IN THE HIGH COURT OF FIJI
(WESTERN DIVISION AT LAUTOKA)

Civil Action No. HBC 022 or 2007L

BETWEEN:

JK BUILDERS LTD,
a limited liability company having its registered office at Nadi, Fiji
PLAINTIFF

AND

GREAT PACIFIC HOTELS LIMITED, 
a limited liability company having its registered office at Pricewaterhouse Coopers, 
Level 8 Civil Tower, Victoria Parade, Suva 
DEFENDANT

Appearances 
Plaintiff: Mr V. Mishra of Counsel
Defendant: Dr MS Sahu Khan of Counsel

Dates of Hearing: 16, 17, 18 April 2008, 21, 22, 23 April 2008
Date of Judgment: 20 November 2008

JUDGMENT

Building contract; Fiji Standard Form of Building Contract (Fiji SFBC); Payment on Certificate; No Certificates issued; Architect as ‘agent’ of Employer; Initial fencing, signage of site; Building fails to commence; No engineer’s certificate for compacting; Problems with finance; Repeated meetings between Builder/Contractor, Architect and Employer and Officers of Employer; Dispute as to agreement for advance payment; Dispute as to amount of advance payment; Parties’ obligation to commit to writing under Fiji SFBC; Claim in contract; Terms of Fiji SFBC must determine dispute

Mohammed Nasir Khan and Ors v. Tower Insurance (Fiji) Ltd (Civil Appeal No. ABU0057 of 2006, 19 November 2008)
Taylor v. Laird (1856) 25 LJ Ex 529
Stubbs v. The Holywell Ry (1867) LR 2 Ex 311

1.	Agreement, Disagreement and Issues

On or about 11 January 2005, JK Builders Ltd (JK Builders) and Great Pacific Hotels Limited (Great Pacific) entered into a Fiji Standard Form of Building Contract (Fiji SFBC) in respect of a building complex (or resort) comprising apartments and villas in Nadi . The Fiji SFBC lies at the heart of this litigation. JK Builders and Great Pacific are in dispute as to matters arising under it.

1.1	The Minutes of Pre-Trial Conference under Order 34 indicate that JK Builders and Great Pacific agree on six matters, leaving nineteen issues to be determined.

1.2	(a)	Agreed Facts: JK Builders and Great Pacific agree:

1.	On or about 11 January 2005 JK Builders and Great Pacific entered into the Fiji SFBC whereby JK Builders was to construct apartments and villas at Lot 1, DP 8048, Nadi (the property).

2.	In consideration for the Fiji SFBC, Great Pacific was to pay JK Builders the total sum of $8,500,100.00, that sum to be paid under the terms and conditions of the Fiji SFBC.

3.	Under the Fiji SFBC, Great Pacific’s Architect named therein was to issue interim Certification showing the amount due and payable from Great Pacific to JK Builders for work done.

4.	The Fiji SFBC provided for liquidated and ascertained damages at the rate of $24,519.00 per week if JK Builders failed to complete the work by the Date of Completion for the time the work remained incomplete.

5.	Great Pacific was to give possession of the property to JK Builders on 1 February 2005 and the work was to be completed by JK Builders by 1 September 2006.

6.	Possession of the property was given to JK Builders on 1 February 2005.

1.3	(b)	Issues for Determination: JK Builders and Great Pacific identify the following issues for determination:

1.	Whether Great Pacific’s Architect was to issue interim Certificate at one month intervals showing the amount due to JK Builders for work done.

2.	Whether JK Builders prepared the construction and did construct boundary fence, signboard and infrastructure on the property and did the work on the same.

3.	
(a)	Whether there have been delays by Great Pacific in payment of amounts due and payable.
(b)	Whether JK Builders has not been able to proceed with the construction of the project due to delays by Great Pacific in payment despite demand having been made.

4.	Whether Great Pacific has failed to pay JK Builders for work done by JK Builders to date. Whether in respect of work done by JK Builders the amounts are due and payable under the Fiji SFBC. 

5.	Whether JK Builders has held back workers, job foremen, subcontractors and labourers for said works and had not submitted tenders on other works or taken other works due to its commitment to construct Great Pacific’s building as contracted.

6.	Whether JK Builders has been unilaterally changing the terms and conditions of the Fiji SFBC and in particular: -

(i)	Increased the amount to be payable by Great Pacific to JK Builders as the Fiji SFBC Price; and
(ii)	Increased the time within which the Fiji SFBC was to be completed.

7.	
(a)	Whether JK Builders has suffered damages consisting of lost profits from the Fiji SFBC and damages consisting of expenses included in mobilizing workers, job foremen, subcontractors and labourers for Great Pacific’s works only to have Great Pacific delay and/or defer the work.

(b)	Whether such damages (if any) are payable by Great Pacific.

8.	Whether JK Builders was itself responsible for the losses and damages it claims and whether JK Builders was in breach of contract in not carrying out the works under the Fiji SFBC.

9.	
(a)	Whether JK Builders waited for a time for Great Pacific to start its project.

(b)	Whether JK Builders lost the chance to tender on other works during the time it waited for Great Pacific to start its project and had therefore lost the opportunity of profit thereon.

10.	Whether JK Builders determined the Fiji SFBC on the basis of Great Pacific’s failure to proceed under the Fiji SFBC and whether JK Builders has unlawfully determined the Fiji SFBC and has been in itself in breach of the Fiji SFBC.

11.	
(a)	Whether JK Builders is entitled to claim $24,519.00 per week as damages for breach of contract for the period from 1 February 2005 to 1 September 2006 when the works were to be completed.

(b)	Whether Great Pacific is entitled to claim from JK Builders as liquidated and ascertained damages at the rate of $24,519.00 per week from 30 September 2006 until date of judgment.

12.	Whether JK Builders demanded for payment from Great Pacific and whether Great Pacific refused to pay the amount owning to JK Builders.

13.	Whether JK Builders and/or Great Pacific are entitled to interest at the rate of ten per centum per annum on the amounts claimed in the claim of JK Builders and/or the Counter Claim of Great Pacific.

14.	Whether JK Builder’s action is frivolous and vexatious.

15.	Whether JK Builders was to complete work under the Fiji SFBC by 1 September 2006 or 30 September 2006.

16.	Whether JK Builders is in breach of the Fiji SFBC and whether JK Builders failed to complete the works under the Fiji SFBC.

17.	Whether JK Builders was aware that Great Pacific intended to have constructed the hotel under the Fiji SFBC and to carry on the business as an hotelier.

18.	Whether Great Pacific is suffering and continues to suffer loss of income by not being able to carry on the hotel business.

19.	Whether Great Pacific breached the Fiji SFBC and whether Great Pacific is solely responsible for all delays and damages suffered as a consequence thereof.

2.	Parties & Fiji Standard Form Building Contract (Fiji SFBC)

The Fiji SFBC is Exhibit P1C and Document 1 in the Agreed Bundle of Documents. It is signed for Great Pacific by Shahed Ali, who bears the title ‘Co-Director’ and Vjantika Patel, titled ‘Co-Secretary’. For JK Builders, it is signed by Jiten Kumar (JK Builders’ principal).

2.1	The articles of agreement provide amongst other matters that the parties are Great Pacific and JK Builders and that Great Pacific (styled in the Fiji SFBC as ‘the Employer’) is desirous of ‘Building apartments/villas and associated facilities "the Works" at Nadi Bay Road’.

2.2	The Fiji SFBC further provides that Great Pacific ‘has caused Drawings and Bills of Quantities showing and describing the work to be done to be prepared by or under the direction of Maisuria Design Limited of Martintar Nadi’. 

2.3	JK Builders (styled in the Fiji SFBC as ‘the Contractor’) is said to have ‘supplied the Employer with a fully priced copy of the said Bills of Quantities ("the Contract Bills")’.

2.4	The Fiji SFBC says it is ‘agreed as follows’:

For the consideration hereinafter mentioned the Contractor will upon and subject to the Conditions annexed hereto carry out and complete the Works shown upon the Contract Drawings and described by or referred to in the Contract Bills and in the said Conditions.

The Employer will pay to the Contractor the sum of EIGHT MILLION FIVE HUNDRED ONE THOUSAND DOLLARS VIP ($8,500,100.00) thereinafter referred to as ‘the Contract Sum’) or such other sum as shall become payable hereunder at the times and in the manner specified in the said Conditions.

The term ‘the Architect’ in the said Conditions shall mean Miasuria Design Limited of Martintar, Nadi …

The term ‘the Quantity Surveyor’ in the said Conditions shall mean Keith William of Brisbane or, in the event of his death or ceasing to be the Quantity Surveyor for the purpose of this Contract, such other person as the Employer shall nominate for that purpose, not being a person to whom the Contractor shall object for reasons considered to be sufficient by an arbitrator appointed in accordance with clause 33 of the said Conditions.

3.	Matters in Issue in Trial

Matters addressed by the oral evidence in the course of the trial, and by reference to agreed and tendered documents, appearing to be of greatest import to the parties were:

1.	Whether there was a problem with and/or delays in financing of the building of apartments, villas and associated facilities (the building project) on the part of Great Pacific, which led to JK Builders not commencing on the date stipulated in the Fiji SFBC for commencement.

2.	Whether many meetings were held between JK Builders and Maisuria Design and Great Pacific at which the delays or problem with financing was the main or a topic, or a matter underlying the issues discussed.

3.	Whether JK Builders asked for and Great Pacific agreed to payment of a sum ‘in advance’ (in consequence of the delays or problem with financing).

4.	If ‘yes’ to item 3, then what was the sum agreed to be paid ‘in advance’ by Great Pacific to JK Builders.

5.	Were persons or any of them attending the meetings held between JK Builders and Maisuria Design and Great Pacific authorised and/or with a status in Great Pacific to bind Great Pacific to any matters discussed and agreed in the meetings.

