The Workers’ Party-run Sengkang Town Council (SKTC) will not drop the lawsuit against its own party members because it owes fiduciary duties to the town council, a law lecturer has suggested.
Citing a landmark High Court ruling last year that town councillors have fiduciary duties to town councils, Singapore Management University lecturer Nicholas Liu said the “only legally safe and practical way forward” would be for SKTC to appoint an independent panel to direct the suit on its behalf.
“This holding was a first for Singapore law,” said Mr Liu, referring to the judgment by Justice Kannan Ramesh in the suit brought by Aljunied-Hougang Town Council (AHTC) against town councillors from the Workers’ Party (WP), which is under appeal.
The WP-run SKTC will take over management of a parallel lawsuit initiated by the Pasir Ris-Punggol Town Council (PRPTC), after the opposition party won Sengkang GRC at the recent general election.
Mr Liu contended in an article published last week on Singapore LawBlog, a database of articles on Singapore law, that the answer for SKTC is “not that simple”. Continuing with the suit by directing the proceedings itself would also lay SKTC open to conflict of interest concerns, he wrote.
“Thus, the only legally safe and practical way forward appears to be for SKTC to appoint an independent panel to direct the litigation on its behalf, as was previously done by AHTC in consultation with the Housing and Development Board,” he said.
“The independent panel would then be in a position to decide whether the suit should continue and, assuming it does, to steer the proceedings,” he added.
SKTC was formed last week along with 16 other town councils. Under the law, town councils have up to 90 days from the date of the order – till Oct 28 – to take over the management of transferred areas.
The new Sengkang GRC consists of Punggol East SMC as well as parts of the former Sengkang West SMC and Pasir Ris-Punggol GRC.
PRPTC had filed the ongoing civil suit against WP chairman Sylvia Lim, former party chief Low Thia Khiang and six other defendants to recover alleged losses incurred by the former Punggol East SMC when it was in WP hands between the 2013 by-election and 2015 General Election.
Said Mr Liu: “If SKTC were to decide on its own to discontinue the suit, the Sengkang town councillors would run a serious risk of being in breach of their own fiduciary duties to SKTC, exposing themselves to potential proceedings in future. Given that the WP has controlled AHTC since the 2015 General Election (although it entrusted the conduct of the litigation to an independent panel), this awkward situation of ‘ownself sue ownself’ is a somewhat familiar one.”
WP MP He Ting Ru, who is the chairman of SKTC, had said in a Facebook post last month that the incoming councillors would ensure all decisions taken on the ongoing lawsuit are “fair, transparent and in accordance with the law” and that they “remain guided by (their) overriding duty to always act in the best interests of the residents of Sengkang GRC”.
Mr Liu said that until the Court of Appeal rules on the case and provides clarity, town councillors must, out of practicality, act on the assumption that they owe fiduciary duties to their town council. To do otherwise would be a dangerous gamble, he added.
The safe bet is that SKTC will appoint an independent panel to conduct the remainder of the suit, consistent with the WP’s recent statement and the precedent it set in respect of AHTC, he said.
The new Sengkang town councillors, having not been involved in previous decisions involving Punggol East, would be safe from any potential claims against them for breach of fiduciary duties, assuming the appointment process of the independent panel itself was beyond reproach, Mr Liu added.
“Regardless of whether the above prediction comes to pass, recent developments and, indeed, the underlying Punggol East dispute make one thing clear: Private law can have a very real impact on the public sphere. Politicians, no less than commercial directors, would do well to pay heed to their private obligations if they wish to avoid public disaster.”
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