics depend on the terms agreed upon by both sides, Mr Baiross added.

Mr Lau agreed: "There are many ways to achieve a settlement, one of which is one party agreeing to pay the other party a sum of money or to undertake a certain course of action."

He said another way is for parties to "drop hands" and not make claims against each other. This was the term Mr Singh used in his statement on the settlement.

Mr Chooi agreed that as the settlement in this case was on a "drop hands" basis, it suggests no payment of money from any party.

What does it mean to bear own costs?

Asked what Mr Singh meant in his statement about parties agreeing to bear their own legal costs, Mr Lau said it means that parties are not going to claim costs against each other, and instead will bear the costs themselves.

Mr Baiross said this could imply that neither party is considered a clear "winner", and that both are absorbing their own expenses from the litigation.

Mr Chooi said it also means that whatever legal costs that have already been paid by parties to their lawyers remain that way, and "neither side compensates the other for any of this".

"Such a settlement is forward-looking in the sense that both sides literally walk away without looking back and counting pennies over costs that have already been incurred previously," said Mr Chooi.

In the AHTC case, the Court of Appeal had ordered the town councils to pay about S$388,800 in costs and disbursements to the defendants.

This was seen as a legal win for the defendants. However, the costs order was only for the appeals on liability, which the defendants largely won, and the costs for the trial itself had not been decided. The trial judge was to decide on costs for the trial after determining damages.

SKTC had confirmed in a statement to the media that costs payable associated with the trials would be covered by SKTC's operating funds, "with provisions already in place".

The town council clarified that the WP, as a political entity, is not involved in the matter and no payments will be made to the party.

AHTC did not respond at the time to queries about who was footing the bill for legal costs, and CNA has contacted the town council again on this issue after news of the settlement broke.

As for how the defendants are likely covering their legal costs, members of the public in October 2018 raised more than S$1 million in under a week after the three WP leaders called for help to raise funds to fight the case.

Mr Baiross said it was possible that any sum paid by the defendants in the settlement could cover part or all of the plaintiffs' costs.

"However, without specific details, it's not possible to definitively say how much of the plaintiffs' costs are covered," he said. 

Asked to compare estimated costs for the trial against the costs of about S$388,800 the town councils were ordered to pay the defendants for the appeals, Mr Chooi said costs for appeals are usually lower than costs for trials.

This is primarily because an appeal is heard over fewer days - usually half a day or at most one day.

However, Mr Baiross said more detailed financial data from the trial itself is required to estimate trial costs. This is because costs for a trial can vary significantly and can be higher or lower than costs for appeals, depending on the complexity and duration of each phase.

Mr Lau agreed on the difficulty of making such an estimate, saying that every case is different, and "much would depend on the amount of time and work involved in the trial and the appeal respectively".

So who won, and who lost?

Asked who was the winner or loser in the settlement, Mr Lau said mediation is confidential and one would not be able to ascertain what the terms of settlement are.

"However, in most, if not all mediations which have resulted in a settlement, the outcome is usually a win-win for both parties," he said.

Mr Chooi said neither side can be seen as a winner or loser, as a settlement is meant to be "win-win", with both sides obtaining closure and finality.

"Very often it can also be expressed to be on a 'without admission of liability' basis, which means that neither party admits fault," he said.

Mr Chooi said this is possible even if the court has ruled on liability - for example if the court expressed a view that damages would be difficult to quantify - which was the case here.

He said that if damages would end up being nominal, parties might rather just settle.

Mr Baiross said it is not always clear who the "winner" or "loser" is, as settlements are generally seen as a compromise, and each party may have gained or conceded something in the agreement.

Even if it is a win-win situation legally, political analysts told CNA that WP is likely to gain some "political capital" from the settlement and will be able to focus on other more pertinent matters, like building up its team ahead of the next General Election.

Singapore's next General Election must be held by November 2025.

Is this the end of the case?

By the looks of it, yes.

A settlement usually concludes the case against the settling parties, and it is generally final, said Mr Baiross.

"Reviving the case would depend on the terms of the settlement and any developments or breaches of the agreement," he said.

Mr Lau said the mediation, based on news reports, has resulted in a settlement agreement which is binding on all parties who have entered into the said agreement. 

"This settlement agreement will usually stipulate that it is in full and final settlement of all claims in the particular dispute. Hence, the case is likely to be over," he said.