6.	Was any of those attending the meetings held between JK Builders and Maisuria Design and Great Pacific authorised to agree to payment of a sum ‘in advance’.

7	Did any of those attending the meetings held between JK Builders and Maisuria Design and Great Pacific agree to payment of a sum ‘in advance’.

8.	Whether the land was required to be compacted before JK Builders commenced the building project.

9.	If ‘yes’ to item 8, then was the land in fact compacted so that JK Builders could commence the building project.

10.	If it was so required, and was in fact compacted, was this done at a date which enabled JK Builders to commence the building project on the date set in the Fiji SFBC (1 February 2005).

11.	If it was required and was in fact compacted, was an engineer’s certificate necessary to be produced to JK Builders before JK Builders could commence the building project.

12.	If ‘yes’ to item 11, was the engineer’s certificate produced to JK Builders.

13.	If the engineer’s certificate was produced to JK Builders, was it produced at a date which enabled JK Builders to commence the building project on the date set in the Fiji SFBC.

14.	Was JK Builders required to provide information to Maisuria Design upon which Maisuria Design would make a Certificate for payment by Great Pacific to JK Builders for work done on the building project.

15.	If ‘yes’ to item 14, did JK Builders provide information to Maisuria Design to make a or any Certificate for payment to JK Builders for work done on the building project.

16.	If ‘yes’ to item 15:

(a)	was a Certificate drawn up and if so, was the sum paid to JK Builders.
 (b)	if no Certificate was drawn up then why not.

17.	Were any Certificates for payment by Great Pacific to JK Builders for work done on the building project ‘made up’ by Maisuria Design for payment to JK Builders.

18.	Was any work done on the building project by JK Builders.

19.	Were any monies paid to JK Builders by Great Pacific for work done on the building project.

20.	Did JK Builders suffer loss and damage in consequence of the failure of the building project to go ahead because of Great Pacific’s delay in finance (if established).

21.	Did Great Pacific suffer loss and damage in consequence of JK Builder’s failure to commence the building project.

3.1	Referring to evidence in relation to each of the above matters assists in addressing the items listed for determination at the pre-trial conference. I have taken into account all the evidence, however, here do not traverse all. That referred to is an indication of the material available to the Court.

4.	Delay in Finance

Problem with and/or delays in financing building project: Yes – a preponderance of evidence indicates there was a problem and/or a delay in financing the building project.

Many meetings held between JK Builders, Maisuria Design and Great Pacific at which topic was delays/problems with financing: Yes – the evidence is that there were such meetings: a (not insignificant) number over the relevant period.

4.1	There was a conflict between the parties on this issue. On all the evidence, that there was a problem with or delay in financing the building project is indicated. I accept the evidence of JK Builders that this was in issue during the relevant period. For example, Mr JJ Kumar, student and son of Mr J Kumar, and who worked at JK Builders as Accounts and Administration Clerk during his university breaks, said: ‘Just before we were going to start the contract in February 2005 we met Shahed of Great Pacific Hotels and he informed us that they were still waiting for finance to come through.’ Mr JJ Kumar said he identified this date because in late February 2005 he left Fiji to continue his studies. He ‘met Shahed of Great Pacific’ ‘before leaving for studies in February 2005’ and it was then Shahed informed them of ‘still waiting for finance’. 

4.2	The ‘still waiting for finance’ problem pertained later in the year. Mr JJ Kumar said that he was not sure of the date but thinks it was July 2005, when he was back in Fiji that he was told that they were ‘still waiting for finance to come through’. Letters were sent by JK Builders to MDL (Maisuria Design), and Shahed said that they were still waiting for finance. Mr JJ Kumar said he believed Shahed Ali was a shareholder and Director in Great Pacific and he met him twice he thinks. He recalled the conversation with Shahed re the finance. He said that in July ‘we were still asking them by when would finance be arranged’. Upon his return to Fiji after November 2005, Mr JJ Kumar said, he as asking when the project was to start and Shahed ‘just kept on saying they were trying to sort out finance and once in place it will start’. 

4.3	Other witnesses said similarly, including Mr J. Kumar and Mr Hemant Kumar. Amongst other matters, Mr Hemant Kumar said that there were ‘many phone conversations’ about the project, and whether it should ‘move forward, stop it, tell everyone how deal with it’. Mr Hafiz Khan said he knew of the building project and was ‘involved in the negotiations to some extent’. He said that the ‘actual project construction building did not start’. He said it was an issue about the ‘owner being able to fund the project’. There were ‘many meetings the contractor, owner and architect attended’. He said that the ‘problem at all times was the position of the developer’ in relation to a loan for the project and Mr Hafiz Khan was ‘advising another approach’. It was, he said, a ‘normal requirement to borrow money for such a project’. He agreed that Mr Hamid Ali had the final ‘say’.

4.4	The evidence of Mr J. Kumar (JK Builders) was most explicit. He said that when JK Builders ‘had already started and did the boundary fencing Hemant Kumar said they don’t have funds, didn’t get the loan so they told me not to start’. Asked if Hamid Ali knew this, Mr J. Kumar said: ‘Yes.’ Asked what Mr Hafiz Khan said, Mr J. Kumar said: ‘He told me there is no money so don’t start now.’ 

4.5	Witnesses for Great Pacific said there was ‘no problem’ with finance and that Mr Hamid Ali, principal of Great Pacific and resident in the United Kingdom, could ‘get money into Fiji within 48 hours’. Mr Shahed Ali, who said he was ‘managing director Great Pacific Hotels’, with ‘no shares in the company’, said his older brother, Hamid Ali, was ‘stationed in England and I look after interests in Fiji’; ‘I look after Hamid Ali’s interests in Fiji Islands’. He said he ‘co-signed the [Fiji SFBC] with JK Builders on behalf Mr Ali’ and ‘on behalf of the company on Hamid Ali’s authority’, and he (Mr Shehad Ali) was the ‘manager of the project’. Asked if the construction work was ‘not started as the finance was not there’ he answered: ‘No.’

4.6	Mr Shahed Ali agreed, however, that Item 3. in the Minutes of 12 September 2005 of a meeting at Maisuria Design at which he was present meant that finance was not available at that time to commence the building project. He said that 30% of the finance was to come from the United Kingdom, and 70% from Fiji. When asked was there ‘no problem with Mr [Hamid] Ali sending it’, he responded: ‘No he didn’t.’ (Understood as meaning that Mr Hamid Ali had ‘no problem in sending the requisite funds.) He said Mr Hamid Ali was to ‘arrange finance from the local Fiji Island’. He said that the ‘finance side was Deepan’s and Hamid’s’. Asked ‘if finance was available’ for the project he said: ‘I don’t know. Deepan would know.’

4.7	Mr Khan, Finance Director or Finance Manager for Pacific Hotels, agreed that the Minutes of 12 September 2005 were a record of what was said at that meeting. However, he also said that Mr Hamid Ali had ‘no problem’ with finance. Mr Hamid Ali, said Mr Khan, ‘is the largest operator’ of Kentucky Fried Chicken in the United Kingdom, having ’55 KFCs’ there. Mr Khan confirmed that the requirement for financing the building project was ‘mostly locally, 70% Fiji, 30% UK’. Through his ‘operations’, said Mr Khan, Mr Hamid Ali ‘can bring in the money to Fiji in 2 days if he wants’. Mr Khan also said that had they been presented with a Certificate from JK Builders, it would have been paid.

4.8	Nonetheless, the weight of the evidence overwhelmingly affirms a problem with finance. Whatever it was, it resulted in discussions about the financing of the building project going on over a period of at least 7-8 months after the scheduled date of start of the building project (February 2005) and it appears that one matter in issue related to a loan or raising of a loan in Fiji. 

4.9	The Minutes of a meeting held at Maisuria Design on 12 September 2005 re the building project show that representatives were present for Great Pacific, JK Builders and Maisuria Design: 

Project:	GREAT PACIFIC VILLAS	
Client:	GREAT PACIFIC HOTELS	
		
Attendance		
Deepan -	Great Pacific Hotels	
Shahed -	Great Pacific Hotels	
Jiten Kumar -	JK Builders	
Hemant Kumar -	Maisuria Design Limited	

4.10	The Minutes (which Mr Khan of Great Pacific accepted as an accurate record) make apparent the delay in commencing the building project and that the delay is consequence upon a funds issue. As late as September 2005 there was discussion about ‘finance’ and its being ‘arranged’ in respect of commencing construction. This is some eight months after the date set in the Fiji SFBC. For example:

3	FINANCE: This was discussed and it was agreed that this is being arranged and GPH will ensure that there is sufficient funds in place to start construction.		
6	Hemant also reminded the meeting that prices will also need to be reconfirmed for services items and other PC sum items. Hemant will only start the negotiations with the contractors who had given us the best offers previously once the funds are in place.	MDL	
8	Deepan also brought up the issue of Bond. He advised that since a loan was being raised for the part of the project cost the bank will require a bond. Hemant advised JK to include the cost of providing a $300,000 bond on the project in his tender.	JK	

4.11	In addition to delay or possible delay in payment for compacting work, it is apparent, too that there are delays in paying bills already presented:

10	Hemant informed the meeting that there was some fees outstanding for Houng Lee Kaba & Jacobs that needs to be paid. Shahid and Deepan to follow up on this.		
11	Architects are also owed fees for week that has been completed and Hemant requested that this is to be settled quickly.		

