The Singapore Swimming Club yesterday failed to recover its $1.5 million from former president Freddie Koh that was used to defend a defamation suit against him.
But Judicial Commissioner Lee Kim Shin also ruled that Mr Koh will not be allowed to be reimbursed by the club for the more than $300,000 in damages and costs he could end up paying, after losing the defamation suits against him in 2011 and last year.
It is understood that Judicial Commissioner Lee will issue the grounds for his decision later.
The case where both sides lost and were ordered to bear their own legal costs is expected to be instructive to other clubs in relation to the extent that club funds should be used to bear the legal bills in civil suits involving club office bearers.
Mr Koh, 68, became club president in 2008 but was voted out at an extraordinary general meeting (EGM) in March 2012.
While in office, he made defamatory remarks during two management committee meetings about a previous committee's decision to purchase a water filtration package for two Olympic-size swimming pools.
Four of the affected committee members sued him in 2009 and were subsequently awarded $50,000 in damages each by the Court of Appeal. Two other members who also separately sued Mr Koh were awarded $50,000 each in damages earlier this year.
Mr Koh had used about $1.5 million in club funds to defend the 2009 defamation suit brought by Mr Bernard Chan, Mr Robin Tan, Mr Nicholas Chong and Mr Michael Ho, which he lost.
Key to the whole episode before Judicial Commissioner Lee was the club's 2012 EGM which resolved that he not be allowed to use club funds to settle his losses. Club members had voted at the meeting, resolving that Mr Koh foot all the legal expenses he incurred while defending the case.
Mr Koh sued the club to be reimbursed for monies paid in damages to the club members who won the suit against him.
The club opposed the move and counterclaimed for about $1.5 million used to defend him in the defamation suit.
His lawyer, Mr Paul Seah from Tan Kok Quan Partnership, argued that club members cannot retrospectively invalidate at the EGM an earlier decision by the management committee to fund his legal fees and pay whatever he incurred in the form of damages paid to the members who had sued him.
Mr Seah added that Mr Koh was acting in the course of his duties and had a common understanding with the club, based on committee meetings, that it would pay his legal costs. He had hired lawyers to defend him in the defamation suits on this understanding.
The move to indemnify office bearers was affirmed several times before the 2012 EGM.
But WongPartnership Senior Counsel Tan Chee Meng countered for the club that payments were made for Mr Koh's legal costs under a mistake of fact.
He argued that the Court of Appeal had found in clear terms in the defamation case that Mr Koh had acted with malice, and this meant his actions could not be counted as done in the proper discharge of his duties as club president.
The club yesterday, through its lawyers, said it would "review the full grounds of decision before deciding on the next course of action".