Housebuyers who accept LAD settlements cannot seek more compensation, court rules

 The Court of Appeal says that settlement letters signed by purchasers who accept late delivery payments amount to a ‘full and final discharge’.

The Court of Appeal held that while the Housing Development Act prevents developers from contracting out of statutory protections, it does not stop homebuyers from accepting a settlement for claims they have already become entitled to make after a dispute has arisen.

PUTRAJAYA:

Housebuyers who accept liquidated ascertained damages (LAD) under settlement letters from a developer cannot later claim additional compensation for the same delay, the Court of Appeal has ruled.

A three-member bench comprising Justices Azizul Azmi Adnan, Ong Chee Kwan and Nadzarin Wok Nordin held this in allowing appeals by Ekovest Capital Sdn Bhd (formerly Prompt Capital Sdn Bhd), the developer of the EkoCheras mixed-development in Kuala Lumpur.

Delivering the broad grounds of judgment, Ong said the settlement letters signed by the purchasers amounted to “a complete accord and satisfaction” and a “full and final discharge” of Ekovest’s liability for LAD in respect of both the housing units and common facilities.

He said the settlement barred any subsequent claim for additional LAD, regardless of whether the claim was based on using the booking fee instead of the sale and purchase agreement as the commencement date, extending the completion date to the issuance of the full certificate of completion and compliance (CCC), or both.

He also said the purchasers’ claims for the balance of LAD were covered by the discharge contained in the settlement letters.

Ong said the settlement letters did not amount to an attempt by the developer to contract out of the protections afforded to purchasers under the Housing Development Act (HDA).

“The protections afforded to purchasers under the HDA are not diluted under the settlement letters.

“The purpose of the settlement letters is merely to compromise accrued rights under the HDA, which purchasers are at liberty to do to settle the matter. It is consistent with the policy of promoting settlements,” he said.

The court ordered purchasers Tan Tiong Hwa and Lim Swee Pei to pay Ekovest RM60,000 in costs.

The appeals arose from two consolidated sessions court suits filed by Tan and Lim against Ekovest, in which they sought additional LAD for the late delivery of their units and common facilities despite having accepted partial LAD payments and signed settlement letters.

The purchasers argued that the settlement letters were signed only to obtain payment and vacant possession, and could not deprive them of their statutory rights under the HDA and the sale and purchase agreements.

They also contended that LAD should be calculated from the dates they paid their booking deposits, in line with a Federal Court ruling.

Ekovest argued that the purchasers had voluntarily accepted the settlement payments as full and final settlement of their claims, thereby preventing any further claim for LAD.

The High Court had ruled in favour of the purchasers, holding that the settlement letters did not extinguish their statutory rights, and ordering Ekovest to pay additional LAD calculated from the booking deposit dates until the issuance of the full CCC, after deducting sums already paid.

However, the Court of Appeal held that while the HDA prevented developers from contracting out of statutory protections, it did not stop the housebuyers from accepting a settlement for claims they had already become entitled to make after a dispute had arisen.

J Shamesh and Dashprit Kaur appeared for Ekovest, while Cecilia Tan and Fatin Izyan Fadzil represented Tan and Lim. - FMT