4.12	Correspondence from JK Builders and Maisuria Design (for Great Pacific) confirms the problem of delay and indicates that there was a problem going to finance. JK Builders wrote a not inconsiderable number to Maisuria Design for Great Pacific referring to delay: Exhibit P1 E1

4.13	Letters commence in May 2005: 

23 May 2005 – ‘As you know the contract for the job was signed on December 2004 and we were supposed to start the job on February. As you know the quotation was valid for two months. We have been preparing for the [job] since then. We have paid many people and have the boundary done. We have also paid for the sign board. If the job is not started on time we will be claiming after we have worked out on our expense …’ 

4.14	Intervening correspondence carries a similar message, and by letter of 8 July 2005 Maisuria Design wrote to JK Builders confirming ‘our recent conversation’ and also ‘your discussion with Hafiz, Sahid and Deepan this week’:

As mentioned can you please reconfirm your price based on ... our recent discussions. Please note the following:

1.	The finance is being organised and is expected to be in place before the end of this month. Can you confirm when you can mobilize.

2.	In our discussion you had mentioned an advance payment, can you please confirm the quantum of the advance payment that you will require.

3.	I have indicated to Hafiz and Hamid that we will require a fortnightly progress payment schedule to be organised and I will revise the progress payment details once I have received a confirmation of your reviewed price.

I would be grateful if you can attend to this Urgently and get back to me before the end of next week. This will allow us to get together with Hafiz, Shahed and Deepan again before Hafiz travels overseas again … 

4.15	A letter of 27 July 2005 from JK Builders to Maisuria Design says – ‘Before last week I was told that this project will start in a week’s time but one week has gone and nothing has been done. Same thing happened in January. We signed the contract and were suppose[d] to start the above project in February but nothing was done then. We cannot take this risk again and waste our valuable time.’

4.16	Correspondence continues in the same vein, and (as an example) on 2 August 2005, observing that the ‘terms of contract entered between Great Pacific Hotels and us, has not been honoured in terms of payment’, JK Builders goes on to say amongst other matters:

After numerous consultation and advises the same has lapsed for more than six months.

Our company has carried out substantial works on the site by way of boundary fence, sign board and developing infrastructure.

We are still awaiting payment for all work done together with cost of delay. You will realize that as mentioned in most of our correspondence … we have not wavered from our stand to complete the project.

After lapse of six months the contract price will need to be adjusted …

That the conservative estimate of money outstanding by Great Pacific Hotels exceeds $500,000.00 and keeps on escalating every day.

In light of the above:

a.	We hereby put you on notice to immediately pay our company the sum of $500,000.00 as above
b.	We await your [advice] within 14 days as to when we shall commence the said work
c.	That the variation of contract dated 11th January 2005 will need to be worked out within the above stipulated time

Should we not receive your payment within the next 14 days then we will be forced to refer the matter to our solicitors to compel you to honour the same.

We hope that common sense will prevail and you will spare us the run around …

4.17	A similar letter with the ‘estimate of money outstanding by Great Pacific Hotels’ rising and said to ‘keep on escalating every day’ is dated 7 October 2005.

4.18	Later – letter of 26 October 2005 – JK Builders stated a revised price for the building project, ‘$11,823,596.00 (Eleven Million Eight Hundred Twenty Three Thousand Five Hundred Ninety Six Dollars) … valid for 30 days’. A follow up letter of 7 November 2005 refers to ‘still awaiting payment for all work done together with cost of delay’ and:

After lapse of nine months the contract price will need to be adjusted in accordance with the price increase for all materials and services associated thereof … 

4.19	Letters from JK Builders to Great Pacific (addressed to Maisuria Design) continued, generally on a monthly basis, into 2006, the last in Exhibit P1 E being dated 7 May 2006 and stating amongst other matters:

RE: GREAT PACIFIC HOTELS

We refer to our many correspondences in the matter and note with disappointment that terms of contract entered between Great Pacific Hotels and us, has not been honoured in terms of payment.

After numerous consultation and advises the same has lapsed for more than fifteen months.

Our company has carried out substantial works on the site by way of boundary fence, sign board and developing infrastructure.

We are still awaiting payment for all work done together with cost of delay. You will realise that as mentioned in most of our correspondence that we have not wavered from our stands to complete the project …

That the conservative estimate of money outstanding by Great Pacific Hotels exceeds $1,160,000.00 and keeps on escalating every day.

In light of the above:

a.	We hereby put you on notice to immediately pay our company the sum of $1,160,000.00 as above.

I ask you to prepare the certificate for the above project …

4.20	The lack of response from Great Pacific could support a proposition that Great Pacific did not repudiate JK Builders’ contentions. Why no denial of them by Great Pacific? Silence might be taken as acquiescence. 

4.21	That Great Pacific did not response to these letters from JK Builders, apart from the Maisuria correspondence referred to, was confirmed in evidence for Great Pacific. On Great Pacific’s part, the proposition appeared to be that the letters required no response. At least as time went on, it appeared that the letters, appearing on a regular or semi-regular basis, were seen by Great Pacific as an annoyance rather than as correspondence in the course of business, raising matters to be taken into account by Great Pacific to progress the building project.

4.22	Initially when asked whether there had been any reply to JK Builders’ letters, Mr Khan, Finance Director or Finance Manager with Great Pacific said:

As far as I am aware we did not respond to any of letters as the architect consulted with us then responded … Hemant Kumar had authority to write letters – would consult then write.

4.23	As to JK Builders’ letter of 23 May 2005 (Exhibit P1 E1), Mr Khan said that he received that letter. He agreed the letter showed JK Builders as ‘wanting to start’. He agreed that Great Pacific ‘did not respond’. In full, that letter said:

RE: GREAT PACIFIC HOTELS – NADI BAY ROAD

It is with great respect that I write to your esteemed office with regards to the above.

As you know the contract for the job was signed on December 2004 and we were supposed to start the job on February.

As you know the quotation was valid for two months.

We have been preparing for the since then [sic]. We have paid many people and have the boundary done. We have also paid for the sign board.

If the job is not started on time we will be claiming after we have worked out on our expense.

Should you need any further clarifications, please contact the undersigned

I hope that you will do the needful and obliged.

4.24	Mr Khan agreed that JK Builder’s letter of 27 July 2005 was received and that it was ‘never replied’ to. Mr Khan said he was not aware that Maisuria Design (Hemant Kumar) replied. He said, however, that Hemant Kumar of Maisuria Design ‘had authority to reply’. 

4.25	He remembered seeing JK Builders’ letter of 2 August 2995 and said Great Pacific made ‘no response’. He saw the letter of 7 September 2005 from JK Builders. He said that he was aware that Hemant Kumar had said that $10,000 to $12,000 on a fence was ‘not enough for a Certificate’. 

4.26	He said there was ‘No reason to respond to the letters’, later repeating: 

There was no necessity to respond as we had been getting letters like this for last six months to a year.

4.27	From the evidence, the position of Great Pacific appears to be that JK Builders was at fault in not commencing the job – or at least not to have continued after fencing, erecting the sign and so on. However, if this were the case, why did Great Pacific not demand that the job start rather than ‘allowing’ JK Builders to continue on the track, as evidenced by the letters and the meetings, of not commencing (whether due to the finance problem or not). If Great Pacific wanted the job to start, surely it would have demanded a start or once the February start date had passed without more activity (apart from the fencing, sign etc) have brought the contract to an end upon the basis that JK Builders was not fulfilling its part of the contract. The Fiji SFBC provides for just this contingency – but Great Pacific did not follow the protocol set out in the Fiji SFBC. That Great Pacific did not do so, but correspondence and meetings continued, leads inexorably to an inference that there was a problem on Great Pacific’s side which meant that it had no problem with JK Builders’ not taking the building project further. The failure on JK Builders’ part to continue with the building project was not one-sided, with JK Builders simply not complying with its responsibilities under the contract. 

4.28	The conclusion is that the problem was one of finance as alleged by JK Builders (and affirmed in the material). What other explanation could there be for the conduct of Great Pacific in not taking steps to require JK Builders to continue with the building project, or repudiating the contract when JK Builders did not do so. Why allow the site to linger and building project to lie idle – not just for weeks, but for months after the 1 February 2005 Fiji SFBC starting date. If, as Great Pacific says, there was urgency in the need for completion, or at least completion should have conformed to the Fiji SFBC date of 1 September 2006 to ensure it could gain financially through occupancy of the villas and apartments, why did it take no steps to enforce the Fiji SFBC terms?

4.29	The July exchange of letters between Maisuria Design and JK Builders as to JK Builders’ submitting a ‘revised price’ indicates that the ‘delay’ by JK Builders was accepted by Great Pacific, heralding the need for a revision of the contract price.

4.30	The contention by Great Pacific that it was ready and able to fulfill its part of the bargain – namely, payment of the work on an ongoing basis in accordance with the delivery of Certificates per the Fiji SFBC is unconvincing.

4.31	I accept Mr JJ Kumar’s evidence that he was told by Great Pacific (through various Great Pacific officers and/or agents) that there was a delay in financing. Even if Mr J. Kumar’s statement that Mr Khan told JK Builders ‘not to start’ were not accepted, there is overwhelming evidence from other witnesses and the documentary material (including particularly the Minutes of the meeting of 12 September 2005, and the failure to pay some of the bills presented) of the financing delay. In any event, and notwithstanding also the lack of engineer’s certificate vis-à-vis the compacting, what other explanation can there be for JK Builders not commencing the building project on the due date? Bluntly, taking into account (amongst all other matters) the effort that went in to securing the tender – evident from the material before the Court - it is inexplicable that JK Builders should simply sit on its hands for no reason, or for some reason other than its being told that there was a financing problem. No other reason is advanced or supported by material before the Court.

5.	Payment of Sum ‘in Advance’

Whether JK Builders asked for and Great Pacific agreement to payment of sum ‘in advance’: Yes.

What was sum to be paid in advance: Unclear/Unable to be determined with precision however there were figures put and a ‘couple of hundred thousand dollars’ was referred to, for example.

