WP leaders believed they had to find options as managing agents ‘disinclined’ to work with AHTC: Court

WP leaders had acted in good faith when they decided to waive the tender for a managing agent and awarded the first contract for AHTC for one year to a company run by WP supporters, said the Court of Appeal. ST PHOTO: KUA CHEE SIONG

SINGAPORE - Workers’ Party (WP) leaders such as Mr Low Thia Khiang had sincerely believed that the managing agent (MA) for Aljunied GRC wanted out of its contract in the days after the May 2011 General Election (GE), and that as the new MPs they had to find other alternatives.

This view, together with their belief that none of the existing players in the MA industry was a viable alternative – given an unwillingness to work with the now opposition-held Aljunied-Hougang Town Council (AHTC) – prompted the WP leaders to develop contingency plans to ensure that town management would not be disrupted, the Court of Appeal found in a written judgment on Wednesday.

As such, they had acted in good faith when they decided to waive the tender for an MA and awarded the first contract for one year to FM Solutions and Services (FMSS), a company run by WP supporters, given the looming deadline of Aug 1, 2011, by which time reconstituted town councils had to assume responsibilities for the new areas under them.

This also means the WP leaders have immunity from personal liability under the Town Councils Act (TCA) for waiving this tender, said the apex court.

The long-running case centres on whether MA and essential maintenance service contracts awarded to FMSS in 2011 and 2012 followed the rules under the TCA; on an allegedly flawed process by which payments were approved and made to FMSS; as well as on claims as to whether contracts awarded to third-party contractors were proper.

Former WP chief Low, party chairman Sylvia Lim and current party chief Pritam Singh are among the defendants in the case. They were elected as members of AHTC following the 2011 GE.

In its judgment, the Court of Appeal said High Court judge Kannan Ramesh had erred in his conclusions as to the intentions of WP town councillors and FMSS owner How Weng Fan.

Broadly, Justice Ramesh had found in his 2019 decision that WP leaders had engineered a plan to ensure that a company set up by their loyal supporters could be appointed by AHTC to be its MA without a tender being called.

The Court of Appeal said Justice Ramesh had placed emphasis on some key statements made in correspondences between parties, but had overlooked that it was not open to him to draw inferences from these documents without very strong reasons.

“In our respectful view, the judge drew a number of inferences which did not follow inexorably from the documentary evidence,” said the appeal judges on Wednesday.

Justice Ramesh had decided that for the WP town councillors to have complied with the requirements of the Town Councils Financial Rules and acted in AHTC’s best interest, they should have done one of two things.

One, they should have retained Aljunied’s then MA, CPG Facilities Management, until its contract expired on July 31, 2013. Two, they could have called a tender for a new MA services provider in 2011 and compelled CPG to stay on as MA for as long as was necessary for this to be done, and then awarded a new MA contract to the lowest bidder.

These findings and expectations are unrealistic and miscast the approach that a court should take in this context, said the appeal judges.

“It is emphatically not the place of the court to second-guess the judgments and decisions made honestly and in good faith by the town councillors based on the facts and circumstances that they were presented with at the time they had to make those judgments and decisions,” they said. “This does not change even if those judgments may ultimately prove, with the benefit of hindsight, to have been wrongly made.”

What is undisputed, said the judges, was that following the 2011 GE, CPG did not wish to serve as the MA of AHTC, even while it was still under contractual obligation to do so. CPG had also indicated to the town councillors at a May 30, 2011 meeting that it wished to cease its services.

Faced with the prospect of a reluctant or unwilling incumbent provider of MA services, the perceived difficulty of finding other experienced MA service providers willing to work with a WP-led town council, and running a large town council without a professional MA, the WP town councillors having wanted FMSS to be set up “seemed to be a prudent, and even an obvious step to take”, said the appeal judges.

“Therefore, contrary to the view taken by the judge, the establishment of FMSS does not in and of itself strike us as sinister,” wrote the five judges, headed by Chief Justice Sundaresh Menon.

The 2019 decision also failed to appreciate that, to Mr Low and the other town councillors, the other two existing providers of MA services in the market were “plagued by the same difficulties that applied to CPG, when it came to working with a WP-led town council”, said the judges.

“There is an unmistakable political overtone that colours the way matters were seen by the (WP) town councillors,” they wrote. “ Mr Low was adamant in his belief that all the major MA service providers were inclined to work with PAP-led town councils and disinclined to work with town councils led by other political parties.”

There was no evidence presented that suggested that such concerns that Mr Low and the other WP town councillors had about these providers’ reluctance to work with them had not been honestly held, the judges added.

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Workers' Party leaders and others involved in running the Aljunied-Hougang Town Council (AHTC) acted in good faith when they ...

There was also no evidence that the WP town councillors’ sole or main purpose in engaging FMSS was to financially benefit Ms How and her husband, or themselves, said the judges.

The town councillors, in particular Mr Low, had honestly believed FMSS to be keen and competent even if they lacked CPG’s experience, having worked with Ms How in Hougang for many years, the judges noted.

“In these circumstances, we find that the town councillors, as well as Ms How, acted in good faith in the execution of the TCA when they waived the requirement for a tender for the first contract for the provision of MA services to AHTC and awarded the First MA Contract to FMSS.

“It follows that Section 52 of the TCA would avail them and afford them immunity from personal liability.”

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