KUALA LUMPUR (Aug 23): Property developer Yong Tai Bhd (KL:YONGTAI) said it will defend itself against a lawsuit filed by construction firm Kerjaya Prospek Group Bhd (KL:KERJAYA) over an alleged unpaid contract dispute, and may also consider countersuing.
In a bourse filing, Yong Tai confirmed that its unit, Apple 99 Development Sdn Bhd, has been served with a writ of summons and statement of claim filed by Kerjaya Prospek (M) Sdn Bhd, a wholly-owned subsidiary of Kerjaya Prospek, for allegedly failing to pay an outstanding residual contract sum of RM105.14 million.
However, Yong Tai contends that the claims by Kerjaya Prospek are without merit, arguing that Kerjaya Prospek breached fundamental terms of the contract by failing to complete the work on time and not adhering to the specified scope of work.
Yong Tai also disputes Kerjaya Prospek's demand to be released from its obligation to fix defective work and challenges the outstanding amount claimed, asserting it is closer to RM36.4 million.
"All allegations in the statement of claim are denied," Yong Tai noted.
Yong Tai said it believes that Kerjaya Prospek has no legal basis for the claims. The company and Apple 99 Development plan to hire solicitors to defend against the claims and may file a counterclaim for all costs, losses and damages incurred.
The claims are not expected to significantly impact the group's financials, Yong Tai noted, as the amount owed to Kerjaya Prospek has already been accounted for in Apple 99 Development's financial statements for the year ending June 30, 2024.
To recap, Kerjaya Prospek had secured a contract worth RM213.75 million from Yong Tai for the main building works of a proposed mixed development project known as "The Apple" in Melaka. The project is a joint venture between Yong Tai and PTS Properties Sdn Bhd.
It includes a 16-storey hotel building with 284 rooms, known as Courtyard by Marriott, a 32-storey service suite building with 361 serviced apartments and an eight-storey car park podium.
On Thursday, Kerjaya Prospek said in a filing that Kerjaya Prospek (M) Sdn Bhd has filed a lawsuit against Apple 99 Development for the disputed contract.
The company is also seeking a declaration that Apple 99 Development breached a settlement agreement from February 2020 and is demanding specific performance of both the settlement and hotel sale agreements.
Due to the unpaid sum and the absence of a third-party sale of the hotel, Kerjaya Prospek claims it is now entitled to proceed with the hotel sale agreement.
Shares in Yong Tai settled one sen or 4.55% lower at 21 sen on Friday, valuing the company at RM89.19 million. Meanwhile, Kerjaya Prospek dipped one sen or 1.21% to 82 sen, translating into a market capitalisation of RM469.97 million.