IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE. And

Transcription

1 IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE HC/S 716/2017 Between PASIR RIS-PUNGGOL TOWN COUNCIL (Singapore UEN No. T06TC0011A) And Plaintiff 1. SYLVIA LIM SWEE LIAN (NRIC No. S A) 2. LOW THIA KHIANG (NRIC No. S G) 3. PRITAM SINGH (NRIC No. S E) 4. CHUA ZHI HON (NRIC No. S J) 5. KENNETH FOO SECK GUAN (NRIC No. S G) 6. HOW WENG FAN (NRIC No. S G) 7. THE PERSONAL REPRESENTATIVES OF DANNY LOH CHONG MENG, DECEASED 8. FM SOLUTIONS & SERVICES PTE LTD (Singapore UEN No H) Defendants PLAINTIFF S OPENING STATEMENT SOLICITORS FOR THE PLAINTIFF Mr Davinder Singh S.C. / Ms Sngeeta Rai / Mr Chan Yong Wei DREW & NAPIER LLC 10 Collyer Quay #10-01 Ocean Financial Centre Singapore Tel: Fax: Ref: DS/SRA/CYWI/ SOLICITORS FOR THE 1 ST TO 5 TH DEFENDANTS Mr Chelva Rajah S.C. / Mr K Eusuff Ali / Ms Zara Chan / Mr Riko Issac TAN RAJAH & CHEAH #58-01 UOB Plaza 1 80 Raffles Place Tel: Fax: Ref: CRR/EA/ ZC/RIC/ SOLICITORS FOR THE 6 TH TO 8 TH DEFENDANTS Mr Leslie Netto / Ms Lucy Netto / Mr Srijit Jeshua / Ms Roqiyah Begum NETTO & MAGIN LLC 111 North Bridge Road #11-06 Peninsula Plaza Singapore Tel: Fax: Ref: 4909.SH.17.FM Dated this 28 th day of September 2018

2 1 I. INTRODUCTION 1 1. In the High Court s Judgment dated 27 May 2015 (the 2015 HC Judgment ), the Honourable Justice Quentin Loh found that grave and serious questions had been raised regarding the state of AHPETC s accounts and the validity and propriety of payments previously made by AHPETC to related parties or otherwise, that there had been numerous breaches of the Town Councils Act (Cap 329A, 2000 Rev Ed) ( TCA ) and the Town Councils Financial Rules (Cap 329A, R 1, 1998 Rev Ed) ( TCFR ), that it was a travesty for AHPETC to have ignored their duties and obligations imposed by them by the TCA and TCFR, and that they owed a duty and heavy responsibility to their constituents to run AHPETC properly and it was incumbent on them to put their house and finance in order In the Court of Appeal s Judgment dated 27 November 2015 (the 2015 CA Judgment ), the Court of Appeal found that there was no real dispute that AHPETC had not fully complied with section 35(c) of the TCA, which requires a Town Council to do all things necessary to ensure that its payments are correctly made and properly authorised, and that adequate control is maintained over its assets and expenditure. 3 1 Nothing in PRPTC s Opening Statement is to be treated as limiting the claims and matters in pleadings filed by PRPTC in Suit 716. For the avoidance of doubt, PRPTC continues to maintain and pursue all of its claims as set out in PRPTC s Statement of Claim dated 6 September 2017 ( PRPTC s SOC ) even if they are not dealt with in PRPTC s Opening Statement. Unless terms are specifically defined herein, the definitions used in PRPTC s SOC are adopted. 2 Attorney-General v Aljunied-Hougang-Punggol East Town Council [2015] 4 SLR 474 (SGHC) at [160]: PRPTC s Bundle of Authorities for the Opening Statement ( PBOA ) at Tab Attorney-General v Aljunied-Hougang-Punggol East Town Council [2016] 1 SLR 915 (SGCA) at [98]: PBOA at Tab 14.

3 2 3. The Court of Appeal stated that AHPETC s non-compliances included various lapses in internal controls, commitment to expenditure without requisite approval as well as wrongful payment for goods and services. They also included inadequate oversight of related party transactions with the 8 th Defendant ( FMSS ), and the fact that the key officers of AHPETC had acted in clear conflict of interests when they approved payment to FMSS despite being the directors and shareholders of FMSS Pursuant to the Court of Appeal s Judgment, AHTC and PRPTC appointed KPMG and PwC respectively as independent accountants, inter alia, to establish whether any past payments made by AHPETC were improper and ought therefore to be recovered. 5. The reports issued by KPMG and PwC make it overwhelmingly clear that these non-compliances, lapses and failures stem from a complete and reckless disregard of their duty to protect the residents and public s monies. The residents paid over their hard earned monies to the town council believing and trusting that its members and officers would do everything in their power to ensure that the monies are properly and honestly spent. 6. Alas, that was not to be. Related party transactions were entered into for reasons which had nothing to do with the interests of the residents. Improper payments were made to benefit the elected members supporters who owned FMSS. The system of checks and balances in the town council was so lacking and flawed that it allowed conflicted persons to enrich themselves almost at will. 4 Attorney-General v Aljunied-Hougang-Punggol East Town Council [2016] 1 SLR 915 (SGCA) at [99]: PBOA at Tab 14.