Could any party at meetings of JK Builders, Maisuria Design and Great Pacific bind Great Pacific to matters discussed/agreed: Yes.

Was any attending meetings of JK Builders, Maisuria Design and Great Pacific authorised to agreement to ‘advance’ payment: Yes.

Any of meetings JK Builders, Maisuria Design and Great Pacific agree to ‘advance’ payment: Yes.

Did Great Pacific agree to ‘advance’ payment: Yes.

5.1	Mr Shahed Ali, named as Co-Director in the Fiji SFBC, signed for Great Pacific. In evidence, he said that he could not provide authority in respect of decisions for Great Pacific; only his brother – who was the owner of Great Pacific – could. Mr Khan of Great Pacific said that Hamid Ali was the only person with authority to do this and that he ‘never agreed’ to an advance payment.

5.2	However, as Mr Shahed Ali is a Co-Director of Great Pacific (according to the Fiji SFBC), and since he was empowered to and did sign the Fiji SFBC for Great Pacific, then it appears he had the authority of Great Pacific in respect of the building project. He said that he did take care of or manage Mr Hamid Ali’s interests in Fiji. 

5.3	Great Pacific relies upon and in no way repudiates the Fiji SFBC. This means that Great Pacific accepts Mr Shahed Ali as having authority in this regard for Great Pacific. The powers of ‘agents’ are circumscribed – the role of Hemant Kumar of Maisuria Design is established through the Fiji SFBC. Mr Shahed Ali was, however, a Director of Great Pacific – and described in the Fiji SFBC as ‘Co-director’ of Great Pacific. If Shahed Ali is ‘Co-Director’ of Great Pacific, then Hamid Ali must surely be a ‘Co-Director’ too. Nothing before the Court confirms or can be taken as confirming a lack of authority on Mr Shahed Ali’s part, despite his contention otherwise in oral evidence. 

5.4	As a further example, Exhibit P1 F is indicative of Mr Shahed Ali’s authority for Great Pacific. This is a Tax Invoice dated 19 January 2005 from KN King’s Neon Sign in the amount of $1200.00 for the signage on the building project. Hemant Kumar’s writing appears on the document: 

GPH pays and this will be deducted from JK’s 1st progress payment. HK 19.01.04

5.5	Also on that document appears the handwritten note (not Mr Kumar’s writing):

Approved by Shahed Ali for payment 24/1/05

5.6	Next to the item ‘Total $1,200.00’ appear the hand written words ‘paid chq#’.

5.7	Mr Khan said Mr Hamid Ali had to make the decision on advance payment and that Mr Hamid Ali had not agreed to it. However, an argument that Mr Shahed Ali had no authority in respect of (for example) an agreement to an advance payment cannot be sustained – if he had the authority to enter into the Fiji SFBC itself, how no authority to agree to advance payment – a variation of the Fiji SFBC. By Mr Shahed Ali’s having authority in relation to the whole of the Fiji SFBC – the Fiji SFBC in its entirety, he must have authority as to a variation of it. 

5.8	Pacific Hotels is not convincing in it endeavour to make an alternative argument. 

5.9	In any event, if Hamid Ali alone had authority in respect of decisions vis-à-vis the building project and Great Pacific (which is not correct because Hemant Kumar as Architect had authority to the full extent of the terms of the Fiji SFBC delineating that authority), there is evidence of agreement to an advance payment not only through Shahed Ali but through Hamid Ali. 

5.10	The Minutes of meeting of 12 September 2005 affirm the discussion and agreement as to an advance payment:

5	Payment prior to start it was agreed that payment in the order of couple of hundred thousand dollars will be considered for this.		

5.11	Correspondence between Maisuria Design (for Great Pacific) and JK Builders – Maisuria Design to JK Builders and JK Builders to Maisuria Design (for Great Pacific) - refer to ‘advance payment’. For example, the letter of 13 July 2005 (Exhibit P1 E) says amongst other matters:

We now want an advance payment of $349,000.00 (three hundred and forty nine thousand dollars) to start the above project. Also we want the payment to be made fortnightly because we do not want [to] suffer the same consequences that [are] currently happening at L[ot] 12 and Lot 13, The Cove – Denarau Island. If we do not receive the payment fortnightly, we will have no other option but to stop all the ongoing work at the site… (Emphasis in original)

5.12	A letter from Maisuria Design to JK Builders (c/c-ed to Deepan of Great Pacific) refers both to a meeting ‘with Hafiz, Deepan and Sahid’ and advance payment. Dated 20 July 2005 (Exhibit P1 E), it says:

Great Pacific Hotels – Villas, Nadi Bay Road

I write further to our meeting with Hafiz, Deepan and Sahid.

As agreed can you please provide a revised priced bill of quantities please note that whilst I agree that there is an increase in cost since your last tender we still need to verify that the increases that you are asking for, are justified.

With regards the request of payment in advance, the developer has been made aware of your request and has agreed that there will be advance payment but the value will need to be looked at. They will be able to assist by buying materials for you as well as making some advance payment to mobilize.

Please forward me the priced bills of quantities.

5.13	In reply (copied to Deepam of Great Pacific Hotels), JK Builders writes on 27 July 2005 (Exhibit P1 E):

… Firstly, we would like to have an advance payment of $349,000.00, and then only we will give the detail of revised priced bill of quantities.

All these things cost money and time is wasted. Since we have not received any money for the above project, I can not supply you with any detail.

Once we receive the advance payment, then only I can give all the details that are required.

5.14	Albeit there was agreement as to the advance payment itself, there was a question as to quantum. Mr Hafiz Khan, for example, said that JK Builders were ‘given the contract date to begin’ but were ‘Not made aware of delay in [the] financial [arrangements’. He remembered a meeting where ‘escalating costs and delays’ were a ‘concern to JK Builders’ and JK Builders ‘wanted an advance payment’. He said that he was ‘aware of the fact that there would have to be an advance’ but that it was ‘never paid’. The ‘quantum was never firmed up’; ‘various sums were bandied about’.

5.15	On all the evidence it appears that:

•	As a consequence of the delays – caused by problems with financing, JK Builders asked for an advance payment, the payment to precede its commencing with the building project beyond boundary fencing, etc;
•	The payment of an advance was agreed to by Great Pacific;
•	A quantum of the advance payment was not agreed to, beyond ‘a couple of hundred thousand dollars’;
•	This would have been a variation of the contract under the Fiji SFBC;
•	This was never committed to writing as required under the Fiji SFBC.

6.	Compaction of Land

Was land required to be compacted before commencement of building project: Yes.

Was land in fact compacted: From Mr Hemant Kumar, Architect’s evidence it appears that it was. Mr Khan of Great Pacific said he thought compaction had been completed. Minutes of a meeting on 12 September 2005 are relevant here also.

Was compacting done at date to enable JK Builders to commence on date set in Fiji SFBC: Again from Mr Hemant Kumar, Architect’s evidence it appears it was, albeit there was also evidence which indicated that the compaction was not completed until March or April.

Was an engineer’s certificate necessary to be provided before commencement of the building project: From Mr Jiten Kumar’s evidence and that of Mr Hemant Kumar, Architect it appears it was.

Was an engineer’s certificate provided to JK Builders: On Mr Hemant Kumar, Architect of Maisuria Design and Mr Jiten Kumar’s evidence, it was not. Minutes of 12 September 2005 are relevant here also.

6.1	For Great Pacific, Mr Khan said they ‘never received any complaints from the builder regarding state of land’. He also said that all payments had been made to the engineers in respect of this – referring to Exhibits DE 2, DE 3, and DE 4. He repeated: ‘No we were not in default of any payments.’

6.2	Three Certificates for Payment are before the Court (Mr Shahed Ali in his evidence appeared to refer to four). All are in respect of Wood & Jepsen Consultants, Consulting Engineers, Registered Surveyors and Town Planning Consultants of Suva:

A.	Exhibit DE 2: The first is dated 20 January 2004 (it was agreed that this should have read 2005). It is said to be ‘First Progress payment for work done and materials supplied on the above contract. The Contract it relates to is Contract No. E/45676 and the Certificate for Payment is directed to The Director, Great Pacific Villas Ltd c/- Maisuria Designs Ltd, Nadi. It says it is to certify that Construction Equipment Hire Ltd, Contactor, is entitled to receive the sum of $66,618.22 – that is, Sixty-Six Thousand, Six Hundred & Eighteen Dollars and Twenty-Two Cents Only. There are no previous certificates.

B.	Exhibit D 3: The second is dated 22 February 2005. This one follows on from the first (for $66,618.22) and is for $37,821.22 – Thirty-Seven Thousand, Eight Hundred and Twenty-One Dollars and Twenty-Two Cents. This is described as a progress payment for work done and materials supplied on the above contract, and Practical Completion. It, too, relates to Contract No. E/4567

C.	Exhibit D 4: The third is dated 7 March 2006 and is noted as being ‘Third & Final Progress payment for work done and materials supplied on the above contact, and End of Maintenance’. As with the others, it relates to contract No. E/4567. The date of 7 March 2006 is said to be ‘Revised Date’. The certificate is directed, as with the others, to The Director, Great Pacific Villas Ltd c/- Maisuria Designs Ltd, Nadi. The sum referred to is ‘Thirty-Eight Thousand, Three Hundred & Eighty-One Dollars and Seventy-Eight Cents Only’ - $38,381.78. Total value of work to date (VAT Includes) is stated on that certificate as $112,906.25, which when ‘less previous certificates’ of $74,524.47’ is deducted, reaches the $38,381.78 figure. A letter dated 7 March 2006 addressed to ‘The Principal’ of Maisuria Designs Ltd and marked to the attention of Mr Hemant Kumar is attached to this Certificate of Payment. This says that ‘no further payments are required for works carried out as per the contract documents’ and ‘We look forward to your timely approval and payment’. 

