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Developer of the prestigious The Peak and Palms initiate legal proceedings against ex-contractor

The Peak, a 55-storey mixed hotel development project comprising one tower of hotel and offices, two towers of residential units, a retail mall and a multi-story car park (the “Project”), being developed by Oxley Gem (Cambodia) Co., Ltd. (“Oxley Gem”), a subsidiary of Oxley Holdings Limited.

Sino Great Wall International Engineering Co., Ltd. (“SGW”) was then engaged as the main contractor for the Project but its parent company fell into financial difficulties and soon mismanagement started and the project came to a standstill for a lengthy period of time.

Oxley Gem, as the developer of the Project, had repeatedly sought to assist SGW to meet the contractually stipulated timelines and even granted goodwill extensions to SGW.

However, there were no significant improvements in the performance of SGW and it became apparent that it was not possible for SGW to complete the Project within any reasonable timeframe in the foreseeable future. In order to mitigate any further delays in the Project, Oxley Gem decided to terminate the contract with SGW in October 2019.

Oxley Gem has since vetted and appointed another main contractor, China Railway Urban Construction Group Co., Ltd. (“CRUCG”), which is a state-owned entity in China with a strong financial position.

Upon termination, SGW was required to vacate the site in order for CRUCG to complete the Project. In defiance of its contractual obligations, SGW refused to vacate the Project site and wrongfully occupied the site.

This has caused further delays in the Project as CRUCG was not able to enter the site to commence work on the Project.

Oxley Gem proceeded to commence legal proceedings to seek an injunction from the Cambodian court to evict SGW from the Project site and to enable Oxley Gem to exercise its lawful rights as developer and owner of the Project.

In the course of the injunction proceedings, SGW was given due opportunity to respond and present their case. However, SGW chose not to do so and the Cambodian courts found merit in Oxley Gem’s case. Oxley Gem successfully obtained an injunction order to evict SGW, their subcontractors and their workers from the Project site on 14 February 2020.

On 25 February 2020, the Cambodian court appointed bailiff commenced the execution of the injunction order at the Project site in a legal and proper manner with the support of competent governmental authorities.

SGW was highly uncooperative with the court bailiff and resisted compliance of the injunction order, eventually causing an altercation with the authority which almost turned into a riot, but didn’t, thanks to some cool heads which prevailed.

Oxley Gem has been advised by its lawyers that such obstruction by SGW to the enforcement of a court order may constitute a criminal offence under Cambodian law.

The court bailiff eventually successfully escorted all SGW personnel from the Project site. As of today, Oxley Gem has regained full control of the Project site and CRUCG will be commencing work on the Project as soon as possible.

Now OXLEY Holdings’ subsidiary, Oxley Gem (Cambodia), has commenced formal legal proceedings in Singapore against its former contractor Sino Great Wall Engineering (SGW) on April 1.

The legal proceeding is to seek compensation from SGW for all damages suffered due to repeated breaches of its contractual obligations, real estate developer Oxley Holdings said in a filing late Thursday night and seen by Khmer Times Friday.

In February this year, Oxley Gem had said it was planning to seek compensation for damages suffered, laying the blame for project delays on SGW. Oxley Gem called on the two performance bonds provided by SGW for the project, and terminated their contract in October 2019.

In mid-March 2020, SGW had applied to the Cambodian courts to get Oxley Gem to suspend work on The Peak, Oxley Holdings disclosed on Thursday.

However, that hearing was rescheduled to a future date to be determined by the Cambodian courts, after SGW failed to attend the hearing for its own application.

The mainboard-listed developer added that its new contractor China Railway Urban Construction Group has since started work on The Peak and construction has “smoothly resumed”.

Currently, none of the above legal proceedings has any impact on the progress of the project, Oxley Holdings noted. Construction is set to complete progressively from mid-2020 to 2021.Extracted from Straits Times/Khmer Times

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