Gamuda and MMC Corporation have jointly agreed to pay RM109.14 million, including interest, to fully settle a dispute with Wayss & Freytag over the SMART Tunnel project.
“The board of Gamuda has deliberated on the settlement and is of the opinion that it is in the best interest of the joint venture (JV) to agree to the settlement. This is in view that the settlement would save further costs and time as opposed to continuing with the protracted legal process that has been ongoing since 2008.”
Originally, MMC Engineering Group-Gamuda JV awarded a sub-contract in April 2003 to Wayss & Freytag for the construction of SMART project’s North Tunnel Drive. But due to delays in the work progress, the JV rescinded the agreement in January 2006, insisting that this was allowed under the terms of the original agreement.
Consequently, the joint venture was sued by Wayss & Freytag for breach of contract, and the other party also filed legal cases in the adjudication board. The total claims against the JV amounted to RM153.81 million, while that against the contractor stood at RM161.21 million.
Finally, the adjudication board ruled that the JV violated the terms of sub-contract dated April 2003, so it must pay RM102.36 million to indemnify Wayss & Freytag. The grand total amounted to RM109.14 million after taking into account the interest.
Initially, the joint venture contested the board’s decision, but it later decided to accept it, and then the concerned parties agreed to end the protracted case.
“The settlement will not have any material impact on the earnings of Gamuda Group for the financial year ending 31 July 2017. The settlement had been expensed off in prior years,” added Gamuda, which has a 50 percent stake in the JV.
Image sourced from Amusing Planet
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