6.3	Why the third is dated one whole year plus almost a whole month after the building project was timed to commence as per the Fiji SFBC between JK Builders and Pacific Hotels (1 February 2005) is unclear. However, these and together with the other evidence confirms the need for compacting the land before commencement. The explanation given by JK Builders at trial was that this was necessary because of the height of the building project. Mr Shahed Ali said he ‘hadn’t seen a certificate of completion civil works’ and agreed that one ‘can’t build without certificate of civil works completion’. He then said that he did not say that the builder could not start. Mr Hemant Kumar, Architect, said that at the time (1 February 2005) the site was ‘compacted and ready to go’. However, he said he would ‘need to check the file to see if the certificate was there [indicating the site was] ready to go’. He said there ‘could have been other reasons why the certificate was not forthcoming’. 

6.4	The Minutes of the meeting of 12 September 2005 say on this:

9	The certification of civil work needs to be followed up with Wood & Jepson. MDL will also check and advise if there is any fee out standing for Wood & Jepson	MDL	

6.5	Mr Khan for Great Pacific said in evidence that the ‘letter stating the work has been completed and certificate of payment were received by us. I am not aware of any other certificate’. To the question whether without a certificate (for compacting), the builder could not go ahead with building, Mr Khan responded ‘yes’. He agreed that there were fees outstanding or owing to the structural engineers Hong Lee Kuba & Jacobs. 

6.6	On all the evidence, including the three Wood & Jepson certificates for payment, the Minutes, particularly item 9, and the oral evidence of Mr Hemant Kumar and of Mr Jiten Kumar who said he was waiting for the engineer’s certificate before he could begin, that no engineer’s certificate was produced at the trial, and the evidence of Mr Khan agreeing that building could not go ahead without the engineer’s certificate vis-à-vis compacting, I accept that:

•	The land had to be compacted for the building project to be undertaken;
•	An engineer’s certificate attesting to the compacting had to be provided;
•	No engineer’s certificate was provide to JK Builders;
•	JK Builders could not commence the building project without the certificate.

6.7	The evidence as to compaction, the lack of certificate and Mr Hemant Kumar’s statement that there ‘could have been other reasons why the certificate was not forthcoming’ may also further the proposition of Great Pacific’s problems with financing the building project. The third certificate’s appearance one year down the track, and its bearing a ‘Revised Date’, together with the entry in the Minutes as to whether ‘there is any fee out standing for Wood & Jepson’, may support an inference that (a) there was delay in paying Wood & Jepson; (b) Wood & Jepson did not produce the certificate because of that delay.

6.8	In the course of the trial Counsel for Great Pacific objected at one stage to the matter of compaction’s being raised and Counsel for JK Builders addressed the objection by saying he would ‘move on’. No objection was raised subsequently, when questions re compaction and the engineer’s certificate were put in cross-examination to Mr Khan. 

7.	Certificate for Payment

Was JK Builders required to provide information to Maisuria Design for Certificate for payment: Yes.

Did JK Builders provide information to Maisuria Design for any Certificate: Yes, for one Certificate.

Was a Certificate made and was sum paid to JK Builders: No, and no.

Were any Certificates made by Maisuria Design for JK Builders Certificates: No.

Was any work done on building project by JK Builders: Yes.

7.1	The evidence is that some work was done on the building project by JK Builders. This is confirmed by, for example, Dr Khan who said that he ‘drives by [the site] once a week’ and had observed a project signboard on the property. He identified photographs showing the project in development to be built and amongst other matters the name of the contractor as JK Builders: Evidence, Thursday 17 April 2008, am; Exhibit P1E 1, Exhibit P1E 2

7.2	Mr JJ Kumar, student and son of director of JK Builders, Mr Jiten Kumar, and who on university breaks in Fiji worked at JK Builders as administration clerk, said: ‘We did some work at the site – boundary fencing – signboard and putting up fence’. It was ‘supervised by foreman Mr Padendra Kumar’. He said that ‘KBNS’ ‘printed names and [designed] printing as to how the situate would come up on the signboard’. Materials were purchased for the work, including ‘pine post, chain link, pylon with the sign put up, concrete to make the sign board stand, nails, chain link on posts’. He said there were costs ‘in materials and printing’ for the sign board, ‘all done by JK Builders’. From Hemant Kumar’s evidence, it appeared that the printing for the sign board was paid for by Maisuria Design and that that was not recouped from JK Builders. Neither was it recouped by JK Builders from Great Pacific. It appears that the amount was $1200. Although on one occasion ‘$200.00’ was referred to, the evidence confirms the higher figure: Exhibit P1 F

7.3	As to putting up the sign board and constructing the boundary fence, labour was involved although Mr Kumar was ‘not quite sure of the area’. He had seen the fence and sign board of ‘what we have done’. He referred to ‘pine posts and chain links’ and said barbed wire was used although he was ‘not sure how many strands’ but there were ‘more than one’. 

7.4	In addition there were office costs – ‘office staff, electricity, stationery related to the job’. Transportation with delivery of labourers, posts, chain links and other materials to the site’. Preliminary costs were incurred, with the doing of estimates, travel costs, office costs – phone calls were made to hardware shops and other suppliers in getting prices. There was a ‘need to get water meter and electricity in place of workers and concrete and erect this for machines’. As to the water meter, Exhibit P1 J is a letter to JK Builders from Maisuria Design in respect of the building project. It refers to an ‘attached … copy of the title for Great Pacific Villas to allow you to apply for water meter as discussed on site the other day’. This letter is dated 19 January 2004.

7.5	No Certificate in respect of this work was, however, drawn up by Maisuria Design as required under the Fiji SFBC because according to Hemant Kumar the amount was insufficient to justify a certificate. 

7.6	Many statements appear in correspondence from JK Builders as to ‘work done’ and the need for Great Pacific to ‘pay monies owed’. Various sums are quoted. ‘Infrastructure’ is referred to. Labour costs are referred to. The employment of a foreman and workers is mentioned a number of times. In oral evidence office and administrative costs were stated as having been expended. The water meter was referred to. Maisuria Design corresponded with JK Builders on this.

7.7	Beyond ‘work done’, ‘infrastructure’ and reference to the boundary fence and signage, apart from the initial provision of information for Maisuria Design for the initial Interim Certificate (not issued), there appear to be no explicit statements from JK Builders to Maisuria Design as to actual work done and precise statements as to costs to be paid in respect of them. There were no further bills or statements provided to Great Pacific (that is, to Maisuria Design) for Maisuria Design to draw up a Certificate for payment. Wordings in the correspondence were not sufficiently precise as to provide Maisuria Design with the information required for a Certificate or Certificates as required by the Fiji SFBC.

7.8	For example, Exhibit P1 E contains correspondence referring to costs and expenditure without precise detail. A letter of 13 July 2005 from JK Builders to Maisuria Design notifies Maisuria Design of the increased prices for the building project ‘due to increase in cost as a result of change in material price for’ – listing various matters including (but not only) ‘preliminaries and general’, concrete, blocks, steel, etc. It goes on to say:

Also we had suffered losses which are unaccounted for. These are as a result of:

•	Mobilizing the workers, job foremen, subcontractors and labour[er]s that were held back because the above project was awarded to our company. We had to compensate these people because the above project had delayed till now;

•	The opportunity lost because we did not tender for so many jobs. We could have got some jobs out of the total number [of] jobs that we missed out on tendering and could have made profits from them. Since we were fully committed to the above project we let go other jobs.

•	We are yet to calculate the total for the losses suffered but we will supply you with the actual figure later on …Exhibit P1E

7.9	Again, a letter of 2 August 2005 from JK Builders to Maisuria Design says amongst other matters:

That the conservative estimate of money outstanding by Great Pacific Hotels exceeds $500,000.00 and keeps on escalating every day.

In light of the above:

a.	We hereby put you on notice to immediately pay our company the sum of $500,000.00 as above
b.	We await your advice within 14 days as to when we shall commence the said work
c.	That a variation of contract dated 11th January 2005 will need to be worked out within the above situated time

Should we not receive your payment within the next 14 days then we will be forced to refer the matter to our solicitors to compel you to honour the same …

7.10	By letter of 7th September 2005 JK Builders writes again to Maisuria Design referring to ‘our many correspondences in the matter’ and noting that ‘terms of contract entered between Great Pacific Hotels and us, has not been honoured in terms of payment’. This, it is said, has ‘lapsed for more than seven months’ after ‘numerous consultation and advices’:

Our company has carried out substantial works on the site by way of boundary fence, sign board and devoting infrastructure.

We are still awaiting payment for all work done together with cost of delay. You will realise that as mentioned in most of our correspondence that we have not wavered from our stands to complete the project …

That the conservative estimate of money outstanding by Great Pacific Hotels exceeds $580,000.00 and keeps on escalating every day.

In light of the above:

a.	We hereby put you on notice to immediately pay our company the sum of $580,000.00 as above.

I ask you to prepare the certificate for the above project. (Emphasis added)

7.11	Albeit a Certificate is requested, beyond the (much earlier) provision of information as to the costs associated with the fencing and signage, when a Certificate albeit requested was not drawn up by Maisuria Design, there is no information included that would enable a Certificate to be compiled based on precise items and figures. Similarly, albeit the letter of 13 July 2005 refers to ‘mobilizing the workers, job foremen, subcontractors and labour[er]s’ and the need to compensate those workers due to delay in the project, and says that ‘the actual figure’ will be supplied later on, it appears that no figure was in fact supplied, or at least no detailed figure associated with detailed or itemised information. 

