SSC wins appeal to reclaim club funds used in lawsuit

Ex-SSC president Freddie Koh was sued for defamation in 2009 by four members of the club's former committee. In 2011, Mr Koh lost the sui
Ex-SSC president Freddie Koh was sued for defamation in 2009 by four members of the club's former committee. In 2011, Mr Koh lost the suit, but the club continued to pay his legal bills even after this ruling. ST FILE PHOTO

Court rules club entitled to refund of $1.5m, as legal fees of ex-chief were paid under 'mistaken belief'

In a twist to a long-running saga, the Singapore Swimming Club yesterday won an appeal to get back $1.5 million in club funds that former president Freddie Koh used to defend a defamation suit against him.

In a written judgment, the Court of Appeal overturned a High Court decision last year, which rejected the club's bid to recover the money. The apex court ruled that the club was entitled to a refund on grounds that it had paid Mr Koh's legal bills under a mistaken belief, and that Mr Koh had breached his fiduciary duties to the club.

Mr Koh, 70, became club president in May 2008 and was ousted at an extraordinary general meeting in March 2012.

The case stemmed from a defamation suit brought against him in 2009 by four members of the previous committee.

Shortly after Mr Koh was sued, the management committee headed by him passed a resolution, stating that the club will assume liability for legal actions brought against office bearers as a result of them discharging their duties to the club.

Following this resolution, the club bore his legal costs.

In 2011, Mr Koh lost the defamation suit. The Court of Appeal found that he had made the defamatory remarks with malice and that he had been on a "witch hunt" against the plaintiffs. After this ruling, the club continued to pay his legal bills.

In March 2012, club members voted to remove Mr Koh, to recover the legal costs paid for him and to stop further payment. He then sued the club, arguing that it has to indemnify him for the costs.

The club, represented by Senior Counsel Tan Chee Meng, countersued him for the return of the money it had paid for his legal costs.

The High Court dismissed both claims in 2014. The club appealed.

In its 68-page judgment yesterday, the apex court accepted Mr Tan's arguments that, prior to the 2011 defamation judgment, the club had paid Mr Koh's bills under a mistaken belief that he was sued as a result of him discharging his duties to the club.The payments after the defamation judgment were not made under this mistake.

But the court noted that after the defamation ruling, Mr Koh continued to hand over invoices to the club's treasurer and financial controller for payments to be made.

This was despite the fact that the question of whether his legal costs were still covered under the resolution had arisen by then.

"In our view, no responsible president of a club, in such a situation, should have done so," said the court, finding that he had acted to further his own interests rather than that of the club.

A version of this article appeared in the print edition of The Straits Times on April 27, 2016, with the headline 'SSC wins appeal to reclaim club funds used in lawsuit'. Print Edition | Subscribe