MMC’s unit loses East Coast Expressway-related lawsuit, hit with RM86.2mil in damages

One of the projects under the MTD group - the East Coast Expressway (phase 1)

KUALA LUMPUR: The High Court has ordered MMC Corp Bhd’s unit Projek Lebuhraya Timur Sdn Bhd (Pelita) to pay the Daya group RM86.2mil in damages plus costs and interest in a case that involves the East Coast Expressway (ECE) concession.

In a filing with Bursa Malaysia, the port operation and construction group announced that Pelita was on Wednesday served with a draft judgment of the Shah Alam High Court dated Oct 24 ordering it to pay damages totalling RM68.93mil to Pengurusan Projek Daya Sdn Bhd.

It was also ordered to pay Jurutera Perunding Daya Sdn Bhd RM17.27mil in damages plus costs and interest.

To both parties, Pelita will also have to pay costs of RM50,000 and 5%-per-annum interest to accrue from the damages from Oct 24 up to six years from the judgment date.

To recap, Pelita had signed a 33-year concession agreement with the Government in September 1998 in respect of the ECE project. A month later it appointed Jurutera Perunding Daya and Pengurusan Projek Daya to provide project management services and conceptual and preliminary engineering design services for the ECE, which would be, at the proposed 338km, the country’s second longest after the North-South Expressway.

However, the ECE project was subsequently awarded to another party, MTD Capital, after the Asian financial crisis hit and the project’s cost was revised down to RM2.62bil from RM4.2bil originally proposed by MMC.

Nonetheless, the Daya group claimed that MMC and Pelita were still indebted to it after Pelita had paid what it felt was the “full and final settlement.” MMC and Pelita received a writ of summons and statement of claim from the Daya group in September 2005. Among others, the Daya group claimed RM49.95mil plus interest and costs.

Prior to the latest ruling in favour of the Daya group, the Shah Alam High Court had in December 2011 dismissed Daya’s claim against Pelita’s parent MMC. It held MMC not liable as MMC was not a party and was not privy to any of the agreements between its wholly-owned subsidiary Pelita and Daya.

Daya’s appeal against the decision was dismissed in September last year.