7.12	Further letters – for example, 7 October 2005, 26 October 2005, 7 November 2005, 2 January 2006 (with letters in between and following) – indicate that the sum sought is escalating, however, with no detailed breakdown and no indication of what the sum sought relates to apart from the reference to ‘substantial works on … site [being] boundary fence, sign board and developing infrastructure …’

7.13	For Pacific Hotels, Mr Khan said: ‘If JK had started building and issued a Certificate we would have paid it.’ On the other hand, he said that ‘local bank financing was needed’ and that Great Pacific ‘needed to bring 1/3 from UK and needed an enormous period of time for local financing’. The ‘money for project was not in Fiji at this time’ however, the ‘building construction work was not started so why should we bring in money?’ He then said that money was ‘brought in and used on other projects’. He said Great Pacific ‘had enough balance in our account in Fiji’. However, he agreed that there was no documentary evidence before the Court (per Affidavit of Documents that he swore for Great Pacific) that Great Pacific brought in finance and used it on other projects. He said that Great Pacific would ‘pay when it was justified’. He repeated that there were ‘funds in our bank account to pay’.

7.14	On the other hand, as noted earlier, the evidence points to there being a financing problem with the building project and hence there is no assurance that production of a Certificate would have resulted in payment, or that ongoing production of Certificates would have done so. Nonetheless, under the Fiji SFBC payment was dependent upon the production of Certificates. Without that, JK Builders could not be paid, whether or not there were funds held by Great Pacific, or at Great Pacific’s disposal, to do so.

8.	Monies Paid/Not Paid to JK Builders

Were any monies paid to JK Builders by Great Pacific for work done on building project: No. The contention here is that no Certificates were produced and hence, per the Fiji SFBC no monies were required to be paid.

8.1	From all the material before the Court, including oral and documentary evidence, it appears that over the entire period no monies were paid to JK Builders and that no Certificates were drawn by Maisuria Design in accordance with the Fiji SFBC. As noted, the only specific information which appears to have been provided by JK Builders to Maisuria Design for drawing up a Certificate was that early on as to boundary fence, etc. That appears to have been in the vicinity of some $12,000 (with the sign printing paid for by Maisuria Design).

8.2	In response to a question whether there were any sums due to JK Builders in respect of the building project, Mr Khan of Great Pacific said in evidence that there was: ‘Nothing due as far as project concerned - Certificates were not issued.’

8.3	The Fiji SFBC makes explicit that in order for monies to be paid to the Contractor (JK Builders) then Certificates must be issued by the Architect – Maisuria Design. These can be issued only upon the requisite information being provided by JK Builders. As noted previously, it appears from all the evidence that the requisite information was provided only in relation to the boundary fence, signage etc and after that, no Certificates were issued and no information provided for them, as an hiatus arose in consequence of the financing problem.

8.4	In a letter of 7 September 2005 (just prior to the minuted meeting of 12 September 2005) from JK Builders to Maisuria Design, a demand is made by JK Builders that a Certificate be drawn up by Maisuria Design. The letter provides no detail upon which a Certificate can be made (albeit it can constitute a demand to make up the Certificate for which information had been supplied – re the boundary fence, etc). 

9.	Loss & Damage – JK Builders

Loss & damage suffered by JK Builders because of Great Pacific financing failure of building project? 

9.1	As the evidence referred to here, particularly the correspondence, indicates, according to JK Builders they did suffer loss and damage in consequence of the failure of the building project to go ahead because of Great Pacific’s delay in finance (and possibly the failure to obtain the engineer’s certificate re compaction of the site). This is variously stated to be in consequence of hire of labourers who were unable to be used on the building project, so were deployed on other projects – evidence was that more labourers were used on other projects than would ordinarily have been the case, for JK Builders did not want these workers ‘standing idly by’ whilst awaiting the start of the building project. The hire of a foreman (and at least on one occasion there is reference to foreman in the plural) is attributed to the building project and said to be a loss suffered by JK Builders as the foreman or foreman was/were not used on the building project. 

9.2	‘Infrastructure’ is referred to frequently but without, as noted, itemization. It does appear, however, from oral evidence (for example, that of Mr JJ Kumar) this involved purchase of vehicles, including a vehicle for the foreman, office work, the work devoted to obtaining quotes for equipment and/or materials, the water meter. Again, however, there is no explicit reference to these as itemized costs with explicit figures attached to each item. Further, items such as vehicles cannot be cited as ‘losses’ – a vehicle is a resource and there was no evidence that any such vehicle was left standing idly by. If there were any question of recovery of damages vis-à-vis vehicles or a vehicle, this could be calculated only by reference to loss in market value, if that – but this was not, as I understand it, the way that this aspect was put.

9.3	A letter dated 21 January 2007 from JK Builders to Mishra Prakash & Associates, JK Builders’ lawyers, provides a breakdown of the costs ‘incurred for Great Pacific Hotels’:

The costs range from paying the estimator, site preparation, boundary fencing, sign board printing to putting up the sign board and other redial [remedial?] works.

Materials	$ 6,250.00	
Labour	$ 3,445.00	
Sign Board Printing costs	$ 1,200.00	
Preliminary Costs	$ 4,200.00	
Office Costs	$ 3,000.00	
Transportation Costs	$ 1,000.00	
		
Total Costs	$19,095.00	

9.4	This detailed information includes that provided to Maisuria Design for the first Interim Certificate (which was never issued). So far as can be discerned from the material before the Court, no such detailed information was provided to Maisuria Design for any other Interim Certificate/s.

9.5	In addition to this, JK Builders claims work foregone through JK Builders’ not tendering whilst it was waiting to commence the building project, so losing the chance for other work. In the evidence, however, reference was made to tenders having been made by JK Builders during this period.

9.6	The problem for JK Builders (and it is similarly so for Great Pacific) is that (apart from detail for the first Interim Certificate) it did not follow the Fiji SFBC in what it now raises before this Court. The Fiji SFBC provides for delays, disputes, payment regime and so on. This regime must be adhered to. In not doing so, JK Builders is hard pressed now to succeed in its claims.

10.	Loss & Damage Great Pacific

Loss & damage suffered by Great Pacific because of JK Builders’ not going ahead with building project?

10.1	Great Pacific’s contention is that it suffered loss and damage as had the building project been completed by JK Builders as per the requirements of the Fiji SFBC, then as from 1 September 2006 it would have had apartments and villas available for occupation and, as it contends, that occupation would have occurred so as to bring income to Great Pacific in accordance with its business plan.

10.2	As noted, however, the problem for Great Pacific is that which arises for JK Builders: like JK Builders, Great Pacific did not follow the terms of the Fiji SFBC in respect of what it now raises in issue before this Court. As noted, the Fiji SFBC has a protocol or terms to follow in the instance of delays, disputes, payment regime and so on, as between the contracting parties. This applies equally to Great Pacific as to JK Builders. In not following the protocol set down by the Fiji SFBC which binds both Great Pacific and JK Builders, Great Pacific is hard pressed now to succeed in its claims: its position mirrors that of JK Builders in this regard.

11.	Matters for Determination per Pre-Trial Conference

Taking into account all the above, I turn then to the matters set out in the pre-trial conference for determination. Ultimately, that determination must be dictated or directed by the terms of the Fiji SFBC which is the fundamental basis upon which the building project was to go ahead, and was the agreement between Great Pacific and JK Builders so must govern the outcome of this matter.

12.	Interim Certificate at One Month Intervals

Whether Great Pacific’s Architect was to issue Interim Certificates at one month intervals showing the amount due to JK Builders for work done.

12.1	The Fiji SFBC confirms that Interim Certificates had to be issued at one month intervals for JK Builders to be paid on an ongoing basis by Great Pacific. The parties agree, as does Mr Hemant Kumar of Maisuria Design (Great Pacific’s architect), that information for Certificates was to be provided by JK Builders to Maisuria Design, and that Maisuria Design would draw up the Certificates for presentation to Great Pacific for payment to JK Builders. ‘The Architect’ (Mr Hemant Kumar) is so named in the Fiji SFBC and clause 30 as to Certificates & Payments, and the items in the Appendix relating thereto are referable to him.

12.2	Clause 2 of the Fiji SFBC says:

The Employer [Great Pacific] will pay to the Contractor [JK Builders] the sum of EIGHT MILLION FIVE HUNDRED ONE THOUSAND DOLLARS VIP ($8,500,100:00)(hereinafter referred to as ‘the Contract sum’) or such other sum as shall become payable hereunder at the times and in the manner specific in the said Conditions.

12.3	Clause 30(1) of the Fiji SFBC says:

30	Certificates & payments

(1)	Interim valuations shall be made whenever the Architect considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an Interim Certificate. The Architect shall from time to time as provided in this sub-clause issue Interim Certificates stating the amount due to the Contractor from the Employer and the Contractor shall be entitled to payment thereof within 14 days from the presentation of that Certificate. Before the issue of the Corticated of Practical Completion, Interim Certificates shall be issued at the Period for Interim Certificates specified in the Appendix to these Conditions. After the issue of the Certificate of Practical Completion, Interim Certificates shall be issued as and when further amounts are due to the Contractor from the Employer provided always that the Architect shall not be required to issue an Interim Certification within or under one month of having issued a previous Interim Certificate.

12.4	Under the Appendix to the Fiji SFBC, in respect of Interim Certificates, Clause 30(1) is confirmed:

Period of Interim Certificate {if none stated is one month}	30(1)	1 Month

12.5	Clause 30 of the Fiji SFBC goes on to provide for what is to be included in Certificates - such as payments being ‘the total value of the work properly executed and of the materials and goods delivered to or adjacent to the Works for use thereon up to and including a date not more than seven days before the date of the said certificate less any amount which may be retained by the Employer (as provided in sub-clause (3) of this Condition) and less any installments previously paid under this Condition. Certificates are to include ‘only’ the ‘value of the said materials and goods as and from such time as they are reasonably, properly and not prematurely brought to or placed adjacent to the Works and then only if adequately protected against weather or other casualties’. 

