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High court dismissed MND’s applications to appoint independent auditors in AHPETC

supremecourt

The High Court has dismissed the application by Ministry of National Development (MND) to impose conditions onto grants disbursed to the town council and to have the court to appoint independent auditors to Aljunied-Hougang-Punggol East Town Council  (AHPETC) in a judgement passed yesterday.

Justice Quentin Loh said in his 83-page judgement that MND failed to establish legal bases for its court application to appoint the independent accountants to the town council.

MND had earlier applied to the court on March 20, to appoint independent accountants to AHPETC for the said purpose of safeguarding government grants.

In its originating summons, MND declared that it has a legal or equitable interest in the grants-in-aid disbursed or to be disbursed by MND to AHPETC or its predecessor, AHTC to ensure that to recover payment that are not properly authorised or lawfully made.

MND sought to designate and appoint independent auditors who will co-authorise and co-sign all payments in excess of S$20,000 from segregated bank accounts established by AHPETC and grants payable for financial years 2014/15 and 2015/16 from MND and to oversee the payments to ensure all proposed payments out of the special accounts are correctly made and properly authorised.

The independent auditors will also identify whether the payments made by AHPETC have been correctly made. They would also be empowered to demand and collect for the recovery of town council money which are incorrectly paid out and also take appropriate actions in the event if breach(es) of duties or unlawful conduct by individuals are found.

No authority shown in support of MND's claim of its right to seek remedy and MND minister already has power to impose conditions on grants-in-aid

"...It would be strange, to say the least, for the MND to be said be the beneficial owner if the proper administration and expenditure of the aforementioned funds would directly benefit residents or the HDB." wrote Justice Loh

Justice Loh agreed with representing lawyer for AHPETC, Mr Peter Low that the conditions such as the appointment of auditors are matters left to the Minister under section 42 of the Town Council Act as the provision provides the Minister with the power to subject the grants-in-aid to such conditions as he may determine.

"No order is required from the court," wrote Justice Loh and went on to note that it would be up to AHPETC to accept the conditions set by the Minister if he chooses. He also noted AHPETC can always choose to opt for judicial review proceeding, should they feel the conditions are unreasonable.

Justice Loh pointed that it is clear from the parliamentary speeches that the Town Council Act was to allow Town Councils latitude to operate and manage their funds, operate with the necessary powers, impose the necessary duties, obligations and requirements and to put in sufficient safeguards.

Quoting from the speech made by the then Minister for National Development, Mr Dhanabalan, Justice Loh noted that the principle of his message on the Town Council Act (TCA) is that residents must live with the choices made by their town councils.  But he cautioned that it should not be construed as an indication that a town council can breach the duties imposed on it by the TCA with impunity.

Attorney-General’s Chambers deputy chief counsel for litigation Aurill Kam had argued that MND has regulatory oversight of the Town Council Act and since AHPETC holds the town council money for the purposes of the town council, the MND has an interest in ensuring that town council money are correctly, properly and lawfully applied and secondly, any town council money wrongfully paid are recovered, thus must have a remedy to require AHPETC to take appropriate steps to safeguard town council moneys and pursue recovery of any town council money wrongfully paid out.

The judge commented in his judgment, "Simply because the TCA delineates certain functions to the Minister does not mean that the MND has an unfettered right to come to court to seek a Town Council's compliance with its duties. Ms Kam has not shown me a single authority, other than the provisions of the TCA, in support of her statutory mandate argument that the MND has a right to seek a remedy to require a Town Council to comply with its duties under the TCA simpliciter.”

Justice Loh said in his conclusion that it is a "travesty for AHPETC to have ignored their duties and obligations imposed on them by the Town Councils Act and Town Council Financial Rules."

He added, "They owe a duty and a heavy responsibility to their constituents to run AHPETC properly and it is incumbent on them to put their house and finances in order."

Justice Loh emphasised that nothing in his judgement can stop any resident or HDB from bringing an action against AHPETC if they wish to do so.

MND notes in its press release that the Court has agreed with MND’s concerns about AHPETC and repeated the judge's opinion on the matter. It added that it will study the judgement carefully and consider what the next steps should be.

In response to the high court judgement, AHPETC chairman Sylvia Lim said, "We respect the court's decision and will be studying the judgment in detail.  In the meantime, we remain focused on filing our audited accounts for FY 13/14 and FY 14/15, and on continuing to improve our financial processes."
Below is the judgement by the high court in full

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