AHTC trial: In good faith or not? Court of 5 judges grills lawyers in WP leaders' appeal against verdict
SINGAPORE: A court of five judges on Thursday (Feb 25) grilled lawyers representing Aljunied Hougang Town Council (AHTC) and Sengkang Town Council (SKTC) on their arguments depicting how Workers' Party (WP) leaders had breached duties owed to the town council and misused S$33.7 million of town council funds.
Central to Thursday's hearing was the issue of how the WP leaders waived the calling of a tender for a managing agent in 2011, after WP won the Aljunied ward and formed AHTC.
Lawyers for the WP leaders argued that they had to do away with the tender and appoint managing agent FM Solutions & Services (FMSS), which was led by Ms How Weng Fan, WP stalwart Low Thia Khiang's long-running colleague from Hougang Town Council.
This was due to the pressing deadlines and political pressure, as well as an unwilling incumbent managing agent - CPG Facilities Management - that was aligned with the PAP (People's Action Party) and which Mr Low feared might "sabotage" matters.
However, lawyers appointed by independent panels for AHTC and the newly formed SKTC charged that the WP leaders had misled the town council and breached their duties as they did not act in the best interests of the town council by waiving the tender for a managing agent. As a result, improper payments were made to FMSS, with FMSS both receiving the money and confirming that works had been done.
READ: AHTC trial: Managing agent 'enjoyed' 300% profit increase as town council's finances suffered, say lawyers
The correct thing to do was for them to call for a tender and hold CPG to its existing contract - which was still valid for two more years - in the interim, they said.
APPELLANTS ARGUING AGAINST LIABLE VERDICT PASSED IN 2019
WP chief Pritam Singh, Aljunied GRC MP Sylvia Lim and former WP secretary-general Low Thia Khiang had been found liable in October 2019 for breaching different types of duties in the handling of about S$33 million in town council funds.
READ: Workers' Party MPs found liable in multimillion-dollar AHTC case; judgment raises 'serious doubt' about their integrity
Other appellants in the suits are then-AHTC councillors Chua Zhi Hon and Kenneth Foo Seck Guan, along with managing agent FMSS and its director Ms How, who also acts in the capacity of her late husband Danny Loh.
However, all eight parties took to court to appeal against the high court's finding that they were liable for various breaches, maintaining that Justice Kannan Ramesh had erred in law and on facts in his decision.
Justice Ramesh had found that Ms Lim and Mr Low breached their fiduciary duties in appointing FMSS as the managing agent of AHTC, while Mr Singh breached his "duties of skill and care".
FMSS was helmed by parties with conflicting interests – Ms How, said to be an opposition supporter and a colleague of Mr Low for more than two decades, and her late husband Mr Loh.
The managing agent was appointed without a tender being called, and this led to millions of improper payments made by the town council to FMSS, AHTC's lawyers charged.
READ: AHTC trial: Sylvia Lim admits to breaching town council financial rules by not calling for tender
An independent panel appointed by AHTC launched the suit against the WP leaders and AHTC councillors, who were tried in 2018 for breaching duties owed to AHTC and Pasir Ris-Punggol Town Council (PRPTC) between 2011 and 2015.
Different sets of lawyers acted for the defendants, as well as the plaintiffs – AHTC and Pasir Ris-Punggol Town Council.
After WP won the newly carved out Sengkang GRC ward in the 2020 General Election, Sengkang Town Council appointed an independent panel to handle court matters involving the area of Pasir Ris-Punggol that became part of Sengkang GRC - with a new set of lawyers helmed by Ms Marina Chin.
JUDGES HAVE DIFFICULTY WITH ARGUMENTS FROM BOTH SIDES
On Thursday, the court of five judges - consisting of Chief Justice Sundaresh Menon and Justices Andrew Phang, Judith Prakash, Woo Bih Li and Tay Yong Kwang - had difficulty with arguments from both sides. They questioned lawyer Chelva Retnam Rajah, who represented Mr Low and his colleagues, on what evidence the leaders had that they formally considered the issue of a waiver.
The lawyer said his clients had made their decisions in good faith, referencing an indemnity clause in the Town Councils Act that protects town councillors from any legal proceedings for acts done in good faith.
The judges grilled lawyer David Chan, who represented AHTC, on why CPG was not called to the stand during the trial - pointing to how there was no evidence that they might have wanted to continue acting as the opposition-led town council's managing agent.
Chief Justice Menon said Mr Chan's arguments "raises the question if we are barking up an imaginary tree", as he was "looking for tests that show something has gone wrong", without actually showing what all other town councils do in order to have a comparison.