4 3 7. It will be shown that having appreciated the force of the independent findings in the KPMG and PwC Reports, the Defendants have resorted to disingenuous defences. In doing so, they have advanced a narrative that bears very little resemblance to the objective facts and contemporaneous documents. It is striking that despite the KPMG and PwC Reports, there is no honourable acknowledgement of wrongdoing. Instead of using the occasion of this inquiry to show remorse for what they did with public monies, they have come ready to use the witness stand as a soapbox to score political points. 8. It will be shown that the 1 st to 7 th Defendants wilfully breached their solemn trustee, fiduciary, statutory and common law duties and that they and FMSS must account to the real victims, i.e. the residents who have been made to bear the consequences of their town councillors misdeeds. II. THE 1 ST TO 7 TH DEFENDANTS WERE TRUSTEES AND/OR CUSTODIAL FIDUCIARIES OF AHTC AND AHPETC S ASSETS AND PROPERTY, AND OWED FIDUCIARY AND STATUTORY DUTIES AND DUTIES OF CARE AND SKILL IN TORT TO AHTC AND AHPETC 9. The elected members (the 1 st to 3 rd Defendants), appointed members (the 4 th and 5 th Defendants) and officers (the 6 th and 7 th Defendants) of AHTC and AHPETC were trustees and/or custodial fiduciaries of AHTC and AHPETC s assets and property which were entrusted to them by the residents. 5 They were obliged to apply those assets and property strictly in accordance with the terms of their trust, which included the TCA and the TCFR. 10. Further, as elected members, appointed members and officers, and as 5 PRPTC s SOC at [145(b)].

5 4 trustees and/or custodial fiduciaries, the 1 st to 7 th Defendants owed fiduciary duties to AHTC and AHPETC including the core duties of honesty and loyalty. That meant, inter alia, that they had to act honestly and in good faith, were not entitled to profit from their positions or place themselves in a position where their duties and their interests may conflict. Additionally, they were prohibited from acting for their own benefit or for the benefit of a third person without the informed consent of the town council In addition, the 1 st to 7 th Defendants owed statutory duties under and/or arising from the TCA and/or the TCFR, including the duty to do all things necessary to ensure that all of AHTC and AHPETC s payments were correctly made and properly authorised and that adequate control was maintained over the assets of or in the custody of, and over the expenditure incurred by, AHTC and AHPETC. They also owed AHTC and AHPETC duties of care and skill in tort. 12. It is a remarkable feature of this case, and the public would understandably be shocked to learn, that although they were entrusted with the residents and the public s monies, the 1 st to 7 th Defendants deny that they were trustees, custodial fiduciaries or that they owed any fiduciary duties. 13. It is their position that they had no duty to act honestly and in the best interests of AHTC and AHPETC and for proper purposes. It is also their position that they were under no duty not to make a profit out of their trust, not to place themselves in a position where their duties and their interests may conflict, and not to act for their own benefit or for the benefit of a third person without the 6 Bristol and West Building Society v Mothew ( Mothew ) [1998] Ch 1(EWCA) at 18A to 18C, followed in Tan Yok Koon v Tan Choo Suan and another and other appeals ( Tan Yok Koon ) [2017] 1 SLR 654 (SGCA) at [192]: PBOA at Tabs 16 and 20.

6 5 informed consent of AHTC or AHPETC A fiduciary is someone who has undertaken to act for or on behalf of another in a particular manner in circumstances which give rise to a relationship of trust and confidence. 8 The fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense; where that power or discretion to the detriment can be exercised of that other person who is vulnerable to abuse by the fiduciary of his position. 9 Relationships between trustee and beneficiary have traditionally been accepted as fiduciary in nature There is simply no room for doubt that town councillors and officers of town councils receive and are custodians of residents and public monies. Those monies are given to town councillors and officers not to benefit friends and supporters but to carefully and prudently spend for the benefit of the residents and the estate. Values of homes are dependent on how town councillors and officers behave. 11 Misconduct therefore not just affect the pockets of the residents and drains public funds, it can cause property values to diminish. For 7 Defence of the 1 st to 5 th Defendants (Amendment No. 1) dated 24 August 2018 ( 1 st to 5 th Defendants Defence ) at [15] and [17]; Defence of the 6 th to 8 th Defendants (Amendment No. 1) dated 27 August 2018 ( 6 th to 8 th Defendants Defence ) at [15] and [17]. 8 Mothew at 18A to 18C, followed in Tan Yok Koon at [192]: PBOA at Tabs 16 and Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41(High Court of Australia) at 96 to 97, cited in Susilawati v American Express Bank Ltd [2009] 2 SLR(R) 737 (SGCA) at [41]: PBOA at Tabs 17 and Libertarian Investments Ltd v Thomas Alexej Hall ( Libertarian Investments ) [2014] 1 HKC 368 (Hong Kong Court of Final Appeal) at [53]: PBOA at Tab Ms Lim recognises this. In her AEIC, Ms Lim included an extract from the executive summary of an MND Report, which states How our public housing estates are managed is a very significant subject as it impacts the value of the homes and the experience of day-to-day life for the vast majority of Singaporeans living in our HDB estates : Ms Lim s AEIC at [124].

7 6 many, their homes are their most valuable assets. Town councillors and officers are therefore duty bound to protect their value. 16. As was publicly stated in Parliament when the town council system was set up, the whole idea [is] to [v]est the responsibility of the management of the funds as well as the estate with the town council. 12 Parliament expressly said that it intended the members of the town councils to be fully accountable to the residents for their actions and decisions There can be no clearer statement of Parliament s intention that town councillors and officers would be trustees and/or custodial fiduciaries and that they would owe trustee, fiduciary, statutory and common law duties. 18. The 1 st Defendant ( Ms Lim ) and the 3 rd Defendant ( Mr Singh ) have themselves stated on numerous occasions that elected members of town councils are described as custodians and guardians of public funds. 14 When she was Chairman of AHPETC, Ms Lim stated that the elected members of that town council are mindful of [their] duty to be accountable to AHPETC and that they [believe] in transparency and accountability. 15 Mr Singh even went so far as to say that the elected members have a duty to go and recover improper payments (if any) It is therefore deeply troubling that the 1 st to 7 th Defendants deny that they had any such duties. It is even more disturbing that they have even gone so far as to deny that they are under a duty to take steps to recover any improper 12 See PRPTC s Bundle of Documents for the Opening Statement ( PBOD ) at Tab See PBOD at Tab See PBOD at Tabs 8, 13 and See PBOD at Tabs 9 and See PBOD at Tabs 9 and 12.

