Court Of Appeal Upholds LAD Settlement Agreements in Commercial Office-Suite Dispute

In Cosmopolitan Avenue Sdn Bhd v Dickson Woo Boon Siew & Ors [2026] CLJU 420 , the developer’s partial appeal succeeded. The Court of Appeal upheld the validity of the settlement agreements on liquidated ascertained damages (LAD) for late delivery of commercial office suites, set aside the High Court’s finding of fraudulent misrepresentation, varied the LAD awards by applying the agreed miscellaneous-charge set-offs, and dismissed the overpayment refund claim.

By upholding the validity of the LAD settlement agreements and confirming that bespoke commercial SPAs are not subject to the buyer-protection regime of the Housing Development Act, the Court has reinforced the sanctity of freely negotiated settlements in non-residential projects. The decision also serves as a timely reminder that affirmation by conduct (such as chasing payment) can estop a party from later alleging fraud, and that the burden of proving overpayment lies squarely on the claimant. For Developers and Purchasers alike, the ruling underscores the importance of documenting settlements clearly and ensuring any post-settlement disputes are pursued as claims for debt or breach rather than attempts to unwind the agreement. A pragmatic and commercially sensible outcome.

Background of the Case

• The Appellant (Cosmopolitan Avenue Sdn Bhd) developed the Empire City, Damansara project and sold commercial office suites on a “sell-and-then-build” basis using its own bespoke Sale and Purchase Agreement (SPA).
• The eight Respondents (individuals and companies) purchased specific units between January and September 2011.
• Delivery was late. The Respondents claimed LAD under clause 24.2 of the SPA (10 % p.a. on the purchase price paid, from the contractual vacant-possession date until notice of delivery).
• Most Respondents (except the 6th and 8th) signed settlement letters agreeing on specific LAD sums and a mutual set-off against miscellaneous charges owed to the developer.
• The Respondents later sued in the Shah Alam High Court, alleging the settlements were void due to fraudulent misrepresentation (promises of faster payment and possession) and claiming substantially higher LAD calculated up to the Certificate of Completion and Compliance (CCC) or actual key handover.

Court Rulings

High Court

The Judicial Commissioner:

• Declared the settlement letters signed by the 1st–5th and 7th Respondents invalid and void on the ground of fraudulent misrepresentation by the developer’s staff.
• Awarded LAD strictly per the SPA calculation (matching the gross figures in the settlement letters) but without deducting the agreed miscellaneous charges.
• Ordered the developer to refund RM25,394 to the 6th Respondent as overpayment.
• Awarded 5 % interest from the date of filing of the writ and costs of RM30,000 to the Respondents.

Court of Appeal

• Reversed the High Court on the validity of the settlements: no fraudulent misrepresentation was proven; the Respondents had affirmed the agreements by conduct (repeatedly chasing payment).
• Confirmed the LAD quantum must follow clause 24.2 read with clause 25 of the bespoke commercial SPA (not the HDA statutory regime).
• Varied the awarded sums by deducting the agreed miscellaneous charges, resulting in the following net LAD:
  • 1st Respondent: RM38,833.90
  • 2nd & 3rd Respondents: RM38,571.50
  • 4th Respondent: RM32,501.96
  • 5th Respondent: RM40,852.87
  • 6th Respondent: RM56,032.35 (no settlement)
  • 7th Respondent: RM55,710.37
  • 8th Respondent: RM35,110.65
• Set aside the RM25,394 refund order (wrong burden of proof placed on the developer; adverse inference against the 6th Respondent for not calling the key witness).
• Maintained the 5 % interest award and costs (but ordered the Respondents to pay the Appellant RM30,000 costs in the appeal).

Key Takeaways

1. Settlement agreements are binding: Settlement agreements in commercial property disputes remain valid and enforceable unless the party challenging them proves clear vitiating factors such as fraudulent misrepresentation; mere non-payment or delay does not automatically void them.
2. Bespoke commercial SPAs are not subject to HDA rules: Unlike residential housing agreements, bespoke commercial sale and purchase agreements are not governed by the Housing Development (Control and Licensing) Act 1966, so LAD must be calculated strictly according to the express contractual clauses.
3. Affirmation by conduct bars later challenges: Once purchasers affirm a settlement agreement by conduct — such as repeatedly chasing payment — they are estopped from later claiming the agreement is invalid.
4. Burden of proof lies on the claimant for overpayments: In claims for refund of alleged overpayments, the burden rests squarely on the purchaser to prove the payment was made; the developer is not required to disprove receipt.
5. Appellate intervention occurs on clear errors: Appellate courts will intervene and correct a High Court decision where the trial judge misplaces the burden of proof or fails to appreciate the totality of the evidence.