After he said there was no evidence to show that money was being paid to FMSS for services that were not rendered, Justice Prakash added that there were thousands of people living in AHTC-controlled areas. She said that if something was wrong, the people would have made noise.
"Singaporeans are not quiet. They know how to complain. They complain to the town council, they complain to the MPs, they write to the papers," she said.
Adding on, Justice Phang asked if it was possible that there were discrepancies by other town councils' managing agents.
"Is it possible that the system is like that, and mistakes occur? In other words, not every mistake has a sinister source?"
However, he added that "it is sinister inasmuch as KPMG identifies conflict of interest", referring to an audit report on which the claims against the WP leaders were based.
"Your highest case, really, is that basically, they didn't hire competent (people) - even though they knew them ... they didn't do a good job," said Justice Phang to Mr Chan. "But what's to say that if any other managing agent had been appointed, these mistakes would not have occurred? We don't know. We don't want to speculate unduly. A lack of competence is one thing. Mistakes are one thing, but to say it rises to a level of breach of fiduciary duty, you need to establish a ... connection."
Mr Chan responded that the failure to call for a waiver of a tender process led to the appointment of FMSS, and put in place a process that created inherent risk with conflicted persons in charge of payments. He added that there were other managing agents who had expressed interest to help run the town council, but acknowledged when grilled that he did not have any names of these agents and did not know who they were.
NO PROOF CPG WANTED TO STAY: CHIEF JUSTICE
The Chief Justice said he sympathised with how the newly formed town council did not want to sue CPG to order them to stick with the town council, if CPG wanted to pull out.
"For goodness' sake - you are running a town council, I don't think you want to start this way," he said. "The proof of the pudding is - a year later, when (AHTC) called a tender, nobody else pitched up."
The court had heard during the trial that nobody took up the tender in 2012, when AHTC called for a tender for a managing agent when FMSS' existing contract neared its end.
"Mr Chan, CPG didn't even give evidence," said Mr Menon. "They didn't even come to say they were keen to do this job. In fact, at the 9th of May (2011) meeting, they already intimated they didn't want to carry on."
"Mr Low is an experienced politician. He obviously went in with a high degree of scepticism that CPG wanted to do the work, and CPG did as he expected. But it's artificial to say they should've gone in expecting that CPG wanted to stay, because they never intimated a desire to stay. They weren't even called as witnesses.
"So if the incumbent is not going to do the work, who else is going to do the work? And you've got this deadline hanging over you. I couldn't find a single document that suggested that CPG was going to carry on."
At this, Mr Chan was silent for some time. He later argued that if the appellants had called for a tender, it would have "shined the spotlight on the ownership of FMSS".
WHATEVER YOUR POLITICAL PERSUASION, YOU HAVE TO PLAY BY THE RULES: SKTC LAWYER
Lawyer Marina Chin, who appeared for SKTC for the first time and is taking over Senior Counsel Davinder Singh who previously represented PRPTC, said it was "not wrong in itself" for Mr Low to have various concerns about CPG.
"For Mr Low ... to have concerns about CPG's perceived affiliation with PAP, that is not wrong in itself," she said.
"He may also have his preference as to particular contractors that perhaps he views as aligned with his political persuasion. It's not wrong in itself. But whatever your political persuasion, you have to work within the rules ... and you are indeed chosen to play by those rules. Those rules apply across a political spectrum, regardless of which political party you come from."
She pointed out that despite the supposed concerns CPG had, it remained on board with the town council for several projects. The town council could also have held CPG to its contract and put out a tender in the interim, releasing them only after they secured a new agent.
Justice Phang responded that this was "fine in theory", but asked if it was realistic. He gave an analogy: "If I have an applicant for academia and I know them. Am I going to say I cannot consider the applicant at all? ... This is human nature."
The judges reserved their decision to a later date. If they allow the appeal in its entirety, the suit against the WP leaders and other parties will be dismissed. If the appeal is dismissed, a second tranche of the trial will commence at a later date to assess damages that the defendants will have to pay AHTC.
If the defendants are unable to pay damages, AHTC could commence bankruptcy proceedings against them, and the WP MPs may lose their parliamentary seats.
Under the Singapore Constitution, an undischarged bankrupt cannot be a Member of Parliament and will not be allowed to contest in any parliamentary election.
The WP MPs involved in the suit successfully raised a million dollars over a few days in October 2018 after turning to the public for help in legal fees.