8 7 payments There is a reason for this volte-face. Knowing that they have breached their duties, they have resorted to denying those duties. 21. This is only part of a highly disturbing pattern of saying whatever is convenient, even if untrue. 22. In her AEIC, Ms Lim claims that AHTC and PRPTC have not alleged in either Suit 668 or Suit 716 that the 4 th Defendant ( Mr Chua ) or the 5 th Defendant ( Mr Foo ) had by their personal actions caused loss to AHTC or AHPETC, and that their alleged wrongdoing is in respect of decisions collectively made at the AHTC meetings and by the Tender and Contracts Committee. 18 On the basis of that false premise, she feigns surprise that AHTC and PRPTC have sued Mr Chua and Mr Foo. 23. Ms Lim knows that this position is false. It is clear from AHTC s Statement of Claim 19 and PRPTC s Statement of Claim 20 that AHTC and PRPTC have sued Mr Chua and Mr Foo for their personal actions and for causing loss to AHTC and AHPETC. As a lawyer she must know that the duties are imposed on each and every member of AHTC and AHPETC, just like duties are imposed on each and every director on the board of a company. The fact that, just like a board, collective decisions are made has no bearing on the incidence and imposition of duties on each individual. They are two separate issues st to 5 th Defendants Defence at [29], [30], [31], [50], [51], [52], [56], [57], [58], [64], [65], [66], [74], [75], [76], [86], [87], [88], [97], [98], [99], [106], [107], [109], [132], [133], [135], [142], [143], [145], [152], [153], [155]; 6 th to 8 th Defendants Defence at [11]. 18 Ms Lim s AEIC at [19]. 19 AHTC s Statement of Claim dated 25 July 2017 at [7.5] and [7.6]. 20 PRPTC s SOC at [18], [28] to [31], [42] to [45], [48] to [51], [54] to [57], [64] to [67], [73] to [76], [83] to [86], [91] to [94], [111] to [114], [118] to [121] and [124] to [127].

9 8 24. It is therefore not open to Mr Chua and Mr Foo to avoid liability for breaching their duties by claiming that these breaches were made in the course of or arose from collective decision-making. 25. There is no suggestion in their pleadings or affidavits that they questioned, probed, inquired into or set out to prevent or to rectify any of the improper contracts and transactions and improper payments, but failed because they were outvoted or blocked by the other members of AHTC. Instead, the evidence suggests otherwise. 21 III. THE 1 ST TO 7 TH DEFENDANTS BREACHED THEIR DUTIES TO AHTC AND LATER AHPETC 26. It will be shown at trial that the 1 st to 7 th Defendants breached their trustee, fiduciary duties, statutory duties and duty of care in tort owed to AHTC and AHPETC as town councillors and officers, with the result that AHTC and AHPETC made the following improper payments to FMSS and third parties: (a) Improper payments to FMSS: (i) AHTC s payment to FMSS under invoice no. FMSS/0601; 22 (ii) AHTC s payment of $2,689, to FMSS pursuant to the 1 st MA Contact and/or the 1 st EMSU Contract and/or the 2 nd MA Contract and/or the 2 nd EMSU Contract between 15 July 2011 and 21 Mr Chua s AEIC at [12], [13], [15], [27] [32], [40], [46], [49], [50], [59]; Mr Foo s AEIC at [13], [20], [30], [41], [45], [55], [56]. 22 PRPTC s SOC at [25] to [27]. 23 PRPTC has calculated the sum of $2,689, based on the payments that AHTC had made to FMSS between 15 July 2011 and 24 January 2013 (i.e. before AHPETC was formed) as set out in rows 1 to 21 of Appendix F.2 of the KPMG Report: see PBOD at Tab 10.

10 9 24 January 2013; 24 (iii) AHPETC s payment of $20,610, to FMSS pursuant to the 2 nd MA Contract and/or the 2 nd EMSU Contract between 29 January 2013 and 14 July 2014; 26 (b) Improper payments to LST Architects in the sum of $2,794,560 in fees which could have been saved if AHTC and later AHPETC had awarded 7 projects to Design Metabolist instead of LST Architects; 27 (c) Improper payments to contractors: (i) For the period 1 July 2012 to 30 June 2013, AHTC could have made significant savings in fees in respect of Maintenance Services if AHTC had exercised the options to extend the contracts with Digo and Terminal 9 instead of appointing Red- Power; 28 (ii) For the period 1 September 2013 to 31 August 2016, AHPETC could have made significant savings in fees in respect of pest control services if AHPETC had awarded the contract to Pest-Pro instead of Rentokil; 29 (iii) For the period 1 April 2015 to 31 March 2016 (i.e. the date on 24 PRPTC s SOC at [53]. 25 PRPTC has calculated the sum of $20,610, based on the payments that AHTC had made to FMSS between 29 January 2013 and 14 July 2014 (i.e. after AHPETC was formed) as set out in the table (save for rows 1 to 21) in Appendix F.2 of the KPMG Report. 26 PRPTC s SOC at [82]. 27 PRPTC s SOC at [71]. 28 PRPTC s SOC at [63]. 29 PRPTC s SOC at [90].

11 10 which the contract with Tong Lee was terminated), PRPTC could have saved $25,910 in fees in respect of Maintenance Services if AHPETC had included the Punggol East Constituency under its existing contract with Tong Lee instead of the Red-Power Contract; 30 (iv) For the period 1 April 2015 to 31 August 2016 (i.e. the date on which the contract with Rentokil expired), PRPTC could have saved its share of the $2, in fees in respect of pest control services for the Punggol East Constituency if AHPETC had awarded the contract to Pest-Pro instead of Rentokil pursuant to the tender called on 12 July 2013; 31 (v) For the period 1 April 2015 to 31 March 2016, PRPTC could have saved $423,147 in fees in respect of conservancy and cleaning works for the Punggol East Estate Zone SK2 if AHPETC had exercised the option to extend contract no. PE 26 with Titan for an additional 12 months instead of calling a new tender and awarding contract no. OT/0338/14 to Titan; 32 (vi) For the period 1 April 2015 to 31 March 2016, PRPTC could have saved $27, in fees in respect of servicing and maintenance of fire protective systems for Punggol East Constituency if AHPETC had exercised the option to extend contract no. PE 40 with J Keart for an additional 12 months instead of inviting a new 30 PRPTC s SOC at [109(a)]. 31 PRPTC s SOC at [109(b)]. 32 PRPTC s SOC at [109(c)].

