WP town councillors abused court process in citing 'irrelevant' and 'confusing' information, says AHTC

The lawyers of AHTC have filed fresh documents with the High Court, in response to a written defence by the town councillors, on Aug 30, 2017.
The lawyers of AHTC have filed fresh documents with the High Court, in response to a written defence by the town councillors, on Aug 30, 2017.ST PHOTO: SEAH KWANG PENG

SINGAPORE - The Workers' Party (WP) town councillors being sued for paying millions in improper payments have raised confusing and irrelevant information to explain away their actions, said the lawyers of Aljunied-Hougang Town Council (AHTC) in fresh documents filed with the High Court on Wednesday (Aug 30).

In bringing up the experience of WP chief Low Thia Khiang in Hougang, and claiming that the system was skewed against them, the town councillors have sought to introduce information that "amount to pleadings that are scandalous, frivolous and (an) abuse of process", they added.

This could "tend to prejudice, embarrass, and delay the fair trial of the action".

The lawyers from Shook Lin & Bok were responding to the written defence filed on Aug 15 by WP MPs, Mr Low, Ms Sylvia Lim and Mr Pritam Singh, as well as town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo.

AHTC is suing them, as well and its former managing agent FM Solutions and Services (FMSS) and the company's owner Ms How Weng Fan, over improper payments the town council made from July 2011 to July 2015.

 
 

The lawsuit was initiated under the direction of an independent panel appointed by the town council to recover the money.

In their defence, the town councillors had included two separate annexes in which they said they had no choice but to appoint FMSS as managing agent without calling a tender in 2011, because they did not want services to residents to be disrupted.

The annexes claimed, among other things, that AHTC's then managing agent, CPG Facilities Management, would not be sincere in helping to manage an opposition town council well, and the People's Action Party may use the town council system to "trip up" the new newly-elected WP MPs.

The WP, which had run Hougang town council since 1991, wrested Aljunied GRC from the PAP in the 2011 General Election.

The town councillors also said that they appointed a new managing agent as CPG did not have a contractual obligation to extend its services to Hougang.

Refuting this, AHTC said CPG was required to do so under its contract and the town council was entitled to ask.

AHTC has pinpointed the rushed appointment of FMSS in 2011 as the start of its accounting woes, and has said that over $33 million in payments made to the company - run by WP supporters Ms How and her late husband Mr Danny Loh - were improper and invalid.

But the town councillors as well as Ms How and FMSS have denied these claims.

They argued that under Section 52 of the Town Councils Act, they are protected from any personal claims against them for actions they have taken in their roles.

In their response, AHTC's lawyers said the provision does not apply as the town councillors had breached their "core fiduciary duties" to the town council, failed to exercise reasonable care and skill in discharging their responsibilities, and "acted in bad faith, for improper purposes".

The lawyers added that the provision in the Act covers "claims brought by a party other than AHTC", and does not apply to the town councillors, Ms How and FMSS.

In addition, Ms How and FMSS had separately said in their defence that AHTC is estopped, or legally barred, from getting back its money from FMSS, as the town council had voluntarily entered into a contract, paid for the managing agent services in accordance with contractual terms, and benefited from the services provided.

But AHTC argued that this defence did not apply in their case, as Ms How and Mr Loh had knowingly received money that was given to them in breach of trust.

In the process, they have also "dishonestly assisted" Ms Lim and Mr Low in the breach of their fiduciary duties, said AHTC.

Mr Loh was town council's general manager, while Ms How was its secretary, and the town council had cited this as a conflict of interest as the couple were responsible for authorising payments to their own company.

However, the defendants said that this arrangement is not inconsistent with what was done at other PAP-run town councils. They said CPG's managing director Jeffrey Chua was also general manager of Aljunied Town Council under the PAP.

To this, AHTC said the comparison was not valid as Mr Chua did not hold an interest in CPG.

When approached on Thursday, both FMSS and the WP town councillors declined to comment, with town council chairman Mr Singh saying that any response would be "undertaken through the legal process".