Hydroshoppe, Menara KL lose bid to temporarily halt KL Tower's takeover by LSH Capital's unit

• In their suit filed on March 27, Hydroshoppe and Menara KL claim that LSH Capital and its units had induced a breach of a contract that the plaintiffs had agreed to with the government in an Aug 1, 2022 meeting.

KUALA LUMPUR (April 8): The High Court on Tuesday dismissed an application by the former operator of the Kuala Lumpur Tower for an ad interim injunction to halt the award of the KL Tower concession to a subsidiary of Lim Seong Hai Capital Bhd (KL:LSH), LSH Service Master Sdn Bhd.

The application was filed by the former operator, Menara Kuala Lumpur Sdn Bhd, and its parent Hydroshoppe Sdn Bhd, which has filed a lawsuit against LSH Capital's wholly owned LSH Best Builders Sdn Bhd as well as its 70%-owned LSH Service Master, as well as the Malaysian government, and the Ministry of Communications and its Minister Datuk Fahmi Fadzil, against the award of the concession.

Also named as a defendant in the lawsuit was LSH Capital's joint-venture partner Service Master (M) Sdn Bhd, which holds the remaining 30% of LSH Service Master.

In dismissing Hydroshoppe and Menara KL's application for a temporary interim injunction on Tuesday, judge Roz Mawar Rozain ruled that the balance of convenience did not favour granting the injunction to the former operator. However, she said the two companies could continue to seek remedy from the trial for their lawsuit, which the court will hear and decide on.

“What it (Hydroshoppe and Menara KL) has is the fifth concession agreement running from July 1, 2024 until March 31, 2025, and the purported minutes (of a meeting stating) that the government may extend the contract,” Roz Mawar said.

“However, these do not culminate in the plaintiffs' favour. Furthermore, there was a request for proposal to take over the concession in March 2024. The argument that (LSH Capital’s) subsidiaries had no expertise to run or manage the KL Tower is not a basis for this court to grant an ad interim injunction,” Roz Mawar added as she dismissed the application.

LSH Service Master was supposed to take over the KL Tower on April 1 this year, but a stand-off occurred after Hydroshoppe and Menara KL initiated the lawsuit against the award of the KL Tower concession, alleging contractual breaches and misconduct that led to the award of the concession to LSH Service Master.

Subsequently, LSH Service Master lodged a police report against Hydroshoppe after it was unable to assume the operations of the skyscraper.

In Tuesday's proceedings, the court also fixed June 9 to hear Hydroshoppe and Menara KL’s interim injunction application.

Roz Mawar also ordered the defendants to file their reply opposing the interim injunction application by April 17, and for Hydroshoppe and Menara KL to reply to that by May 2. Submissions for the application are to be filed by May 16.

She also directed the government and the communications minister, along with the LSH Capital companies, to file their defence by April 21.

An ad interim injunction, a temporary measure, is typically sought urgently, often ex parte (in the interest of one side), prior to a full hearing for an interim injunction, to maintain the status quo and prevent irreparable harm until that hearing can occur. An interim injunction, sought to preserve the status quo throughout the legal process, will, if granted, generally remain in effect until the conclusion of the trial or a further order of the court.

RM1 bil in damages sought

In their suit filed on March 27, Hydroshoppe and Menara KL claim that LSH Capital and its units had induced a breach of a contract that the plaintiffs had agreed to with the government in an Aug 1, 2022 meeting.

They claim that LSH Capital and its units had committed dishonest assistance, and want the award of the KL Tower concession to LSH Service Master be declared void and unlawful.

They are also claiming an estimated RM1 billion in damages, and for the concession of the iconic Kuala Lumpur landmark building to be transferred back to them.

They claim that Menara KL had been managing and maintaining the KL Tower for nearly 30 years, and that Hydroshoppe, a Bumiputera company, had stepped in as a strategic partner by acquiring Menara KL in 2022 from Telekom Malaysia Bhd (KL:TM) to help turn the company around.

This partnership, they allege, was based on the government’s assurances that a new concession would be awarded to Menara KL.

Relying on these assurances, Hydroshoppe committed substantial financial and operational resources to maintain the KL Tower, including investing in key infrastructure and other essential upkeep works based on a Value Management Lab report.

However, following Malaysia’s 15th general election in late 2022 and the subsequent change in government, the Communications Ministry under Fahmi awarded the concession to LSH Service Master, allegedly disregarding the government's prior commitments to Menara KL and Hydroshoppe.

In response to the lawsuit, LSH Capital said the former KL Tower operator's claims were without merit, and that it would challenge the matter in court.

In Tuesday's proceedings, Hydroshoppe and Menara KL were represented by Rosli Dahlan, while senior federal counsel Zetty Zurina Kamaruddin and federal counsel M Bharath appeared for the government and minister. Datuk Arthur Wang represented LSH Capital's subsidiaries and Service Master.

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