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Representatives of the AHPETC outside the High Court on 3 Aug 2015

No indication that court has power to be regulator of town councils: Chief Justice

Representatives of the AHPETC outside the High Court on 3 Aug 2015
Representatives of the AHPETC outside the High Court on 3 Aug 2015 (Photo – Terry Xu)

Judgment was reserved by the court of appeal on Monday (3 June) in the hearing involving the Ministry of National Development (MND) and the Aljunied-Hougang-Punggol East Town Council (AHPETC).

The MND is appealing the High Court’s earlier decision which dismissed the MND’s application for the court to order independent accountants to oversee the disbursements of government grants in AHPETC.

The High Court had found that the MND had failed to establish legal bases for its court application to appoint the independent accountants to the town council.

Justice Quentin Loh, the presiding judge in the High Court hearing, noted in his judgment that the principle of the parliamentary speech by then Minister for National Development, Mr Dhanabalan, on the debate on the Town Council’s Act (TCA) in 1988 was that residents must live with the choices made by their town councils.  Justice Loh, nonetheless, 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.

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

Following Justice Loh’s decision, the MND filed an appeal against the judgment and also to have the Housing Development Board (HDB) admitted as a joint applicant.

MND’s lawyer, Deputy Chief Counsel Aurill Kam Su Cheun, referencing parliamentary debates and the TCA itself, maintained that although the TCA does not specifically say if the courts could order the independent accountants to have oversight in AHPETC, the law says that the Supreme Court can make an order of compliance “as it thinks proper”.

Ms Kam said that in order to ensure proper accounting procedures are adhered to, the appointment of the accountants would enable the courts to have their eyes and ears on the ground and not just issue a “paper judgment”.

Chief Justice Sundaresh Menon however, raised doubts on the courts issuing an order of compliance and asked Ms Kam to help the judges understand what power the court has over the town council, as it would seem uncommon for the judiciary to interfere over the administrative powers vested in the town council.

Judge of Appeal Andrew Phang noted that if it was important that the courts could exercise discretion in such matters, the parliamentary debate surrounding the TCA would have explicitly declared or noted such powers, but there was no such mention.

Ms Kam argued that Parliament had reserved provisions for any mismanagement of the town council in the parliamentary debate of 1988.

However, Chief Justice Sundaresh noted that by reading the full speech by the then-Minister of National Development, the intent of the TCA was to transfer the powers of HDB to the town councils.

He further pointed out that prior to the TCA in 1988, the estates were managed by HDB, and residents would not have been able to file such an application – as what the MND is doing here – against the HDB.

So when the power of the HDB was delegated to town councils, where does this additional power to hold the town councils to account, come from, the Chief Justice asked.

He also noted that the funds disbursed by the MND to town councils do not involve any issue of trust, because what the funds are used for are set out in the TCA.

How the town councils are able to collect funds or use the funds are in the act itself.

Justice Chao Hick Tin questioned if the MND is even suitable to make the application to have the court order independent accountants to oversee fund disbursements in AHPETC, and said that the Deputy Chief Counsel might be stretching the words in the TCA.

He also noted that the word, “minister”, appears in other parts of the Act but not in the section which Ms Kam was relying on for her argument.

Ms Kum replied that the inclusion of the term was because of the need to specify the individual who makes the decision.

The MND’s application to have the HDB included in the appeal was also heard in the same court yesterday.

Ms Kam said that the HDB “has an interest as a capacity of the owner of common property”, noting that the HDB would still own unoccupied flats as there were no tenants in them to pay service and conservancy charges to the town council.

But Justice Phang noted that section 21 (1) of the TCA that Ms Kum was relying on, was referring to “nitty-gritty” issues of the town council and that the section that she is quoting from, has to be taken in context with regards to the intention of the Act.

AHPETC’s lawyer, Peter Low, insisted that the Act has “no express provision” for the courts to bring in the accountants, noting that the law is “too broad” to ask the courts to do anything more than issuing an order of compliance.

Ms Kam clarified that the accountants would be agents of the court acting in the “interest of all parties”. She said the Government is not asking for the accountants to take over the town council, but only to  co-sign disbursements of new monies.

Mr Low disagreed that this is allowed by the TCA and said that the onus is on MND to show that the provisions in the TCA indeed allow such actions to be taken. He further pointed out that the non-compliance of the TCA by AHPETC is a result of the MND withholding grants to the town council, preventing it from transferring the S&CC charges to the sinking fund as stipulated in the TCA.

AHPETC was found to have flouted the Town Councils Act and Town Council Financial Rules by failing to transfer S$12.46 million into sinking fund bank accounts. The Government has since withheld about S$14 million in grants to the town council as a result.

Although the courts are vested with certain powers, such as issuing order for a town council to comply with certain duties or requirements, the court of appeal questioned the extent of such powers – whether this would include the power to order independent accounts to oversee town councils’ management issues.

Referring to this and the 1988 parliamentary debates, Chief Justice Sundaresh said:

“I’m troubled that I don’t see anything in the debates that hint that the court is vested with the considerable power to, in effect, become a regulator of sorts.”

Turning to Ms Kam, he added:

“You’re saying that it is open-ended, that once the application is made, the court has untrammelled and unlimited discretion as to the order it could make.”

Ms Kam responded that the Act “strikes a balance” between allowing certain level of latitude and providing safeguards.

section 21 2
Section 21(2) of the Town Council Act 1988

AHPETC chairman Sylvia Lim declined to comment after the hearing, but Aljunied GRC Member of Parliament, Pritam Singh, said to the media that the town council will “leave the judgment in the hands of the court”.

The judgment will be delivered on a date to be fixed.