The top court has asked lawyers representing the various parties in the lawsuit involving Aljunied-Hougang Town Council (AHTC) and Pasir Ris-Punggol Town Council (PRPTC) against Workers' Party (WP) chairman Sylvia Lim and others to address issues it has raised for the hearing of the case.
The Court of Appeal posed the questions in a letter last week after having read and considered their papers and submissions, according to court records.
Among other things, the court has asked the parties to address the issue of whether Parliament intended for town councillors or employees of town councils to owe fiduciary duties when performing their statutory functions.
Fiduciary duties involve private law, which is a branch of law that deals with the relations between individuals or institutions, unlike public law, which deals with the relations between such entities and the state.
The Court of Appeal wants parties to address the implications of the High Court's finding, that the first to seventh defendants owed fiduciary duties, on the normal distinction between private law and public law.
The court also wants parties to address the scope of Section 52 of the Town Councils Act and whether any of the defendants are entitled to claim immunity under the section and, if so, in relation to which claims.
The appeals court hearing that is due later this year follows a High Court judgment last year, which held that former WP chief Low Thia Khiang and Ms Lim had breached their fiduciary duties to AHTC, among other things.
They were then town councillors of AHTC, which, through an independent panel, had taken a civil suit against them for alleged improper payments made under their watch.
The case also involved current WP chief Pritam Singh and two other AHTC town councillors, along with its former managing agent company FM Solutions and Services and the company's two owners.
The eight defendants are appealing in relation to the main suit by AHTC.
Concurrently, PRPTC, under which Punggol East was a WP ward at the time, is also appealing against Justice Kannan Ramesh's judgment in relation to Ms Lim and three other defendants.
PRPTC had run a parallel suit against Ms Lim, Mr Low and six other defendants in the High Court for alleged losses incurred when Punggol East was under their watch. It initiated the civil suit after the WP-run AHTC had taken the same defendants to court.
The Court of Appeal in its letter posed six sets of questions, each themed on a particular issue it listed.
One set relates to the High Court's finding that the first to seventh defendants owed fiduciary duties to the town council.
"Is there any evidence that Parliament intended for town councillors and employees of town councils to owe fiduciary duties in the execution of their statutory functions?" asked the court.
"Taking into account the existing regimes that regulate town councils and town councillors, what role does fiduciary law play in this specific context?" it added.
Separately, the court also asked what the alternative reliefs are if the first to seventh defendants are found not to owe fiduciary duties to the town council.
In relation to claims for breach of the common law duty of care, the court has asked to be addressed on what are the rules by which damages caused by each alleged breach are to be assessed.
Legal sources say the questions suggest the court intends to clarify the interaction between private law (specifically, on fiduciary duties and common law duties of care) and public law in the context of town councils.
"It is clear that the Court of Appeal wishes to hear arguments on various legal questions about the precise legal principles governing the duties that are owed by various persons to town councils," said Singapore Management University's (SMU) Assistant Professor of Law Benjamin Ong.
"One important issue is whether the defendants owe fiduciary duties to the plaintiffs. There are certain established categories of case: for example, the director of a company owes fiduciary duties to the company; a lawyer owes fiduciary duties to a client.
"But the courts have never before had to address the question of who owes fiduciary duties to a town council," he said.
"Both fiduciary duties and duties of care are governed by judge-made common law. The twist in this case is that we have another source of law, namely, the following statutes: the Town Councils Act and Town Councils Financial Rules," he added.
SMU law lecturer Nicholas Liu stressed that the questions posed by the court do not suggest the court has formed any firm view on the dispute or any particular outcome.
"The plaintiffs essentially argue that both legal regimes impose duties and liability on town councillors. The defendants argue that the two legal regimes are separate: only public law applies to town councillors in the discharge of their duties to the town council. The plaintiffs succeeded at trial on this point."