AHTC appeal: Lawyers grilled by apex court

The lawyers representing the parties in the Aljunied-Hougang Town Council appeal were questioned to determine if the Workers' Party's leaders had breached their duties and caused $33.7 million to be misspent.
The lawyers representing the parties in the Aljunied-Hougang Town Council appeal were questioned to determine if the Workers' Party's leaders had breached their duties and caused $33.7 million to be misspent.ST PHOTO: KUA CHEE SIONG

SINGAPORE - For about six hours on Thursday (Feb 26), the four lawyers representing the parties in the Aljunied-Hougang Town Council (AHTC) appeal were grilled, as the apex court sought to ascertain if the Workers' Party's (WP) leaders had breached their duties towards their town council and caused $33.7 million to be misspent.

The inquiry went from the small details like when an e-mail was sent and what it meant, to the broader legal issues such as whether MPs should be considered fiduciaries of the town councils they oversee and what legal protection they can fall back on.

In a hearing held over video conferencing, the judges asked question after question, at one point expressing surprise that despite the amount of documents amassed in the long-running case, some answers could not be found.

One question was what exactly WP leaders Sylvia Lim and Low Thia Khiang were thinking when they waived a tender and directly appointed a company set up by their acquaintances as managing agent, after taking over Aljunied GRC following the 2011 General Election.

Their lawyer, Senior Counsel Chelva Retnam Rajah, acknowledged that there were political considerations.

Mr Low had received information that the incumbent managing agent, CPG Facilities Management, was looking to be released from its contract and would not have served the new town council in a wholehearted manner anyway, since the company was "affiliated with the People's Action Party (PAP)".

"To not trust people you perceive to be PAP-affiliated... is in itself not a breach of fiduciary duty," Mr Rajah said.

He argued that his clients had acted in good faith and in the best interests of their residents when they appointed FM Solutions & Services (FMSS) - owned by Ms How Weng Fan, who worked with Mr Low at Hougang Town Council.

Surely, working with a managing agent that had their back would benefit the residents as well, Mr Rajah said.

The court of five judges, comprising Chief Justice Sundaresh Menon and Justices Andrew Phang, Judith Prakash, Woo Bih Li and Tay Yong Kwang, pressed Mr Rajah on what evidence he had to show that Mr Low and Ms Lim had given due consideration to the possibility of calling a tender.

Mr Rajah cited e-mails and meeting minutes, which showed that the town councillors were pressed for time due to a looming deadline of Aug 1, 2011, to take over the town council.

But Justices Prakash and Woo said they did not see in these documents any genuine consideration of whether to call a tender.

Mr Rajah said the PAP's Mr Sitoh Yih Pin, too, had appointed a managing agent without calling a tender after he won Potong Pasir SMC in 2011 and took over the running of its town council from then Singapore People's Party chief Chiam See Tong.

The priority in both instances was to ensure continuity of estate services, noted Mr Rajah, quoting from a Ministry of National Development review.

But would it not have been better for the WP MPs to enforce their contractual rights to retain CPG for a few more months instead of appointing FMSS, a newly set-up firm?

Lawyers for AHTC and Sengkang Town Council (SKTC) argued that doing so would have given them time to call a proper tender.

Ms Marina Chin, who represented SKTC, said it would have been in the best interests of residents, considering FMSS had no experience running a constituency of that size.

She added that e-mail exchanges show that the WP MPs had planned the appointment of FMSS as a fait accompli way before CPG had intimated it planned to exit.

Mr David Chan, who represented AHTC, posited that other more experienced or less expensive managing agents may have responded to the tender.

He said by waiving the tender without due consideration, the WP MPs had set the tone that they did not need to comply with rules and had carte blanche over the way things were done.

This was the original sin which had led to AHTC's improper payments amounting to the tens of millions of dollars now impossible to account for since FMSS' owners were also the ones who approved payments to themselves, he argued.

These suggestions were described as "theoretical" and "unrealistic" by CJ Menon and Justice Phang.

Expressing great sympathy for why a new MP would not want to sue its incumbent managing agent, CJ Menon said: "For goodness sake, you are running a town council, you don't want to start off that way. If the incumbent was not keen on carrying on, I find it difficult to imagine anyone else would be rushing in." He added that the proof was in the pudding because a year later when they called a tender, nobody else made a pitch.

Justice Prakash said there was an absence of evidence to show that FMSS had indeed taken money for work it did not do.

"There are how many hundreds of thousands of people living in the area? Singaporeans are not quiet people. When things are not done properly, they know how to complain. They will complain to the town council, they complain to their MPs and they write to the newspapers," she added.

During the hearing, Mr Chan had also asked the court to consider an important point of law to do with how compensation should be determined if the town councillors were found to have breached their fiduciary duty.

Pasir Ris-Punggol Town Council (PRPTC), which Punggol East came under, had argued that the town councillors would have to account for all of the money improperly paid by the town council to FMSS.

But the High Court ruled that the onus falls on the town council to show how much losses it had suffered as a result of the town councillors' actions.

PRPTC had appealed against this point, but this was dropped after SKTC - which took in Punggol East when the boundaries were withdrawn - took over the case.

Ms Chin told the court that the decision was not taken lightly, but did not elaborate.

To Mr Chan's request, CJ Menon said: "If you haven't appealed the point, then that's the end of it. We are not in the business of saying they can't withdraw part of their appeal."

Justice Prakash added: "The proponent has withdrawn and opponent is not going to say anything about it. It's like you're asking us for an academic opinion."

The judges have reserved judgment.