EcoFirst unit faces RM20m lawsuit from Kerjaya Prospek over alleged contract breach


ECOFIRST Consolidated Bhd’s wholly-owned subsidiary, BCM Holdings Sdn Bhd, is currently embroiled in a RM20 million lawsuit for an alleged breach of contract, specifically related to termination damages following the cancellation of a contract.

In a disclosure to the stock exchange today, the company revealed that BCM received a writ of summons and a statement of claim dated December 6, 2023, served by Kerjaya Prospek (M) Sdn Bhd (KPM), a unit of Kerjaya Prospek Group Bhd.

The legal action has been filed in the High Court of Malaya in Kuala Lumpur.

KPM is seeking various reliefs from BCM, including a substantial sum of RM20 million, interest accruing from November 15, 2023, costs incurred, and any other reliefs deemed appropriate by the court.

The lawsuit centers around agreed liquidated damages as per Clause 14 of the letter of award dated June 8, 2023, and the supplementary letter of award dated June 15, 2023.

The dispute originated from a contract issued by BCM to KPM for a residential development project, with a total contract sum of RM404.35 million.

Subsequently, on November 15, 2023, BCM issued a letter retracting the contract and asserting that it was not bound by its terms.

In response to this recantation, KPM invoked the termination damages clause outlined in the contract.

Under Clause 14, in the event of a pre-determination of the contract by BCM, the latter is obligated to compensate KPM with a termination damages sum of RM20 million.

Despite a demand for payment by KPM’s legal representatives on November 21, 2023, BCM’s solicitors responded on November 27, 2023, disputing the claim.

As of December 6, 2023, BCM has allegedly failed to meet the required payment.

EcoFirst stated that the estimated financial liability to the group, if the claim proceeds, is the RM20 million being sought.

This would result in a cash outflow for the group, as stated in the legal claim.

However, the company clarified that there is no anticipated operational impact on the group resulting from these legal proceedings.

In response to the lawsuit, BCM has taken a defensive stance by instructing its solicitors to contest the matter and safeguard its interests.

The company is committed to navigating the legal complexities to ensure a fair and just resolution.