12.6	Various other matters are included in Clause 30 governing the drawing up of Interim Certificates and what is to be included. A discretion lies with the architect as to what might be included, the discretion governed by what is set out in Clause 30(3).

12.7	No such Certificates were produced in evidence. None, as noted, was drawn up by Maisuria Design and details for any such Certificate were not provided, beyond that for the first Certificate (not issued by Maisuria Design) relating to fencing, signage, etc. 

13	JK Builders Prepare Construction, etc

Whether JK Builders prepared the construction and did construct boundary fence, signboard and infrastructure on the property and did the work on the same.

13.1	As noted previously, clearly JK Builders readied for the building project and ‘prepared the construction’ insofar as it did construct boundary fence, signboard and ‘infrastructure’. What ‘did the work on the same’ means is not clear. However, what is clear is that beyond the construction of the boundary fence and erection of signboard, and making arrangements re the water-meter, no other work appears to have been carried out on the site by JK Builders. 

13.2	It seems that JK Builders did carry out other preparations for the building project including hire of at least one foreman and workers, purchase of a vehicle for the foreman and apparently other vehicles. It is not clear that materials were purchased. There are letters seeking quotes, however, the new pricing or costings submitted to Maisuria Design for Great Pacific after the delay led to the need for them do not appear to have been drawn up from a perspective of ‘minus-ing’ materials already purchased: the inference is that materials had not been pre-purchased (apart from ‘vehicles’ and those for the boundary fencing, etc). When Great Pacific offered to purchase materials, JK Builders responded by saying it had connections with suppliers enabling it to purchase materials at a good price so did not require Great Pacific’s assistance. JK Builders did not, at that time, say it had already purchased materials for the building project so they (or some) were on hand making purchase by Great Pacific unnecessary. No doubt the usual approach of purchasing materials on an ongoing basis consistent with the project of the building project was adopted. There is no indication in the material before the Court that pre-purchase of materials was made, whether of the whole or part of the materials required for the building project (apart from boundary fencing, etc).

14.	Delays by Great Pacific in Payment of Due and Payable Amounts

(a)	Whether there have been delays by Great Pacific in payment of amounts due and payable.
(b)	Whether JK Builders has not been able to proceed with the construction of the project due to delays by Great Pacific in payment despite demand having been made.

14.1	As set out previously and below, the were delays in financing the building project. However, whether there were delays by Great Pacific in payment of amounts due and payable is another matter. As indicated below, the problem for JK Builders is that (apart from the fencing, etc) there were no delays by Great Pacific ‘in payment of amounts due and payable’ because amounts were ‘due and payable’ by Great Pacific in accordance with the terms of the Fiji SFBC only – and these terms (as to Interim Certificates) were not complied with.

14.2	Insofar as the fencing, etc matter – it was Maisuria Design’s responsibility to provide an Interim Certificate for the amounts passed on to it by JK Builders. That it did not is not a responsibility lying with JK Builders. Great Pacific cannot properly argue that it has no responsibility to pay that amount on the basis that no Interim Certificate was presented. The responsibility lies with Maisuria Design in not presenting the Certificate. As in this regard Maisuria Design was Great Pacific’s ‘agent’ appointed under the Fiji SFBC, then notwithstanding the fact that there was no Interim Certificate presented to Great Pacific, Great Pacific is liable to JK Builders in that amount of that Certificate.

14.3	As to whether JK Builders could not proceed with the building project ‘due to delays by Great Pacific in payment despite demand having been made’, the only demand that was made in accordance with the provisions of the Fiji SFBC was that relating to the fencing and signage, etc (for the first Interim Certificate). Hence, any inability of JK Builders to proceed was not due to ‘delays … in payment despite demand having been made’. Demands were made – as noted below – but not per the terms of the Fiji SFBC.

14.4	July 2005 correspondence indicates a ‘breakdown’ or ‘standoff’ between JK Builders and Great Pacific to the extent that when asked to provide revised costings (indicating that Great Pacific condoned the delay and, as the evidence shows, itself engendered the delay by reason of financing problems), JK Builders made provision of the revised costings subject to condition.

15.	Great Pacific Failed to Pay JK Builders for Work Done to Date ‘Due & Payable’ under Fiji SFBC

Whether Great Pacific has failed to pay JK Builders for work done by JK Builders to date. Whether in respect of work done by JK Builders the amounts are due and payable under the Fiji SFBC. 

15.1	The answer here is consistent with the foregoing and the answer below re ‘demands’ by JK Builders and ‘refusal’ to pay by Great Pacific. Great Pacific has failed to pay JK Builders for the work vis-à-vis fencing and signage, etc. That payment is an amount due and payable under the Fiji SFBC because:

•	JK Builders provided to Maisuria Design (the architect) the information required for the drawing up of an Interim Certificate vis-à-vis that work;
•	Maisuria Design failed to draw up an Interim Certificate for presentation to Great Pacific;
•	Maisuria Design was ‘agent’ for Great Pacific in this regard;
•	Maisuria Design was designated in the Fiji SFBC by Great Pacific for this role.
•	The responsibility for failure to draw up the Interim Certificate for payment to JK Builders lies at the door of Great Pacific – JK Builders does not bear that responsibility;
•	JK Builders should not be denied payment for work done – labour and materials expended in respect of it – by reason of the failure to draw up a Certificate despite JK Builders’ having provided the requisite information to Great Pacific – via its architect under the Fiji SFBC, Maisuria Design. 

16.	JK Builders ‘Held Back Workers, Job Foremen, etc for the Works, etc

Whether JK Builders has held back workers, job foremen, subcontractors and labourers for said works and had not submitted tenders on other works or taken other works due to its commitment to construct Great Pacific’s building as contracted.

16.1	Consistently in its correspondence JK Builders affirmed its commitment to the building project. It consistently stated that it had employed workers, at least one foreman, and labourers for the building project. It also said it had not submitted tenders or taken other works due to its commitment to the building project. However, its recitation of this was not accompanied by explicit figures relating (for example) to the wages of workers or the foreman/men it had employed. In evidence JK Builders said that workers were deployed on other projects so that they were not standing idle – that if there was a project in hand, then workers who would otherwise have been deployed on the building project were sent to it. JK Builders said that it would not have had so many workers on the alterative projects, had the building project been in progress for they would have been used there. Estimates were made in evidence of the wages and tenders foregone.

16.2	Whether these amounts are recoverable (if explicitly identified) by JK Builders is another matter, however, going to the terms of the Fiji SFBC and the protocol to be followed in the event of disputes such as this. As indicated, it is not apparent that JK Builders did follow the protocol under the Fiji SFBC. This impedes its claims in this regard.

17.	Unilateral Change of Terms and Conditions by JK Builders

Whether JK Builders has been unilaterally changing the terms and conditions of the Fiji SFBC and in particular: -

Increased the amount to be payable by Great Pacific to JK Builders as the Fiji SFBC Price; and 
Increased the time within which the Fiji SFBC was to be completed.

17.1	On all the foregoing, it appears to me that the delay Great Pacific had in financing the project is principally the cause of the delay in commencement of the building project Delay was caused by JK Builders not starting the project despite the delay in financing. However, JK Builders was asked not to commence and even if this evidence were not to be accepted (which it is), JK Builder’s delay in commencing the building project was (as noted) condoned by Great Pacific as evidenced by the various meetings held where delays in financing were acknowledged and no demand was made that JK Builders commence the building project despite the delay in financing. Further, although down the track Great Pacific began to make enquiries of other builders as to their costings, there was no written or other advice to JK Builders that JK Builders was to be relieved of the building project.

17.2	Taking all matters into account as per the evidence before the Court, it appears to me that Great Pacific did not want the building project to go ahead until finance was in place, at least up to September 2005, and it appears to me for at least some time after. The minutes of the meeting on 12 September 2005 (previously referred to) make clear that Great Pacific was fully aware of the building project’s not having gone ahead, and agreed to an advance payment to JK Builders before it did start – whether or not there was a firm commitment to a particular sum: the evidence indicates (as set out earlier) agreement by Great Pacific to the advance payment. This itself confirms Great Pacific knew and agreed the building project not go ahead, at least over the foregoing months. An ‘advance payment’ can be interpreted only as a payment in advance of JK Builder’s commencing on the building project (beyond the fencing, etc).

17.3	As to the increase in amount payable: Great Pacific asked JK Builders for new costings or prices, hence any such costings or prices presented by JK Builders in response was not ‘unilateral’. On the other hand, JK Builders sent a stream of correspondence referring to increased sums, seemingly an increase in the advance payment required or in respect of losses it said it was suffering or had suffered due to the building project’s not having commenced on 1 February 2005 as per the Fiji SFBC. This was ‘unilateral’ as to the rising sum, albeit if it relates to advance payment, it is not unilateral in the sense of an advance payment itself, just the amount. An advance payment was agreed to by Pacific Hotels, the amount being ‘a couple of hundred thousand dollars’ albeit to be ‘firmed up’ in quantum.

17.4	As to the time in which the building project was to be completed: from all the material before the Court there was no ‘unilateral’ change in date of completion. Rather, the parties were talking on a regular or semi-regular basis throughout the first nine months at least of 2005, from the date upon which the building project was intended to commence per the Fiji SFBC (February 2005). There was evident agreement between them that JK Builders should not commence the building project on that date (beyond fencing, etc).

17.5	It does not appear that any time or particular date was set beyond that in the Fiji SFBC (1 September 2006). Time went on, with the building project not commenced, with finance being a problem, with dates passing right up to 12 September 2005, with both parties evidently ‘in agreement’ or at least conceding to one another that the time for completion would be different from that stated in the Fiji SFBC. 