12 11 tender and awarding contract no. OT/0337/14 to J Keart; 33 (d) Improper payments to other third parties: (i) In November 2015, AHPETC made payments on 22 invoices amounting to $536, even though the supporting documents and/or evidence of work done were missing and/or incomplete; 34 and (ii) In November 2015, AHPETC made payments on 56 invoices amounting to $674, even though they were not properly authorised and/or certified by the Head of Department, i.e. the Property Manager, as required under Rule 56(4) of the TCFR It will also be shown that trust property was misapplied in breach of the 1 st to 7 th Defendants duties as trustees and/or custodial fiduciaries to act strictly in accordance with the terms of the TCA and the TCFR. 28. These breaches give rise to a primary duty to replenish the trust fund, and in that connection, considerations of foreseeability and remoteness are irrelevant It will also be shown, in the alternative, that the 1 st to 7 th Defendants breaches were breaches of fiduciary duties which involved, inter alia, infidelity and disloyalty; that for such breaches, once the plaintiff has shown a loss arising 33 PRPTC s SOC at [109(d)]. 34 PRPTC s SOC at [116]. 35 PRPTC s SOC at [122]. 36 Tongbao (Singapore) Shipping Pte Ltd and another v Woon Swee Huat and others [2018] SGHC 165 ( Tongbao ) at [126]: PBOA at Tab 21; Bank of New Zealand v The New Zealand Guardian Trust Company Limited [1999] 1 NZLR 664 (NZCA) at 687: PBOA at Tab 15

13 12 out of a transaction to which the breach was material, the plaintiff is entitled to recover unless the defendant fiduciary discharges his onus of proving that the loss or damage would have occurred in any event, i.e. without any breach on the defendant s part. Questions of foreseeability and remoteness also do not arise in this kind of case In any event, it is clear that but for the 1 st to 7 th Defendants breaches of trustee, fiduciary, statutory and common law duties, PRPTC would not have suffered the losses that it seeks to recover in this Suit. 31. The 1 st to 5 th Defendants claim that any claims against them personally in relation to and/or arising out of their acts as town councillors are subject to section 52 of the TCA. 38 In other words, the 1 st to 5 th Defendants are claiming, in relation to each of the breaches that are the subject of the Suit, that they acted in good faith in the execution or purported execution of the TCA or any other Act. 32. They have got it completely wrong. Section 52 does not apply to instances where town councillors and officers breach their duties to the town council. In any event, good faith is hardly an apt description of conduct which is unlawful and undermines the residents interests and assets. The improper payment of $92,000 to FMSS 33. It is PRPTC s case that the 1 st to 7 th Defendants caused and/or procured and/or authorised and/or permitted AHTC to pay FMSS invoice no. FMSS/0601 dated 30 June 2011 in circumstances where FMSS had not even been appointed 37 Libertarian Investments at [82], followed in Tongbao at [128]: PBOA at Tabs 18 and 21; Bank of New Zealand v The New Zealand Guardian Trust Company Limited [1999] 1 NZLR 664 (NZCA) at 687: PBOA at Tab st to 5 th Defendants Defence at [16] to [17].

14 13 as AHTC s managing agent and where there was nothing to suggest that the services referred to in the invoice had been satisfactorily delivered to AHTC Further, by failing to inquire into and/or disclose and/or inform AHTC of and/or set right and/or rectify the breaches of duties referred to in the paragraph above, the 1 st to 7 th Defendants breached their fiduciary duties to AHTC and later AHPETC It is also PRPTC s case that the 1 st to 7 th Defendants dishonestly assisted in all the breaches of duties referred to in paragraphs 9 to 11 above. Each of them knew, or ought to have known, that one or more of the others had acted in breach of their duties referred to above. The 1 st to 7 th Defendants knowledge and complicity was such as to render their participation in the payment of FMSS invoice no. FMSS/0601 contrary to normally acceptable standards of honest conduct. 36. Further, it is PRPTC s case that FMSS was a knowing recipient of the sums that it received under invoice no. FMSS/0601. Ms How and Mr Loh were the controlling shareholders and directors of FMSS while being the General Manager of AHTC and Secretary of AHTC respectively. They therefore knew that it was the 1 st to 7 th Defendants breaches which enriched FMSS. 37. One major component of the wrongful payment of invoice no. FMSS/0601 was AHTC s payment of S$92,000 for the provision of Managing Agent Services to Hougang SMC for the month of June The 1 st to 5 th Defendants claim that under the Letter of Intent from FMSS to Sylvia Lim dated 15 June PRPTC s SOC at [25] to [28]. 40 PRPTC s SOC at [29] to [31].

