Aljunied-Hougang Town Council and another v Lim Swee Lian Sylvia and others and another suit

• Judge: Kannan Ramesh J
• Judgment Date: 11 October 2019
• Neutral Citation: [2019] SGHC 241
• Citation: [2019] SGHC 241
• Court: High Court (Singapore)
• Published date: 16 October 2019
• Docket Number: Suit No 668 and 716 of 2017
• Plaintiff Counsel: Chan Ming Onn David, Joseph Tay Weiwen, Cai Chengying, Fong Zhiwei Daryl, Lin Ruizi, Zhang Yiting and Mark Yeo (Shook Lin & Bok LLP),Davinder Singh s/o Amar Singh SC, Sngeeta Rai, Lea Woon Yee, Chan Yong Wei, Lin Xianyang Timothy, Tan Mao Lin, Stanley Tan Jun Hao, Hanspreet Singh Sachdev and Gerald Paul Seah Yong Sing (Davinder Singh Chambers LLC)
• Defendant Counsel: Chelva Retnam Rajah SC, Eusuff Ali s/o N B M Mohamed Kassim, Chan Xian Wen Zara, Isaac Riko Chua and Yong Manling Jasmine (Tan Rajah & Cheah),Netto Leslie, Netto Leslie née Lucy Michael, Srijit Jeshua Shashedaran and Roqiyah Begum d/o Mohd Aslam (Netto & Magin LLC)
• Subject Matter: Equity,Fiduciary relationships,When arising,Duties,Trusts,Accessory liability,Recipient liability,Statutory interpretation,Construction of statute,Defences,Limitation,Relief,Against penalties,Remedies,Account,Equitable compensation,Rescission
• Hearing Date: 09 April 2019,18 January 2019,08 October 2018,01 March 2019,12 October 2018,05 April 2019,18 October 2018,10 October 2018,25 October 2018,17 October 2018,23 October 2018,11 October 2018,24 October 2018,16 October 2018,15 October 2018,19 October 2018,09 October 2018,05 October 2018,22 October 2018,29 October 2018,30 October 2018

Kannan Ramesh J: Introduction

This is a case involving claims brought by Aljunied-Hougang Town Council (“AHTC”) and Pasir Ris-Punggol Town Council (“PRPTC”) against several current and former town councillors, as well as officers of the Town Councils and business entities controlled by them, on the basis that they had breached fiduciary duties, duties of skill and care, and/or statutory duties in their management of the Town Councils’ affairs.

The trial of this case has been bifurcated. This means that I have only heard evidence on whether the defendants are liable for breach of their duties as alleged by the plaintiffs thus far. The present judgment deals with those issues. The issue of loss and damages, if any, that should be ordered against the defendants for any breaches that they may be found liable for, will be considered in the next stage of this case. The issue of bifurcation is explained in full at [133] below.

A vast number of breaches and reliefs have been pleaded – in some instances with no clear link drawn between the two – giving rise to both factual and legal issues of significant complexity and adding in no small part to the length of this judgment. As will be evident to the reader, analysing these issues has been akin to battling the Lernaean hydra (as Edelman J aptly put it in Agricultural Land Management Ltd v Jackson (No 2) (2014) 285 FLR 121 (“Agricultural Land Management”) at [7]), with each step of the analysis on one issue spawning several related and inter-connected issues. As such, a table of contents would be helpful to the reader in navigating this judgment, which is set out here:

