HOW WENG FAN & 2 Ors v PASIR RIS-PUNGGOL TOWN COUNCIL

Facts

This judgment followed the Court of Appeal's main decision in How Weng Fan and others v Sengkang Town Council and other appeals [2022] SGCA 72 in Civil Appeals Nos 196, 197, 198, 199 and 200 of 2019. Those appeals arose from Suit 668 (brought by Aljunied-Hougang Town Council, AHTC) and Suit 716 (brought by the Pasir Ris-Punggol Town Council, later replaced by Sengkang Town Council, STC), which were tried together but not consolidated. The defendants included town councillors Ms Sylvia Lim, Mr Low Thia Khiang, Mr Pritam Singh, Mr Chua Zhi Hon and Mr Kenneth Foo, and senior employees Ms How Weng Fan and the late Mr Danny Loh, together with the managing agent FM Solutions & Services Pte Ltd (FMSS).

In the main judgment the court reversed many of the trial judge's findings. It held that the councillors and employees owed no fiduciary duties and had acted in good faith in awarding contracts, but were grossly negligent in implementing AHTC's payments process, where conflicted persons were involved and safeguards were absent. It also held Ms Lim negligent over the award of a contract to Red-Power Electrical Engineering Pte Ltd. Because AHTC's pleadings appeared inadequate on these two points, the court called for further submissions on what orders it could make. AHTC conceded it had not pleaded the Red-Power claim, which had been brought by STC only.

Issues

1. Whether AHTC had adequately pleaded a claim in negligence against the town councillors over the control failures in the payments process
2. Whether, if not, the councillors could still be held liable to AHTC because no irremediable prejudice would result
3. Whether AHTC should be allowed to make a fresh application to amend its pleadings at this stage
4. How liability between AHTC and STC should be apportioned

Holding

The court allowed Civil Appeals Nos 196, 197, 198 and 199 of 2019 in part and dismissed Civil Appeal No 200 of 2019. All the councillors and employees were liable to STC in negligence for the control failures, and Ms Lim was liable to STC alone over the Red-Power contract. Only Mr Low, Ms Lim, Ms How and Mr Loh were liable to AHTC in negligence for the control failures. All other findings of the trial judge were overturned. Apportionment was left to the assessment of damages, trial costs were reserved to the trial judge, and the parties were invited to file submissions on the costs of the appeals.

Reasoning

The court restated the law on pleadings. Parties are generally bound by their pleadings, subject to two qualifications. Under the material facts principle, only the material facts supporting each element of a claim need be pleaded, not the legal label or result. Under the prejudice principle, an unpleaded point may be allowed if it causes no irreparable prejudice that costs cannot cure. Where material facts are pleaded, the court leans towards allowing the claim unless the other side shows undue prejudice; where they are not, the party advancing the claim must show that both sides engaged with the issue at trial.

Applying this, AHTC had pleaded, albeit loosely, that Ms Lim and Mr Low set up a flawed system that let Mr Loh and Ms How certify and approve payments to themselves, causing loss. These were the material facts of negligence against those four, evidence had been led on the control failures, and AHTC had made submissions against them on a fiduciary footing, so no prejudice arose. The position differed for Mr Singh, Mr Chua and Mr Foo. AHTC never pleaded that they were involved in setting up or running the system, did not cross-examine them, and made no submission against them on it. The case run by the other town council could not be imported into AHTC's separate suit, so holding them liable to AHTC would unduly prejudice them.

A fresh amendment was refused. It would come after judgment at trial and on appeal, would cause prejudice that costs could not compensate, and would give AHTC a second bite at the cherry, its earlier post-trial attempt at a similar amendment having already been disallowed. On apportionment, the court only needed to decide which defendants were liable to which plaintiff; any apportionment of damages belonged to the assessment stage. The court declined to lift the stay of arbitration made in a separate application, HC/OS 835/2017, saying that should be sought there.

From the judgment