Workers' Party MPs file defence to AHTC lawsuit, say they acted in good faith

(From left) Workers' Party chairman Sylvia Lim, chief Low Thia Khiang and assistant secretary-general Pritam Singh holding a media doorstop interview on July 26, 2017.
(From left) Workers' Party chairman Sylvia Lim, chief Low Thia Khiang and assistant secretary-general Pritam Singh holding a media doorstop interview on July 26, 2017.ST PHOTO: SEAH KWANG PENG

SINGAPORE - Workers' Party (WP) MPs Sylvia Lim, Low Thia Khiang, and Pritam Singh have filed their defence in the lawsuit brought against them by the Aljunied-Hougang Town Council (AHTC), saying that are not personally liable for $33 million in payments made by the town council to its former managing agent and service provider, and had acted in good faith.

The MPs, who have been asked to account for the sum, also said they do not owe any special duty of care to the town council beyond what is stated in the laws governing town councils.

Even so, they added, they had acted in the best interests of the town council in appointing its managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

These arguments were made in a 40-page statement of defence filed in the High Court on Tuesday (Aug 15), which also covers two other defendants, town councillors Kenneth Foo Sek Guan and Chua Zhi Hon.

In July, AHTC, represented by Shook Lin & Bok, had initiated legal action against them under the direction of an independent panel appointed by the town council in February to help recover improper payments.

The lawsuit is the latest development in a long-running saga arising from the town council's inability to submit a clean set of accounts since the WP won Aljunied GRC in the May 2011 general election.

The town council alleged that $33,717,535 in payments it made from July 15, 2011 to July 14, 2015 to FMSS and FMSI, are not valid, as the town councillors had acted in breach of their fiduciary duties.

 
 
 

On Wednesday, Ms Lim, Mr Low and Mr Singh said in a statement on the WP website that their defence would deal with all the allegations made against them, adding that they denied them all.

"We maintain that, at all times, we had acted in good faith and in accordance with our duties as Town Councillors. Our actions had the best interests of the residents of AHTC at heart and sought to ensure that AHTC was able to fulfil all its functions and duties, notwithstanding the difficult circumstances that we were faced with," they said in their statement.

In their statement of defence filed in court, the five defendants, represented by law firm Tan Rajah & Cheah, argued that town councillors do not owe such duties - which include a duty of loyalty and fidelity among other things - to the town council.

"Their duties as town councillors are no more and no less than as set out in the Town Councils Act (TCA) and the Town Council Financial Rules (TCFR)," said the defence lawyers.

Under the TCA, town councillors are also protected from any personal claims against them in relation to actions they have taken in their roles, they added.

They also denied that the town council had made any improper payments or suffered any losses as a result of their conduct.

AHTC had asked for "equitable compensation" for any sum that has been wrongfully paid out, in its statement of claim filed in the High Court in July.

It also wanted Mr Low and Ms Lim to be liable for a sum of $1.2 million, which it described as the difference between the "inflated charges" of FMSS compared to the rates charged by previous managing agent CPG Facilities Management.

The town council had pinpointed the appointment of FMSS - set up by Ms How and her late husband Danny Loh on the instruction of Mr Low and Ms Lim - without a tender being called, as the start of its financial woes.

Mr Low and Ms Lim, refuting allegations of wrongdoing, said they had done so to ensure that services to residents would not be disrupted, and had acted in good faith. Recounting the circumstances surrounding the appointment, they said CPG had informed them that it wanted to stop providing managing agent services to AHTC, even though its contract was good for two more years.

Given this, they said, they did not trust CPG to continue to do its best to serve the residents, and felt it was "too politically risky to retain a reluctant and unwilling managing agent".

They also said they had taken steps to "ameliorate" any conflicts of interest that would arise from making Ms How the general manager of the town council and Mr Loh the secretary, by requiring all payments to FMSS to be co-signed by either the chairman or vice-chairman of the town council.

In their Wednesday statement, Ms Lim, Mr Low and Mr Singh said of the appointment of FMSS as AHTC's managing agent: "Ms Sylvia Lim and Mr Low Thia Khiang acted in good faith and in the best interests of its residents."

FMSS and Ms How, who are also named in the suit, are represented by lawyers from Netto and Magin.

Separately, the Attorney-General's Chambers, representing the Housing Board, has written to the court to ask for permission to follow the case at all hearings, a request objected to by Tan Rajah & Cheah on behalf of its clients.

The AGC said in its letter to the court that the HDB has an interest in the proceedings as they pertain to the recovery of improper past payments, a key issue in a previous case between the HDB and AHTC, then known as Aljunied-Hougang-Punggol East Town Council.