News

9-Year Saga of AHTC Finally Came to an End Today As Appeal Court Said WP Leaders Had Acted in Good Faith

2022-11-09 , 7:30 pm

The Workers’ Party (WP) gets thrown into the limelight every once in awhile, the most recent one being the Raeesah Khan incident.

Today we unlock a memory: remember the Aljunied-Hougang Town Council (AHTC) case?

Part of the Appeals Brought By WP Leaders in AHTC Case Allowed

On Wednesday (9 Nov), the Court of Appeal allowed part of the appeals brought by the WP leaders and other related parties in the AHTC case.

The Court of Appeal, Singapore’s apex court, found that while the leaders do not owe fiduciary or equitable duties to AHTC, they were still liable to the town council for negligence in certain aspects.

These leaders include WP chief Pritam Singh, Aljunied GRC MP Sylvia Lim and former WP secretary-general Low Thia Khiang.

In 2019, they were found liable for the breach of various types of duties in the handling of about S$33 million in town council funds.

The case started a few years back, when an independent panel appointed by AHTC launched the suit against WP leaders and AHTC councillors.

They were tried in 2018 for the breach of duties owed to AHTC and Pasir Ris-Punggol Town Council (PRPTC) between 2011 and 2015.

All parties appealed against the high court’s finding that they were liable for the different breaches.

The WP Members of Parliament (MPs) and AHTC councillors were accused of breaching their fiduciary duties in the appointment of town council managing agent FM Solutions & Services (FMSS).

FMSS was led by Ms How, Mr Low Thia Khiang’s long-time colleague from Hougang Town Council.

But what exactly was the issue?

The issue was that “improper” payments of more than S$33 million were allegedly allowed to FMSS, its service provider FM Solutions & Integrated Services (FMSI) as well as third parties.

Do Town Councillors Owe Fiduciary Duties?

A fiduciary is a person acting for or on behalf or another, in a legal or practical relationship of trust.

The Court found that fiduciary duties should not be imposed on the town councillors and employees.

Here’s why.

The relationship between a town council and its members and employees is not a fiduciary relationship.

The town councillors and employees were merely executing statutory duties under public law.

It was “both unprincipled and inappropriate to ‘convert’ these statutory duties existing under public law into fiduciary duties existing under private law,” said the Chief Justice.

Acting in Good Faith

The court found several members of the town council had acted in good faith.

That’s good news for the town councillors.

Having acted in good faith in waiving the tender for and awarding the first contract for managing agent (MA) services to FMSS, they could claim immunity from personal liability under the Town Councils Act.

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“Mr Low harboured a belief, which developed and strengthened as events unfolded, that the difficulties affecting the prospects of a WP-led town council working successfully, meant that it would better serve the residents in AHTC if the WP-led AHTC engaged a new company, established from scratch, made up of people who would serve a WP-led town council wholeheartedly and competently,” the Court of Appeal found.

It was found that the town councillors and employees acted in good faith in waiving the tender for awarding the first contract for Essential Maintenance Service Unit (EMSU) services to FMSS as well.

And for the second contracts awarded to FMSS for the MA and EMSU services, the court also did not find any breach of duties, and that the town councillors actions were done in good faith.

It’s good faith all around, I guess.

Negligence in Payments Process

Now for the part of the appeal that wasn’t allowed (i.e. still liable for damages).

The court found that members and senior employees are liable to AHTC for negligence in certain aspects with regards to the payments process.

It was found that they had not acted in good faith in implementing the payments process for AHTC to approve payments to FMSS and FMSI.

Aw, so it wasn’t good faith all around.

By allowing control failures to exist in the payment process, the town councillors and employees breached their duty of care.

Ms How and her late husband Mr Loh had direct interests in FMSS and FMSI. At the same time however, they also held key positions in AHTC.

There was a potential conflict of interest, yet Ms How and Mr Loh were still the ones overseeing and involved with the payment process.

There was also no actual verification of whether work was done.

The court said the town councillors were aware of the potential conflict of interest as early as 2011, and they failed to address it.

This state of affairs persisted for at least three years—what the court deemed “gross negligence”.

“We are thus unable to see how such conduct that amounted to gross negligence can be said to have been done in good faith,” said the Chief Justice.

“In our judgment, this was a paradigm example of poor financial governance and a breach of the duty of care.”