15 14 ( Letter of Intent ) 41, Ms Lim had, in the exercise of the powers delegated to her under section 32 of the TCA, appointed FMSS with effect from 15 June 2011 to provide managing agent services to Hougang SMC, and that FMSS had satisfactorily delivered these managing agent services to Hougang SMC in June Ms Lim also claims in her AEIC that KPMG does not deny that FMSS provided managing agent services to Hougang SMC in June These claims are misconceived and blatantly distort the facts. 39. The Letter of Intent did not state that FMSS would provide managing agent services to Hougang SMC for the month of June The Letter of Intent expressly stated that FMSS appointment as managing agent for AHTC (which included Hougang SMC) would take effect from 15 July Clause 2(a) of the Letter of Intent provided that FMSS would take over the existing staff of the former Hougang Town Council at their existing salary and terms of appointment on 15 June 2011 for preparation of takeover. That did not in any way amount to an agreement to appoint FMS as managing agent of Hougang SMC before 15 July On the contrary, as stated above, the Letter of Intent expressly stated that FMSS appointment as AHTC s managing agent would take effect from 15 July Further, FMSS issued its invoice no. FMSS/0601 even before Ms Lim and Mr Yaw Shin Leong signed the Letter of Intent on behalf of AHTC. FMSS issued its invoice on 30 June Ms Lim signed the Letter of Intent on 8 July 2011, 41 See PBOD at Tab st to 5 th Defendants Defence at [25(d)]; Ms Lim s AEIC at [166]. 43 Ms Lim s AEIC at [165]. 44 See KPMG Report at [5.3.22]: see PBOD at Tab 10; see also PBOD at Tab 2.

16 15 and Mr Yaw signed the Letter of Intent on 18 July It is remarkable that FMSS felt able to issue an invoice when the Letter of Intent had not even been signed. 42. So, even if (which is denied) the Letter of Intent had provided for FMSS to provide managing agent services to Hougang SMC in June 2011, FMSS had no business issuing an invoice for these managing agent services on 30 June As at that date, there was no concluded contract for FMSS provision of managing agent services to Hougang SMC But there is a more fundamental problem. Even if the Letter of Intent was a contract for FMSS to provide managing agent services to Hougang SMC, that contract was entered into in complete and blatant disregard of the TCA and TCFR. 44. The 1 st to 5 th Defendants Defence is that Ms Lim signed the Letter of Intent pursuant to the authority that had been delegated to her under section 32 of the TCA. 46 However, section 32(4) of the TCA provides that any delegation of power, function or duty under section 32 shall not be inconsistent with the TCFR. The TCFR provides that unless waived under [section 74(17)], tenders shall be invited for the execution of works or for any single item of stores or services estimated to cost more than $70, The Letter of Intent stated that FMSS managing agent fees for Hougang SMC would be based on the annual staff cost which is S$1,114, subject to adjustments, if any based on the final audited accounts. It was therefore clear 45 KPMG Report at [5.3.22]: PBOD at Tab st to 5 th Defendants Defence at [25(c)] and [25(d)]; Ms Lim s AEIC at [71]. 47 TCFR, section 74(1): PBOA at Tab 9.

17 16 that FMSS managing agent services would cost more than S$100,000, and that Ms Lim and the other elected members were therefore required under the TCFR to either invite a tender or seek a waiver of tender under section 74(17) of the TCFR. 46. Neither was done. 47. In the circumstances, Ms Lim s appointment of FMSS to provide managing agent services to Hougang SMC was a breach of the Town Council Financial Rules. Ms Lim and Ms How s approval of the payment was therefore an egregious breach of duty. 48. In fact, Ms How admits in her AEIC that the amounts that FMSS charged in their invoice dated 30 June 2011 went beyond the scope of what was agreed under the Letter of Intent. She states in her AEIC that though the Letter of Intent provided that FMSS would take over the staff of Hougang Town Council from 15 June 2011, FMSS sought reimbursement for staff salaries paid out from 1 to 30 June 2011, which amounted to $92, In other words, for the entire month! AHTC paid, with no questions asked. Ms Lim and Ms How approved the payment The fact that FMSS had no qualms about issuing an invoice even before the Letter of Intent was signed and about charging AHTC amounts that clearly went beyond what on the Defendants highest case was due shows the utter failure of controls, that FMSS was left in full control (issuing the invoice and then having one of its directors and shareholders approving payment by AHTC) and 48 Ms How s AEIC at [97]. 49 See KPMG Report at [5.3.21]: PBOD at Tab 10

18 17 that the elected members had abdicated their duties. 50. What is particularly shocking is that Ms How signed off on the invoice as GM even when she was not. The GM at that time was Mr Jeffrey Chua of CPG. But this invoice and payment appears to have been deliberately hidden from him. There would have been no reason to approve and sign under the cover of darkness if everything was considered to be above board That was wrong for at least two other reasons. First, Ms How had a conflict of interests because she was a shareholder and director of FMSS. There is no suggestion that she had disclosed her conflict to the Town Council before she approved the payment and AHTC paid FMSS. Second, Ms How had no business signing the invoice or approving payment of the invoice. 52. The pattern of weaving untruths reveals itself in yet another instance. Ms Lim has claimed that KPMG does not deny that FMSS provided managing agent services to Hougang SMC in June That is downright false. The KPMG Report states that AHTC had made payment of invoice no. FMSS/0601 even though there was no certification that services had been satisfactorily delivered or that they were in accordance with the terms of the applicable agreement The payment of S$92,000 to FMSS in circumstances where there was no certification that services had been satisfactorily delivered or that they were in accordance with the terms of the applicable agreement was also a breach of Rule 61(1) of the TCFR which, inter alia, provides that when work is done under an agreement, there shall be a certification on the voucher that the payments are 50 Ms Lim s AEIC at [16]. 51 See KPMG Report at [5.3.21]: PBOD at Tab 10

19 18 in accordance with the terms of the agreement. 54. In the circumstances, FMSS had no basis to charge AHTC for the provision of managing agent services to Hougang SMC in June 2011, and Ms Lim and Ms How had no basis to approve AHTC s payment of S$92,000 to FMSS for the alleged provision of these managing agent services. 55. The Defendants also claim that PRPTC s causes of action arising from AHTC s approval of payment to FMSS on or before 21 July 2011 of the sum of S$92,000 and which accrued more than six years before 3 August 2017 are timebarred under sections 6 and/or 22 of the Limitation Act (Cap 163, 1996 Rev Ed) That claim is an afterthought (having only recently been introduced) and a non-starter. 57. First, it is not even clear which causes of action the Defendants are claiming are time-barred. 58. Second, section 22(1) of the Limitation Act provides that no period of limitation prescribed by the Act shall apply to an action by a beneficiary under a trust, being an action to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use PRPTC is bringing its claims in relation to the payment of S$92,000 as a beneficiary under a trust. As stated above, as town councillors and officers of 52 1 st to 5 th Defendants Defence at [174A(b)]; 6 th to 8 th Defendants Defence at [100A(a)]; PBOA at Tabs 1 and PBOA at Tab 2.

