SINGAPORE – Workers’ Party (WP) chief Pritam Singh cannot be held liable for negligence in the Aljunied-Hougang Town Council (AHTC) payments process as he was not given the chance to defend himself against the claim, the Court of Appeal said on Friday.

This is because AHTC’s lawyers did not put up a case on this front, the court added.

But the apex court held WP chairman Sylvia Lim and former party chief Low Thia Khiang liable for allowing control failures in the payments process that led to the risk of overpayment, noting that the claims had been clearly put to them during the trial.

In previous findings, the court had also held all three senior WP leaders, as well as four others, liable to Sengkang Town Council (STC) for permitting control failures in the payment processes.

The ruling is the latest development in the long-running civil suit involving $33.7 million of improper payments made by AHTC between 2011 and 2015 under the watch of the senior WP leaders.

The High Court found in 2019 that Mr Low and Ms Lim had breached their fiduciary duties to AHTC, and Mr Singh had breached his duties of skill and care.

They appealed against the judgment, and the Court of Appeal in 2022 ruled that the town councillors and employees did not owe fiduciary duties or equitable duties of skill and care to AHTC.

But the apex court noted that they were negligent in certain aspects, including the payments process, and may still be liable for damages.

Friday’s judgment focused on two specific issues: The liability of the senior WP leaders in implementing the payment process which led to the misuse of AHTC’s funds, and the liability of Ms Lim towards AHTC in awarding a contract to electrical engineering firm Red-Power.

The determination for both hinged on whether AHTC had adequately pleaded its case regarding the issues.

Pleadings are formal statements setting out a party’s case in terms of material facts and legal issues. A plaintiff’s pleadings define the parameters of the case so that a defendant knows the issues he needs to address, the court said.

In both issues, the Pasir Ris-Punggol Town Council (PRPTC), whose lawsuit was heard together with AHTC’s lawsuit, had pleaded its case against the three WP senior leaders.

But the court ruled that the claims made by each party had to be kept distinct, as the two lawsuits were merely heard together and not consolidated.

PRPTC’s lawsuit was transferred to Sengkang Town Council (STC) after the WP won Sengkang GRC in the 2020 General Election. The newly formed GRC had absorbed the Punggol East ward, which was previously run by PRPTC after the People’s Action Party wrested the constituency from WP at the 2015 polls.

The apex court noted that AHTC’s pleadings were narrower than that of STC’s.

In finding Ms Lim and Mr Low liable for implementing the payment processes, the court found that AHTC did plead the material facts of the claim.

For instance, AHTC argued that Ms Lim and Mr Low had set up the “flawed” system which caused the town council damage.

It also argued that the system allowed Ms How Weng Fun and Mr Danny Loh, the owners of the town council’s managing agent, FM Solutions and Services, to certify their company’s work and approve payments to benefit themselves.

To support its argument, AHTC had cited evidence during the trial to prove its case and made closing submissions about the issue, the court found.

Given this, Ms Lim and Mr Low, as well as Ms How and Mr Loh, would have known the case against them, and there would be “no prejudice in the court finding these four individuals liable for the tort of negligence for permitting the control failures to exist”, the court said.

In the case of Mr Singh, as well as town councillors Kenneth Foo and Chua Zhi Hon, the court found that AHTC “did not run any case, much less a clear case” against them regarding the setting up of payment processes.

The town council not only did not plead the case, but also did not cross-examine the trio on the issue and did not make any closing submissions on it, the court said.

As such, the three of them did not know they had to defend themselves against such a claim, and it would be prejudicial for the court to find them liable for the control failures in the payment processes, the court added, in absolving Mr Singh, Mr Foo and Mr Chua of liability.

The court noted that AHTC had tried to amend its pleadings after the High Court trial and before the appeals were heard, but said this would amount to bringing a fresh application and should not be permitted.

On the contract awarded to Red-Power, AHTC said in its submissions to the court that it was not making a claim against Ms Lim in the issue.

The court thus found Ms Lim liable only to STC for this issue.

The Straits Times has contacted WP for comments.

In response to media queries on Friday, the Ministry of National Development (MND) said it “notes with concern the Court of Appeal’s judgment in the lawsuit brought by STC and AHTC”.

MND noted that AHTC’s town councillors, including Ms Lim, Mr Low and Mr Singh, as well as two former employees – Ms How and Mr Loh – were found by the court to be grossly negligent in implementing AHTC’s payment process.

The involvement of conflicted persons and the absence of safeguards created an inherent risk of overpayment, the ministry said.

MND added that the court had found that the town councillors and employees were grossly negligent when making $23 million worth of payments to FMSS, and that $33.7 million in payments to FMSS and FM Solutions and Integrated Services were co-signed by conflicted persons or employees of FMSS.

Ms Lim was found to have not acted in good faith when she awarded the contracts to Red-Power Electrical Engineering at rates that were four to seven times higher than those offered by incumbent vendors for the same services, the ministry noted.

It said it would continue to monitor the case, including the assessment of damages by the High Court, as public funds are involved.

A second round of hearings will be held at a later date to assess the damages that each defendant will have to pay.

The appeal was heard by a five-judge panel led by Chief Justice Sundaresh Menon and consisting of justices Judith Prakash, Tay Yong Kwang, Woo Bih Li and Andrew Phang. 

The long-running case had come about after an independent panel appointed by AHTC launched a suit in 2017 against the town councillors, including Mr Singh, Mr Low and Ms Lim, over $33.7 million in improper payments made under their watch.

Central to the case is the WP leaders’ hiring of FMSS, which was set up by Ms How and her husband, Mr Loh, who were later appointed deputy secretary and general manager, and secretary of AHTC, respectively, while remaining FMSS shareholders and directors.

Mr Loh died in 2015.

PRPTC had initiated a parallel civil suit to recover losses incurred by Punggol East when the constituency was under the WP and managed by the WP-run town council from 2013 to 2015. The lawsuit has since been transferred to STC.