SINGAPORE - Workers' Party MPs Sylvia Lim and Low Thia Khiang have refuted allegations that they improperly appointed Aljunied-Hougang Town Council(AHTC)'s new managing agent when they took over the running of the town council.

In their defence filed with the High Court on Tuesday, Ms Lim and Mr Low, the party's chairman and secretary-general, highlighted an "immediate and urgent need" to appoint a new managing agent, as the previous agent - CPG Facilities Management - was not willing to continue with its contract beyond Aug 1, 2011.

The court documents cited Mr Low's past experience when he took over Hougang SMC following the 1991 general election to illustrate why he and Ms Lim acted quickly to appoint FM Solutions and Services (FMSS) as managing agent without a tender.

Back then, the incumbent managing agent served Mr Low notice to terminate their contract less than a month after he took over Hougang.

This experience served to impress upon Mr Low that "the continuity of essential services by the existing service providers was at risk" when he took over Aljunied GRC, which covered a much larger area.

"He was also aware that PAP may attempt to 'trip up' the new MPs in the way they did when he took over the Hougang Town Council," said the court documents.

Furthermore, Mr Low believed that none of the three companies managing People's Action Party (PAP) town councils would be prepared to work with the WP. None of these companies had made a bid when AHTC called a tender for a managing agent in 2012.

"As the managing agents of PAP town councils, they felt it was disadvantageous for them should they choose to work for opposition town councils since all town councils have political connections," said a document.

In addition, the AHTC town councillors also "did not have the luxury of time to call an open tender because doing so could result in a real danger that services to the residents would be disrupted in the meantime".

They had also considered it "too politically risky to retain a reluctant and unwilling managing agent in CPG... because it is hard for them to trust that CPG would continue to do their best to serve the residents when they were reluctant to continue in the first place," the document added.

Outlining their version of events, the Aljunied GRC MPs said they acted in good faith, and did not pay inflated rates to FMSS.

Ms Lim and Mr Low are among several defendants in the lawsuit filed by AHTC. An independent panel had initiated legal action on behalf of the town council against Ms Lim, Mr Low, and other town councillors to recover what it deemed were improper payments to FMSS.

It is demanding that Ms Lim, Mr Low, FMSS owner How Weng Fan and FMSS account for over $33 million in payments, paid from July 15, 2011 to July 14, 2015. AHTC wants "equitable compensation" for any sum that was wrongfully paid out.

Ms Lim and Mr Low were part of a WP team that won Aljunied GRC from the People's Action Party (PAP) in the May 2011 general election.

Mr Low had e-mailed Ms How on May 19, 2011 about appointing Mr Loh as general manager/secretary of AHTC and FMSS as its managing agent.

AHTC had flagged that e-mail to show Ms Lim and Mr Low were aware that installing FMSS would put both Mr Loh and Ms How in positions of conflict as they were directors and shareholders of FMSS while holding senior positions in AHTC.

In court papers obtained by The Straits Times, Ms Lim and Mr Low denied instructing Ms How and her late husband Mr Danny Loh to set up and incorporate FMSS. Instead, they said they wanted FMSS set up as soon as possible to "provide an alternative to CPG, particularly if CPG decided to pull out" of its contract.

The documents say they met CPG's managing director and Aljunied Town Council general manager Jeffrey Chua on May 30, when he told them that CPG did not want to continue as managing agent and sought a release from its contract.

Addressing allegations on conflict of interest, the documents point to an e-mail sent six days before the May 19, 2011 correspondence between Mr Low and Ms How.

In the earlier e-mail, Ms Ng Swee Bee - who went on to be an AHTC town councillor - shared with Mr Low a Straits Times article that reported CPG's Mr Chua's dual-role at both the town council and managing agent, raising the issue of conflict of interest.

This e-mail was forwarded on to Ms How, who replied saying "she knew about this and that it was 'a practice' in other town councils controlled by the PAP".

A "system of checks and balances" could be put in place to resolve any issues of conflict, and both Ms Lim and Mr Low argue there were "sufficient safeguards to ameliorate possible conflicts of interest".

They pointed out that it was "industry practice" for employees of the managing agent to approve payments to the managing agent on behalf of the town council.

AHTC had adopted this model and instituted an "additional layer of protection", requiring the chairman or vice-chairman of the town council to co-sign all payments to FMSS, they said, adding that this was done after monitoring FMSS' work at various levels, including through meetings and estate visits.

Both Ms Lim and Mr Low also denied paying "inflated rates" to FMSS in its first year of service, pointing out these were calculated on the basis of the former CPG contract rate.