20 19 AHTC and AHPETC, the 1 st to 7 th Defendants were trustees and/or custodial fiduciaries. Their wrongful payment of the S$92,000 to FMSS entitles PRPTC, as a beneficiary, to bring a claim against them. 60. Further, the 1 st to 7 th Defendants continuing failure to rectify the wrongful payment of S$92,000 from FMSS gives rise to a separate cause of action on the part of AHTC and later AHPETC as a beneficiary against the 1 st to 7 th Defendants. That cause of action continued and revived every day until the issuance of the Writ in this action, and is continuing. 61. Further, and in any event, PRPTC s claim against FMSS for its share of the $92,000 that was wrongfully paid to FMSS is not time-barred. PRPTC, as a beneficiary, is bringing its claim for PRPTC s share of the $92,000 against FMSS as a knowing recipient and constructive trustee of the wrongful payment that was made in breach of trust. 62. Under the Town Councils (Declaration of Towns) (Amendment) Order 2013 (the 2013 Order ), as from 22 February 2013, AHTC became known as AHPETC, and Punggol East Constituency became part of the Town of Aljunied- Hougang-Punggol East. AHPETC therefore was vested with AHTC s previous cause of action against the Defendants in relation both to the wrongful payment of the S$92,000 and to the 1 st to 7 th Defendants continuing failure to rectify the wrongful payment. 63. Under the Town Councils (Declaration of Towns) Order 2015 (the 2015 Order ), as from 1 December 2015, all rights comprised in the undertaking of AHPETC to which AHPETC was entitled and that related to or were connected with any area which became comprised in the Town of Pasir Ris-Punggol (the

21 20 Transferred Undertaking of PE ) became, by virtue of the 2015 Order and without further assurance, the rights of PRPTC. The 2015 Order also provided that all causes of action that related to the Transferred Undertaking of PE could be enforced by PRPTC. 64. In the circumstances, and by operation of the 2015 Order, PRPTC became entitled to enforce AHTC s and AHPETC s causes of action as beneficiaries against the 1 st to 8 th Defendants in relation both to the wrongful payment of S$92,000 and to the continuing failure to rectify the wrongful payment. 65. Third, under section 24A(3) of the Limitation Act, any action for breach of duty shall not be brought either (a) six years from the date on which the cause of action accrued; or (b) three years from the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action, if that period expires later than six years from the date on which the cause of action accrued The earliest date on which PRPTC first had both the knowledge required for bringing a cause of action in relation to the wrongful payment of S$92,000 and a right to bring such an action was 31 October 2016 when KPMG issued the KPMG Report. PRPTC did not know and could not have been expected to know about the wrongful payment before KPMG released its findings in the KPMG Report. 67. PRPTC s claim in relation to the wrongful payment of S$92,000 is 54 PBOA at Tab 3.

22 21 therefore not time-barred. 68. In any event, even if (which is denied) PRPTC s claim in relation to the wrongful payment of the S$92,000 is time-barred, PRPTC s claim in relation to the 1 st to 7 th Defendants continuing failure to rectify the wrongful payment cannot, on any view, be time-barred. 69. The sums which represent the losses which flowed from these breaches of duties, including the breach of duty to recover losses, would have, as from 1 May 2013 and by virtue of the 2013 Order, been apportioned and/or distributed to and/or made available for the use of Punggol East Constituency and/or would have, as from 1 December 2015, and by virtue of the 2015 Order, been transferred to and/or vested in PRPTC insofar as they related to and/or were connected to the Transferred Undertaking of PE. 70. The question of the quantum will be dealt with in the second tranche. The 1 st MA Contract and the 1 st EMSU Contract 71. It is PRPTC s case that the 1 st to 7 th Defendants breached their trustee, fiduciary, statutory and tortious duties to AHTC and AHPETC by causing and/or procuring and/or authorising and/or permitting AHTC to waive tenders in respect of the 1 st MA Contract and the 1 st EMSU Contract and to enter into the 1 st MA Contract, the 1 st EMSU Contract, the 2 nd MA Contract and the 2 nd EMSU Contract in circumstances, inter alia, where: 55 (a) the 1 st to 7 th Defendants had failed to disclose the fact that the appointment of FMSS would place Mr Loh and Ms How in a position of 55 PRPTC s SOC at [37] to [42].

23 22 conflict of interest because Mr Loh and Ms How were shareholders, employees and directors of FMSS; (b) the 1 st to 7 th Defendants failed to disclose the fact that AHTC had made improper payments to FMSS; and (c) to justify the waiver of tender for the 1 st MA Contract, Ms Lim and the 2 nd Defendant ( Mr Low ) made representations which were false and/or inaccurate and did not justify the waiver of a tender. 72. It is also PRPTC s case that between 15 July 2011 and 24 January 2013 and between 29 January 2013 and 14 July 2014, the 1 st to 7 th Defendants caused and/or procured and/or authorised and/or permitted AHTC to pay a total of $2,689, and $20,601, respectively to FMSS pursuant to the 1 st MA Contract and/or the 1 st EMSU Contract and/or the 2 nd MA Contract and/or the 2 nd EMSU Contract in circumstances where there was no meaningful oversight by AHTC over those payments and/or where AHTC s funds were exposed to risks of erroneous and/or improper and/or unauthorised payments to FMSS and/or the risk of misappropriation Further, it is also PRPTC s case that by failing to inquire into and/or disclose and/or inform AHTC of and/or set right and/or rectify the breaches of duties referred to in the paragraph above, the 1 st to 7 th Defendants breached their fiduciary duties to AHTC and later AHPETC as set out in paragraphs 9 to 11 above. 74. It is undisputed that AHTC had a contractual right to require CPG to 56 PRPTC s SOC at [53] to [82].