Table of Contents	Paragraph
INTRODUCTION	[1]
BACKGROUND FACTS	[4]
	DRAMATIS PERSONAE	[4]
	CIRCUMSTANCES LEADING TO THE PRESENT SUITS	[20]
	UNDISPUTED FACTS AND KEY DOCUMENTS	[25]
		Correspondence after the 2011 GE up to 30 May 2011	[26]
		Meeting with CPG on 30 May 2011	[37]
		Presentation by FMSS on 2 June 2011	[38]
		The first Town Council meeting on 9 June 2011	[40]
		Correspondence with AIM regarding TCMS	[41]
		Events in between the first and second Town Council meetings	[43]
		The second Town Council meeting on 4 August 2011	[54]
		Events following the second Town Council meeting	[55]
		Correspondence leading to the award of the first EMSU contract to FMSS	[57]
		Events leading up to the award of the second MA contract and second EMSU contract to FMSS	[65]
		Circumstances leading to the award of miscellaneous contracts to third party contractors	[75]
			(1)	LST Architects	[76]
			(2)	Red-Power	[79]
			(3)	Rentokil	[81]
			(4)	Titan and J Keart	[83]
PARTIES’ CASES	[85]
	THE PLAINTIFFS’ CASE	[86]
		The defendants owe fiduciary duties to the plaintiffs and/or were trustees	[88]
		The defendants breached their duties in the award of the first and second MA and EMSU contracts	[91]
		The defendants breached their duties in failing to ensure meaningful oversight over payments to FMSS and FMSI	[102]
		The defendants improperly awarded contracts to various third parties	[111]
		The first to fifth defendants failed to ensure that payments made to third parties were substantiated by supporting documents or subject to properly authorised and certified invoices	[119]
		The defendants are not entitled to rely on s 52 of the TCA	[123]
		Remedies sought	[124]
	THE DEFENDANTS’ CASE	[134]
		The defendants do not owe fiduciary duties to AHTC	[134]
		The waiver of tender and appointment of FMSS in relation to the first and second MA and EMSU contracts was proper	[135]
		The payments to FMSS were proper	[143]
		The appointment of and payments to third party contractors were proper	[146]
		The defendants acted in good faith and are protected by s 52 TCA	[157]
		The claims are time-barred	[158]
ISSUES TO BE DETERMINED	[159]
MY DECISION ON LIABILITY	[160]
	DUTIES OWED BY THE DEFENDANTS TO AHTC	[160]
		Did the first to fifth defendants owe AHTC fiduciary duties?	[162]
			(1)	The nature of fiduciary duties	[163]
			(2)	The fiduciary duties of municipal councillors: the case law	[167]
				(A)	The distinction between public law and private law	[174]
				(B)	Municipal councillors and their constituents	[186]
				(C)	Municipal councillors and municipal councils	[196]
			(3)	Whether the relationship between town councillors and Town Councils gives rise to fiduciary duties	[206]
			(4)	Whether the volunteer status of appointed members changes their position	[221]
		Did Ms How Weng Fan and Mr Danny Loh owe AHTC fiduciary duties?	[226]
		The duties owed by the defendants to AHTC	[240]
	THE WAIVER OF TENDER AND APPOINTMENT OF FMSS PURSUANT TO THE FIRST MA CONTRACT IN 2011	[245]
		Was the replacement of CPG with FMSS a contingency plan or a fait accompli?	[250]
		Was the waiver of the tender justified in the circumstances?	[269]
		What were the actual reasons for the waiver of the tender?	[281]
		The manner in which the waiver was effected without the involvement of CPG/Mr Jeffrey Chua	[290]
		Conclusion on the waiver of tender for the first MA contract	[300]
		Was there a failure to disclose a conflict of interest in the appointment of FMSS?	[314]
		Other matters pertaining to the appointment of FMSS	[318]
	THE WAIVER OF TENDER AND APPOINTMENT OF FMSS PURSUANT TO THE FIRST EMSU CONTRACT IN 2011	[322]
	THE APPOINTMENT OF FMSS PURSUANT TO THE SECOND MA AND EMSU CONTRACTS IN 2012	[335]
	IMPROPER PAYMENTS MADE TO FMSS/FMSI	[346]
		The control failures	[347]
		The invoice for $106,559 dated 30 June 2011 and the invoice for $166,591 dated 31 July 2011	[362]
		The payment of project management fees	[369]
		Miscellaneous improper payments to FMSS	[382]
		Inconsistencies between the first to fifth defendants’ position and AHTC’s position in AHPETC (CA)	[391]
	THE IMPROPER AWARD OF CONTRACTS TO THIRD PARTIES	[395]
		LST Architects and Design Metabolists	[395]
		The appointment of Red-Power	[408]
		The appointment of Rentokil	[414]
		The appointment of Titan and J Keart	[417]
	IMPROPER PAYMENTS TO THIRD PARTIES	[424]
		12 invoices totalling $171,112.62	[424]
		56 invoices totalling $674,388.70	[430]
	SUMMARY OF FINDINGS ON BREACHES OF DUTIES AGAINST THE FIRST TO SEVENTH DEFENDANTS	[440]
	LIABILITY FOR DISHONEST ASSISTANCE AND KNOWING RECEIPT	[448]
	WHETHER THE CLAIMS ARE TIME-BARRED	[459]
		The knowledge exception under s 24A(3)(b) of the Limitation Act	[464]
		The trust-related exceptions under s 22(1) of the Limitation Act	[475]
	THE DEFENCE OF GOOD FAITH UNDER S 52 TCA	[491]
		Whether the s 52 TCA defence can be invoked against the Town Council	[493]
		Whether the defendants have acted in good faith	[511]
	OTHER DEFENCES RAISED BY THE SIXTH TO EIGHTH DEFENDANTS	[517]
REMEDIES	[527]
	REMEDIES FOR BREACH OF FIDUCIARY DUTIES	[532]
		Equitable compensation	[532]
			(1)	The characterisation of the defendants as trustees and/or custodial fiduciaries	[533]
			(2)	Equitable compensation for breach of custodial fiduciary duties	[545]
				(A)	Accounting	[547]
				(B)	Equitable compensation after Target Holdings and AIB	[553]
				(C)	Assessment of loss	[564]
				(D)	The legal burden of proof	[575]
				(E)	The evidential burden of proof	[579]
			(3)	Causation	[585]
			(4)	Whether the court should order a common account	[603]
			(5)	Summary of the principles applicable to breaches of fiduciary duties	[609]
		Account of profits	[610]
		Whether the MA and EMSU contracts are void or voidable	[614]
			(1)	Rescission for breach of fiduciary duties	[614]
			(2)	Consequences of unlawfulness in public law	[618]

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