KUALA LUMPUR – Allegations of failure to be compensated over four construction projects in Johor has prompted Malaysian Resources Corporation Bhd (MRCB) to take separate legal actions against four subsidiaries of Themed Attractions Resorts & Hotels Sdn Bhd (TARH) at the high court here.
In total, MRCB seeks RM35 million in security for costs from Desaru Peace Holdings Club Sdn Bhd (RM8.8 million); Desaru Corniche Hotel Sdn Bhd (RM9.1 million); Desaru Estate Sdn Bhd (RM8.8 million), and Desaru Convention Centre Sdn Bhd (RM8.3 million).
According to sighted court filings, MRCB had filed actions in April against all four entities over security for costs.
A security for costs action in Malaysia allows a defendant in legal proceedings to secure costs for defending the suit against a losing plaintiff.
Based on the four originating summons filed, MRCB is involved in arbitration proceedings against the four companies over failure to pay MRCB for construction works carried out, and during those proceedings, the defendants all filed counterclaims.
MRCB sought, in its originating summons, costs that would be borne by them for defending against counterclaims filed by all defendants during the arbitration proceedings.
MRCB – whose main shareholder is the Employees Provident Fund – also requested for the high court to suspend all defendants’ counterclaims in the arbitration proceedings until they pay security for costs.
The reasoning behind MRCB’s claims, as stated in the originating proceedings, is that the defendants did not agree to pay security for costs at the arbitration stage, prompting MRCB to file the application at the high court.
Additionally, MRCB stated that there is evidence to show that the defendants are insolvent and will lack the finances to pay costs (in regard to the counterclaims) in the event of an MRCB win during the arbitration proceedings.
According to the court filings, MRCB is relying on audited financial statements of the entities concerned, which reflect financial losses and liabilities, including financial losses by the ultimate holding company Themed Attractions Resorts & Hotels Sdn Bhd – which the four companies are reliant on for some form of financial support.
According to affidavits sworn by TARH managing director Stephanie Saw Ai Lin, the notion by MRCB that the companies are insolvent and lack funds are unsubstantiated.
Commenting on the companies’ financial position, Saw said all four companies are established through strategic investments from the Malaysian government via its parent company, sovereign wealth fund Khazanah Nasional Bhd, which has strong financial standing.
TARH netted losses of RM37.23 million, RM52.41 million, RM32.51 million, RM398.64 million, and RM539.36 million for the financial years of 2015-2019, respectively.
In March, Khazanah said it maintained support for its developmental assets, including TARH, through capital injections in 2021. – The Vibes, August 1, 2022
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