24 23 continue to supply managing agent services to AHTC for the entire town, including Hougang. As stated in the KPMG Report, under Clause 1.1 of the Part 5 Specifications of the contract between CPG and ATC, CPG was obliged to provide managing agent services for the whole Town, and Town included other properties in any part of Singapore taken over from other town councils Under the Town Councils (Declaration of Towns) Order 2011 (the 2011 Order ), from 27 May 2011, the area comprising Aljunied GRC and Hougang SMC was declared to be a Town known as the Town of Aljunied-Hougang, and ATC became known as AHTC. 76. So, following the 2011 Order, CPG was obliged under its contract with ATC (deemed by virtue of the 2011 Order to be a contract with AHTC) to provide managing agent services to Hougang SMC as well as Aljunied GRC. As Mr Low admits in his AEIC, CPG had managed Town Councils for many years, and had staff who were experienced in township management. 58 Even leaving aside the option to renew for another three years on terms to be agreed, the contract had still 2 years left to run. It will be shown that there was no urgency for AHTC to replace CPG; certainly not by 1 August 2011 (when AHTC released CPG). 77. It will also be shown that the 1 st to 5 th Defendants claim that they had no realistic or reasonable choice but to release CPG from its contract for the provision of managing agent services, and to appoint FMSS as the managing 57 See KPMG Report at [5.5.10] and footnote 67: PBOD at Tab 10; Contract Documents for Provision of Managing Agent Services for Aljunied Town Council For a Period of Three Years With An Option to Continue For a Further Period of Three Years between AHTC and CPG Facilities Management Pte Ltd: see also PBOD at Tab 1 58 Mr Low s AEIC at [39].

25 24 agent instead, is contrived. 59 The evidence will make it clear that just as they did in connection with the Town Council meeting on 4 August 2011, they are seeking to mislead this Court. 78. There is nothing in any contemporaneous document to show that CPG would have disputed or challenged AHTC s exercise of its contractual rights to compel CPG to perform its obligations until the expiry of the CPG Contract or until AHTC called a tender for the appointment of a new managing agent. 79. The evidence will unmistakeably show that Ms Lim and Mr Low decided to bring in FMSS, after which they and the elected members took calculated steps to achieve that objective, in complete disregard for the law and their duties. In short, the urgency which was used to justify the waiver of tenders was invented. It was also not as if their motives were honourable. That reprehensible enterprise was undertaken to achieve collateral and improper purposes. 80. The 1 st to 7 th Defendants claim that by the meeting on 4 August 2011, AHTC was aware that Ms How and Mr Loh were the directors and shareholders of FMSS. 60 It is interesting though that the Defendants cannot point to a single disclosure of that. Ms Lim has been forced to admit that there is no reference in the minutes of any Town Council meeting to the disclosure of the identities of FMSS shareholders It is even more significant that some of those who were at that meeting are not being called by the Defendants to give evidence on oath that they knew at the time of the meeting that Ms How and Mr Loh were directors and 59 1 st to 5 th Defendants Defence at [33] st to 5 th Defendants Defence at [39(a)iii]. 61 Ms Lim s AEIC at [92].

26 25 shareholders of FMSS. 82. It is also deeply troubling that none of the Defendants has disclosed a copy of the Report on Appointment of Managing Agent For Aljunied-Hougang Town Council which Ms Lim claims to have circulated at the meeting on 4 August Ms Lim claims that the version of the report that was circulated at the meeting was essentially a printed copy of the draft which she sent to Mr Yaw and Mr Low on 3 August Her very careful use of the word essentially is plainly a fudge. In any event, it implies that there are differences between the version of the report that was circulated at the meeting and the draft she sent on 3 August The document that she is therefore relying on was not the actual report that was circulated at that meeting. 83. The 1 st to 7 th Defendants also claim that it was inevitable and industry practice for the employees of a managing agent to also serve as the secretaries or general managers of a town council. 64 The Defendants know that that is not the issue. As KPMG made clear in their report, the question is whether shareholders of a managing agent which is commercially driven by the profit motive should be given the power and authority over payments of public monies to themselves The 1 st to 7 th Defendants also procured AHTC to enter into the 1 st EMSU Contract with FMSS under similarly dubious circumstances First, as will be shown, the waiver of the tender on the grounds of 62 Ms Lim s AEIC at [95]. 63 Ms Lim s AEIC at [95]. 64 Ms Lim s AEIC at [195]; HWF s AEIC at [132]. 65 See KPMG Report at [5.2.5.]: PBOD at Tab See KPMG Report at [5.5.49]: PBOD at Tab 10

27 26 urgency was contrived. 86. Second, the Defendants have carefully avoided calling all the town councillors to testify that were aware that Ms How and Mr Loh were shareholders of FMSS. 87. Third, under the 1 st EMSU Contract, FMSS charged AHTC S$38,585 per month from 1 October 2011 to 30 June 2012, i.e. S$347,265 in total for a ninemonth period. Mr Low states in his AEIC that EMSU is a 24-hour service provided by the [Town Councils] to attend to the residents maintenance and urgent essential services requests such a lift rescues. 67 According to Ms Lim and Mr Low, EMSU services are critical. 68 Despite that and the very substantial value of the contract, the 1 st to 5 th Defendants did not even consider it necessary to reduce the contract into writing That was a shocking abdication of duties. The absence of a written contract for such essential and critical services meant AHTC was left in a situation where, if there were disputes, it would be difficult to compel FMSS to perform its obligations. 89. These reckless acts were wrongful in and of themselves. But, as will become apparent as the evidence unfolds, they reveal an agenda that subordinated the interests of the residents to highly improper purposes. 90. The Defendants also claim that PRPTC s causes of action arising from paragraph 42 of PRPTC s Statement of Claim, and which accrued more than 6 67 Mr Low s AEIC at [23]. 68 Mr Low s AEIC at [90]; Ms Lim s AEIC at [128]. 69 See KPMG Report at [5.5.53]: PBOD at Tab 10.

