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IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE [2019] SGHC 241 Suit Nos 668 and 716 of 2017 Between (1) Aljunied-Hougang Town Council … Plaintiff in S 668/2017 (2) Pasir Ris-Punggol Town Council … Plaintiff in S 716/2017 And (1) Sylvia Lim Swee Lian (2) Low Thia Khiang (3) Pritam Singh (4) Chua Zhi Hon (5) Kenneth Foo Seck Guan (6) How Weng Fan (7) How Weng Fan (personal representative of the estate of Danny Loh Chong Meng, deceased, in his personal capacity and trading as FM Solutions & Integrated Services) (8) FM Solutions & Services Pte Ltd … Defendants JUDGMENT [Equity] — [Fiduciary relationships] — [When arising] [Equity] — [Fiduciary relationships] — [Duties] [Trusts] — [Accessory liability] [Trusts] — [Recipient liability] [Statutory interpretation] — [Construction of statute] [Equity] — [Defences] — [Limitation] [Equity] — [Relief] — [Against penalties] [Equity] — [Remedies] — [Account] [Equity] — [Remedies] — [Equitable compensation] [Equity] — [Remedies] — [Rescission] TABLE OF CONTENTS INTRODUCTION............................................................................................1 BACKGROUND FACTS ................................................................................7 DRAMATIS PERSONAE .....................................................................................7 The plaintiffs in Suit Nos 668 and 716 .......................................................7 The defendants in Suit Nos 668 and 716....................................................9 CIRCUMSTANCES LEADING TO THE PRESENT SUITS........................................13 UNDISPUTED FACTS AND KEY DOCUMENTS ...................................................14 Correspondence after the 2011 GE up to 30 May 2011 ..........................15 Meeting with CPG on 30 May 2011.........................................................20 Presentation by FMSS on 2 June 2011 ....................................................20 The first Town Council meeting on 9 June 2011......................................22 Correspondence with AIM regarding TCMS ...........................................23 Events in between the first and second Town Council meetings..............24 The second Town Council meeting on 4 August 2011 .............................30 Events following the second Town Council meeting................................31 Correspondence leading to the award of the first EMSU contract to FMSS....................................................................................................32 Events leading up to the award of the second MA contract and second EMSU contract to FMSS..............................................................35 Circumstances leading to the award of miscellaneous contracts to third party contractors .............................................................................38 (1) LST Architects ............................................................................38 (2) Red-Power...................................................................................39 (3) Rentokil.......................................................................................40 (4) Titan and J Keart .........................................................................40 i PARTIES’ CASES .........................................................................................41 THE PLAINTIFFS’ CASE ..................................................................................41 The defendants owe fiduciary duties to the plaintiffs and/or were trustees .....................................................................................................42 The defendants breached their duties in the award of the first and second MA and EMSU contracts .............................................................43 (1) The first MA contract..................................................................44 (2) The first EMSU contract .............................................................45 (3) The second MA contract and second EMSU contract ................46 The defendants breached their duties in failing to ensure meaningful oversight over payments to FMSS and FMSI........................48 (1) Project management fees paid to FMSS .....................................49 (2) Invoice of $106,559 paid to FMSS on 30 June 2011 and invoice of $166,591 paid to FMSS on 31 July 2011...................50 (3) Miscellaneous improper payments to FMSS and FMSI .............50 The defendants improperly awarded contracts to various third parties.......................................................................................................51 (1) LST Architects ............................................................................51 (2) Red-Power...................................................................................51 (3) Rentokil.......................................................................................52 (4) Breaches following the expiry of contracts for services in Punggol-East ...............................................................................52 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 ..............................53 (1) 12 invoices totalling $171,112.62 ...............................................54 (2) 56 invoices totalling $674,388.70 ...............................................54 The defendants are not entitled to rely on s 52 of the TCA......................54 Remedies sought.......................................................................................54 (1) AHTC..........................................................................................55 (2) Additional claims by PRPTC......................................................56 ii (3) Bifurcation ..................................................................................57 THE DEFENDANTS’ CASE ...............................................................................58 The defendants do not owe fiduciary duties to AHTC..............................58 The waiver of tender and appointment of FMSS in relation to the first and second MA and EMSU contracts was proper............................59 (1) The first MA contract..................................................................59 (2) The first EMSU contract .............................................................60 (3) The second MA and EMSU contracts.........................................61 The payments to FMSS were proper ........................................................61 The appointment of and payments to third party contractors were proper.......................................................................................................62 (1) LST Architects ............................................................................63 (2) Red-Power...................................................................................63 (3) Rentokil.......................................................................................64 (4) Inclusion of Punggol-East under contracts with Red- Power and Rentokil.....................................................................64 (5) Appointment of Titan and J Keart under new contracts .............64 (6) Payments of 12 invoices in November 2015 ..............................65 (7) Payment of 56 invoices in November 2015 ................................65 The defendants acted in good faith and are protected by s 52 TCA ........65 The claims are time-barred......................................................................66 ISSUES TO BE DETERMINED ..................................................................66 MY DECISION ON LIABILITY .................................................................68 DUTIES OWED BY THE DEFENDANTS TO AHTC .............................................68 Did the first to fifth defendants owe AHTC fiduciary duties?..................68 (1) The nature of fiduciary duties .....................................................69 (2) The fiduciary duties of municipal councillors: the case law...............................................................................................70 iii (A) The distinction between public law and private law..........73 (B) Municipal councillors and their constituents ....................81 (C) Municipal councillors and municipal councils..................88 (3) Whether the relationship between town councillors and Town Councils gives rise to fiduciary duties..............................94 (4) Whether the volunteer status of appointed members changes their position................................................................101 Did Ms How Weng Fan and Mr Danny Loh owe AHTC fiduciary duties? ....................................................................................................103 The duties owed by the defendants to AHTC..........................................110 THE WAIVER OF TENDER AND APPOINTMENT OF FMSS PURSUANT TO THE FIRST MA CONTRACT IN 2011 ..............................................................112 Was the replacement of CPG with FMSS a contingency plan or a fait accompli?.........................................................................................115 Was the waiver of the tender justified in the circumstances? ................126 What were the actual reasons for the waiver of tender?........................133 The manner in which the waiver was effected without the involvement of CPG/Mr