1. ) YEW TUCK CHOON 2. ) SRI AMAN BAKTI SDN. BHD. v 1. ) BITARA ANGKASA SDN. BHD. 2. ) BINA HARTA HOMES SDN. BHD. 3. ) Lee Lun Teong

Case Significance

Illustrates partial summary judgment under Order 14 rule 3 of the Rules of Court 2012, entering judgment for an undisputed settlement sum while a section 75 Contracts Act 1950 penalty argument confines the remaining heads to trial on quantum.

This High Court decision at Kuala Lumpur concerns an application for summary judgment on part of a claim for breach of a settlement agreement, and it illustrates the difference between a settlement agreement and a consent judgment as modes of settling litigation. The plaintiffs had sued the defendants in an earlier suit and, weeks before trial, entered into a settlement agreement under which the defendants promised to pay agreed sums. The plaintiffs performed their side of the bargain by filing a notice of discontinuance of the earlier suit, but the defendants reneged on the settlement agreement within about six weeks of signing it, prompting the present action to enforce it.

The court's task under Order 14 rule 3 of the Rules of Court 2012 was to decide whether summary judgment could be entered for part of the plaintiffs' claim while sending the balance to trial. It held that this is permissible, and it distinguished between the different components of the settlement agreement. One sum, of RM2,000,000, had been unconditionally agreed under a specific clause to be payable by a fixed date, and the defendants did not dispute that it should have been paid by then and offered no cogent reason for their default. The court found no triable issue about that sum: the plaintiffs had given good consideration by discontinuing the earlier suit, and the defendants were liable to pay the RM2,000,000 in any event.

By contrast, the remaining items, which fixed amounts payable for various heads of loss in the event of breach, attracted a defence under section 75 of the Contracts Act 1950 that those sums were penalties rather than a genuine pre-estimate of loss, and this raised triable issues as to their quantum. The court accordingly entered summary judgment for the RM2,000,000 and set down the quantum of the remaining parts of the claim for trial. The judgment is a useful illustration of partial summary judgment under Order 14 rule 3 and of how a section 75 penalty argument confines, rather than defeats, enforcement of a settlement agreement.