28 27 years before 3 August 2017 are time-barred under sections 6 and/or 22 of the Limitation Act. 91. But paragraph 42 of PRPTC s Statement of Claim pleads and refers to matters that occurred during the 4 August 2011 Town Council meeting. Such matters are not time-barred. In addition, that claim is also a non-starter for the same reasons as set out in paragraphs 56 to 68 above, i.e. that it is not clear what causes of action the Defendants are claiming are time-barred, PRPTC s claim is made as a beneficiary under a trust and the earliest date on which PRPTC first had both the knowledge required for bringing a cause of action and a right to bring such an action was 31 October 2016 when KPMG issued the KPMG Report. 92. The sums which represent the losses which flowed from these breaches of duties, including the breach of duty to recover the losses, would have, as from 1 May 2013 and by virtue of the 2013 Order, been apportioned and/or distributed to and/or made available for the use of Punggol East Constituency and/or would have, as from 1 December 2015, and by virtue of the 2015 Order, been transferred to and/or vested in PRPTC insofar as they related to and/or were connected to the Transferred Undertaking of PE. 93. The question of the quantum will be dealt with in the second tranche. The 2 nd MA and 2 nd EMSU Contracts 94. AHTC awarded the 2 nd MA Contract to FMSS under which it agreed to pay FMSS S$16,752,314 and a separate project management fee of 3.5% for the period 15 July 2012 to 14 July AHTC also awarded the 2 nd EMSU Contract

29 28 to FMSS under which AHTC agreed to pay FMSS S$110,356 per month for the period 1 July 2012 to 30 June As PwC stated in their report, the appointment of FMSS under the 1 st MA Contract was significant. 71 At the time that the tender for the 2 nd MA Contract was called, FMSS was the incumbent managing agent, and potential new vendors may have been hesitant about putting in a bid. The press had reported the fact that AHTC had waived the tender for the 1 st MA and EMSU Contracts, leading to a perception that AHTC had waived the tender because AHTC favoured FMSS. 72 Further, the PwC Report notes that new vendors may have been concerned that FMSS, as a company with no track record, may not have done a good job in the past year, and any new managing agent would have to resolve any issues or problems arising from FMSS management of the town council It will also be shown that the reasons and motives which drove the Defendants to appoint FMSS for the 1 st MA and 1 st EMSU contracts made FMSS appointment under the 2 nd MA and 2 nd EMSU contracts a fait accompli and that the Defendants evidence which seek to give the impression that the town councillors discharged their duties is a smokescreen. 97. The entire process was odious. 98. On 4 May 2012, Ms Lim directed, among others, Mr Loh to collate the materials relating to AHTC s oversight of the tender specifications for RSM Ethos 70 PRPTC s SOC at [47]; 1 st to 5 th Defendant s Defence at [53]. 71 See PWC Report at [5.32]: PBOD at Tab See PwC Report at [5.32]: PBOD at Tab See PwC Report at [5.32]: PBOD at Tab 11

30 29 review. 74 It was not of the slightest concern to her that Mr Loh had a serious conflict of interest. 99. As a shareholder and director of FMSS which was seeking a term, he had a personal and financial interest in seeing that RSM Ethos audit would not find any impropriety in the tender and award process for the appointment of managing agent services for AHTC. On the other hand, as one of the persons responsible for collating materials relating to AHTC s oversight of the tender specifications for RSM Ethos review, Mr Loh had a duty to be thoroughly objective and fair, and to present RSM Ethos with all relevant materials and information, even those which may have led RSM Ethos to identify impropriety and wrongdoing in the course of their audit It gets worse. Despite knowing that residents expected their town councillors to be honest, impartial and beyond reproach, she passed on inside information to help FMSS. On 19 June 2012, Ms Lim sent an to Mr Loh and Ms How to give [them] a heads up, [that] the tender interview comm is likely to ask for some explanation as to the pricing difference from current to the proposed This made the entire process stink and the result was therefore tainted The monies that would have been saved but for these breaches would have, as from 1 May 2013 and by virtue of the 2013 Order, been apportioned and/or distributed to and/or made available for the use of Punggol East Constituency and/or would have, as from 1 December 2015, and by virtue of the 74 See PBOD at Tab See PBOD at Tab 4.

31 Order, been transferred to and/or vested in PRPTC insofar as they related to and/or were connected to the Transferred Undertaking of PE. Those monies or part thereof are therefore sums or losses which PRPTC is entitled to recover by virtue of the 2015 Order The question of the quantum will be dealt with in the second tranche. The improper award of contracts 104. The Tenders & Contracts Committee of AHTC (the Committee ) was formed in April It is not in dispute that the Committee was responsible for vetting the specifications of the tenders called by AHTC and AHPETC, evaluating the tenders that were received, interviewing tenderers, and deciding on the awards of the tenders. 77 At all material times, Mr Singh was the Chairman of the Committee and Ms Lim, Mr Foo and Mr Chua were members of the Committee Between 2012 and 2015, in breach of their trustee, fiduciary, statutory and common law duties, the Committee members, working with Mr Loh and Ms How: (a) caused, procured, authorised and/or permitted AHTC and AHPETC to improperly award tenders and contracts for services to contractors at rates and/or prices which were significantly (in some cases, many times) higher than those offered by AHTC existing contractors for the same services, or to contractors who had not submitted the lowest tender in the tenders called by AHTC and AHPETC, without disclosing any proper reason or justification for doing so; and 76 PRPTC s SOC at [58] 77 PRPTC s SOC at [58]; 1 st to 5 th Defendants Defence at [67].