Four EkoCheras house owners lose bid for extra late damages after signing settlement, rules Appeals Court

PUTRAJAYA (July 16): The appellate court on Wednesday overturned a lower court's verdict that had awarded additional liquidated ascertained damages or LAD for the late delivery of vacant possession (VP), ruling that the purchasers had already signed settlement letters.

Allowing the appeal filed by property developer Ekovest Capital Sdn Bhd, the three-member panel held that the four purchasers of the EkoCheras residential project had waived their rights to further damages when they accepted and signed settlement letters following the delivery of their VPs in May 2019.

Delivering the unanimous decision, Court of Appeal judge Datuk Ong Chee Kwan said the High Court had erred in law, warranting appellate intervention.

The panel found that the settlement letters did not amount to “contracting out” of statutory rights — meaning the agreements were a legally valid compromise rather than an unlawful waiver of the buyers' protections.

“For avoidance of doubt, we do not treat the settlement letters as instruments where parties seek to ‘contract out’ provisions of the Housing Development (Control and Licensing) Act 1966 (HDA),” Ong stressed. The protections accorded to purchasers under the HDA were not violated, he added, as the settlement letters represented a valid compromise.

"The purpose of the settlement letters is to merely compromise and accrued rights under the HDA, which the purchaser is at liberty to do to settle the matter. It is consistent with the policy to promote settlement," the judge said.

Consequently, the developer was discharged of liability for LAD in relation to both the home parcels and common facilities.

The bench — chaired by COA judge Datuk Azizul Azmi Adnan — found that the settlement payment fully covered the LAD. This was regardless of whether the claim was based on using the booking fee date instead of the sale and purchase agreement date as the commencement point, or extending the completion date to the issuance of the full certificate of completion and compliance (CCC), or both.

The panel, which also included Datuk Nadzarin Wok Nordin, awarded total cost of RM60,000: RM30,000 for each set of appeals.

High Court previously awarded over RM215,000 as additional late damages

The house owners — Tan Tiong Hwa, Lim Swee Pei, Chong Sew May and Chong Chee Sien — launched the legal action against Ekovest between 2020 and 2021 to seek for additional LAD. The dispute involved three residential units in total.

Following a full trial, the Sessions Court ruled in favour of the buyers. It held that the signed settlement letters did not prevent the plaintiffs from claiming the balance of the late delivery damages they had not yet received.

Ekovest subsequently appealed the decision to the High Court, which dismissed the developer's appeal in January last year. Ekovest then obtained permission to appeal to the Court of Appeal, leading to the latest hearing.

At the High Court stage, Judicial Commissioner (JC) Suzana Muhamad Said ruled that the law was clear: settlement letters amounted to an attempt to "contract out" of the statutory protections outlined under the 1989 Regulations, meaning such letters could not bar buyers from pursuing their full legal rights.

Testimonies from the purchasers had also indicated they never intended to give up their right to claim the remaining LAD owed to them, she noted.

The JC also concluded that the initial payouts received by the buyers were only partial payments, saying the total LAD owed should have been calculated from the date the booking fees were paid — rather than the sale and purchase agreement date — up until the full CCC was issued.

She then awarded a total of RM164,619.47 as additional LAD for the three units (RM74,499.70, RM50,107.32 and RM40,012.45 respectively) and a total of RM51,289.56 of additional LAD for common facilities (RM21 820.64, RM16,808.72 and RM12,660.20 respectively). The collective sum came to RM215,909.03.

Datuk J Shamesh and Dashprit Kaur of Jeevapartnership represented Ekovest in the case, while Soh Hayati & Co's Cecilia Tan and Fatin Izyan Fadzil represented the house owners.

..........

Read about emerging trends, data-backed insights, growing subsectors, and expert commentaries in EdgeProp print. Subscribe now for your free copy!