Settlement agreements for liquidated damages in housing contracts are valid under the law, provided they comply with legal statutes and do not require external approvals.

[1] This appeal raises a novel question of whether a settlement agreement regarding liquidated damages for late delivery of vacant possession (VP) of "housing accommodation" between a housing developer and home buyer made pursuant to s 64 of the Contracts Act 1950 ( CA ) is invalid under the Housing Development (Control and Licensing) Act 1966 (HDA) and Housing Development (Control and Licensing) Regulations 1989 (HDR) read with s 24 .

Background

[2] I will refer to the parties in this judgment as they are in the Sessions Court (SC).

[3] The plaintiff company (plaintiff) had entered into a Sale and Purchase Agreement (SPA) with the defendant company (defendant) whereby the plaintiff had purchased parcel No P02-023A (Parcel) in a residential apartment known as "Empire Residence" (Building).

[4] The SPA is in the form provided in Schedule H to HDR.

[5] There was a delay by the defendant in the handing over of delivery of VP of the Parcel to the plaintiff (defendant's Delay). Due to the defendant's Delay, the plaintiff filed this suit in the SC against the defendant (Suit) and claimed liquidated damages totalling RM261,399.63 (Claimed Sum). The Claimed Sum is computed by the plaintiff as follows:

(1) pursuant to cl 25(1) and (2) SPA [cl 25], a sum of RM225,863.02 for the delay in the delivery of VP of the Parcel;

(2) by reason of cl 27(1) and (2) SPA [cl 27], liquidated damages amounting to RM45,172.61 in respect of the delay in the completion of the "common facilities" of the Building; and

(3) the defendant has paid a sum of RM9,636.00 to the plaintiff pursuant to a purported settlement agreement between the plaintiff and the defendant regarding the Claimed Sum.

[6] The defendant applied to strike out the Suit on the ground that the plaintiff and defendant had entered into a settlement agreement regarding the Claimed Sum (defendant's Application).

[7] The SC allowed the defendant's Application with costs on the ground that there had been a settlement agreement between the plaintiff and the defendant regarding the Claimed Sum. Hence, this appeal.

Issues

[8] The following questions arise in this appeal:

(1) Has the plaintiff entered into a settlement agreement with the defendant regarding the Claimed Sum pursuant to s 64 CA ?;

(2) If there is a settlement agreement, whether the settlement agreement is invalid under HDA and HDR read with s 24 CA ; and

(3) If the settlement agreement is valid, is the plaintiff estopped by the settlement agreement from filing the Suit?

The Plaintiff's Contentions

[9] In support of this appeal, the plaintiff's learned counsel, Mr Rajasegaran Karruppiah, has submitted as follows:

(1) the purported settlement agreement between the plaintiff and the defendant is void under HDA and HDR for the following reasons:

(a) based on the "Preamble" to HDA, HDA is a piece of "social legislation" which is intended to protect home buyers. I think Mr Rajasegaran is referring to the long title of HDA (Long Title). The Long Title states that HDA is to "provide for... the protection of the interest of purchasers";

(b) the plaintiff is entitled to the Claimed Sum under cls 25 and 27. Such a right of the plaintiff is a "public right' which is protected by HDA and HDR; and

(c) the purported settlement agreement is a "Supplementary Agreement' to the SPA which requires the "written consent' of the Controller of Housing (Controller) under reg 11(1) and (3) HDR. The purported settlement agreement is invalid because the Controller has not given his written consent to such an agreement.

To support the above contention, Mr Raja