17.6	JK Builders periodically protested at this through its correspondence. This indicates that JK Builders was not ‘happy’ with this arrangement. But both Great Pacific and JK Builders were ad idem in the starting date’s not being 1 February 2005 and hence its having to be shifted to another date (never determined).

18.	JK Builders – Damages Being Lost Profits, etc Payable by Great Pacific

Whether JK Builders has suffered damages consisting of lost profits from the Fiji SFBC and damages consisting of expenses included in mobilizing workers, job foremen, subcontractors and labourers for Great Pacific’s works only to have Great Pacific delay and/or defer the work.

Whether such damages (if any) are payable by Great Pacific.

18.1	Great Pacific did delay and/or defer the building project due to finance. The evidence is that there was effective agreement on the part of JK Builders to defer or delay commencement of the building project because Great Pacific represented to JK Builders that finance was an issue and effectively asked JK Builders to delay and/or defer.

18.2	One of the problems in this matter is fixing upon precise losses and their quantification. However, even if there is sufficient information to provide precise figures in this regard, the question is whether the damages are payable by Great Pacific. Apart from or in addition to damages, there is the question of unpaid work which was payable under the Fiji SFBC on an ‘Interim Certificate’ basis. 

18.3	At least in the latter regard, JK Builders should not lose out because no Interim Certificate was drawn up by Maisuria Design per the Fiji SFBC. The necessary information having been provided, the work and the costs of it should be honoured in accordance with the terms of the Fiji SFBC.

19.	JK Builders Responsible for Losses & Damages Claimed/In Breach of Contract

Whether JK Builders was itself responsible for the losses and damages it claims and whether JK Builders was in breach of contract in not carrying out the works under the Fiji SFBC.

19.1	JK Builders did not carry out the works under the Fiji SFBC. However, as earlier observed the delay was caused by Great Pacific’s problem with finance. On the basis of the evidence before the Court, it does not appear that JK Builders breached the contract: rather there was an acceptance by JK Builders that it should not start on the due date in February 2005 because of the finance problem, and for a period at least where this was accepted by JK Builders. By July 2005 the correspondence shows some frustration on JK Builders’ part vis-à-vis this.

19.2	There was also the problem of the engineer’s certificate re compacting – without which JK Builders could not begin. The evidence does not show this as ‘the’ impediment, however. The impediment was lack of finance along with Great Pacific’s request and JK Builders’ agreement not to commence until finance had been dealt with by Great Pacific.

20.	JK Builders Wait for Great Pacific to Start

Whether JK Builders waited for a time for Great Pacific to start its project.

Whether JK Builders lost the chance to tender on other works during the time it waited for Great Pacific to start its project and had therefore lost the opportunity of profit thereon.

20.1	At Great Pacific’s behest, JK Builders did wait. JK Builders said in evidence it did not tender for jobs because the Great Pacific job, being contracted, was a ‘firm’ job for it. However, JK Builders also said it tendered for some jobs in the relevant period. JK Builders also had other jobs, for its evidence was that it used workers employed for the Great Pacific building project on other projects so as not to have them idle.

21.	JK Builders Determination of Fiji SFBC

Whether JK Builders determined the Fiji SFBC on the basis of Great Pacific’s failure to proceed under the Fiji SFBC and whether JK Builders has unlawfully determined the Fiji SFBC and has been in itself in breach of the Fiji SFBC.

21.1	A problem for JK Builders is that nothing was put in writing as required by the Fiji SFBC. Under the Fiji SFBC clause 21 states:

21	Possession, completion & Postponement

1)	On the Date for Possession stated in the Appendix to these Conditions [here, 1 February 2005] possession of the site shall be given to the Contractor who shall thereupon begin the Works and regularly and diligently proceed with the same, and who shall complete the same on or before the Date for Completion stated in the said Appendix [here, 1 September 2006] subject nevertheless to the provisions for extension of time contained in clause 23 of these Conditions.

2)	The Architect [Maisuria Designs] may issue instructions in regard to the postponement of any work to be executed under the provisions of this Contract.

21.2	The Architect’s obligations are set out in clause 2 which amongst other matters says:

2	Architects instructions

1)	…
2)	…
3)	All instructions issued by the Architect shall be issued in writing. Any instruction issued orally shall be of no immediate effect, but shall be confirmed in writing by the Contractor to the Architect within seven days, and if not dissented from in writing by the Architect to the Contractor within seven days from receipt of the Contractor's confirmation shall take effect as from the expiration of the latter said seven days. Provided always:

(a)	That if the Architect within seven days of giving such an oral instruction shall himself confirm the same in writing, then the Contractor shall not be obliged to confirm as aforesaid, and the said instruction shall take effect as from the date of the Architect’s confirmation, and

(b)	That if neither the Contractor nor the Architect shall confirm such an oral instruction the manner and at the time aforesaid but the Contractor shall nevertheless comply with the same, then the Architect may confirm the same in writing at any time prior to the issue of the Final Certificate, and the said instruction shall thereupon be deemed to have taken effect on the date on which it was issued.

21.3	Clause 23 is referred to later in these reasons. 

21.4	There are provisions for ‘determination’ by the Contractor and by the Employer: respectively Clause 26 and Clause 25. I am unable to find any provision in the Fiji SFBC for determination by the Contractor where the Employer is unable to finance the building project, or at least is unable to commence the building project on the due date due to problems with finance; there is no provision either for this to occur by way of the Employer’s oral request to the Contractor not to commence the building project, or not to continue with it, on the due date or thereafter because finance for the building project is not available or has not come through or is not in place at the time the building project is scheduled to start. 

21.5	However, determination by the Contract may take place where (as referred to earlier) the Employer does not pay an amount due on any Certificate within 14 days from the presentation of the Certificate and continues such default for seven days after receipt by registered post or recorded delivery of a notice from the Contractor stating that notice of determination under this Condition will be served if payment is not made within seven days from receipt thereof …: Clause 26(a)

21.6	It is apparent, however, that JK Builders ultimately determined the Fiji SFBC by notice to Great Pacific, upon the basis that Great Pacific did not proceed with the building project because of problems with finance. At the same time, it may be said that Great Pacific determined the Fiji SFBC by its not having finance in place, etc at the time of the date for commencement of the building project. What impact does JK Builders’ agreement not to commence, upon the request of Great Pacific, have?

21.7	As the parties came to an agreement whereby JK Builders did not commence, then JK Builders cannot be heard to complain – and nor can Great Pacific. When the correspondence became ‘negative’ on JK Builders’ part, JK Builders should have acted with expedition by starting the building project, presenting a Certificate and, if that were not paid in accordance with the terms of the Fiji SFBC, JK Builders should have followed the steps provided under the Fiji SFBC (see below). Alternatively, JK Builders could have taken those steps re the information it had supplied to Maisuria Design vis-à-vis fencing, etc for what would have been the first Interim Certificate, had it been issued. This, JK Builders failed to do.

22.	Entitlement Claim $24,519.00 per Week Under Fiji SFBC

Whether JK Builders is entitled to claim $24,519.00 per week as damages for breach of contract for the period from 1 February 2005 to 1 September 2006 when the works were to be completed.

Whether Great Pacific is entitled to claim from JK Builders as liquidated and ascertained damages at the rate of $24,519.00 per week from 30 September 2006 until date of judgment.

22.1	The figure $24,519.00 per week appears in the Appendix to the Fiji SFBC in respect of clause 22, ‘Liquidated and Ascertained Damages’ are set ‘at the rate of $24,519 per week’. 

22.2	Clause 22 of the Fiji SFBC says:

22.	Damages for non-completion

If the Contractor fails to complete the Works by the Date for Completion as stated in the Appendix to these Conditions or within any extended time fixed under clause 23 of these Conditions and the Architect certifies in writing that in his opinion the same ought reasonably so to have been completed, then the Contractor shall pay or allow to the Employer a sum calculated at the rate stated in the said Appendix as Liquidated and Ascertained Damages for the period during which the Works shall so remain or have remained incomplete and the Employer may deduct such sum from any monies due or to become due to the Contractor under this Contract.

22.3	This clause has not been complied with by Great Pacific. There is no ‘in writing’ certification by Maisuria Design that the building project ‘ought reasonably so to have been completed’. Indeed, it is not possible on the evidence for Maisuria Design to provide such a certification. In not commencing on the due date, or not continuing with the building project in accordance with the Fiji SFBC, JK Builders was acting in accordance with the request of Great Pacific not to commence on the due date due to problems with finance.

22.4	At the same time, taking into account the provisions of the Fiji SFBC, despite what seems clear were financial problems or delays for Great Pacific in financing the building project, JK Builders should at least have commenced the works (if the certificate for compacting was at hand), presenting details of work done to Maisuria Design for an Interim Certificate under the Fiji SFBC. That there was no finance would thereby have been ‘tested’ by JK Builder’s compliance with the Fiji SFBC terms and conditions. On the other hand, that JK Builders did not do that cannot in my view be used by Great Pacific to bolster its claim, for it:

•	Condoned the non-commencement of the building project by JK Builders (beyond the boundary fencing, etc);
•	Did not itself comply with the terms and conditions of the Fiji SFBC as it did not put in writing to JK Builders and written notice to JK Builders as required under clause 22.

22.5	As to JK Builders’ position, there is provision in the Fiji SFBC for postponement:
 
21	Possession, completion & postponement

(1)	On the Date for Possession stated in the Appendix to these Conditions possession of the site shall be given to the Contractor who shall thereupon begin the Works and regularly and diligently proceed with the same, and who shall complete the same on or before the Date for Completion stated in the said Appendix subject nevertheless to the provisions for extension of time contained in Clause 23 of these Conditions.

(2)	The Architect may issue instructions in regard to the postponement of any work to be executed under the provisions of this Contract.

22.6	However, the matters referred to do not appear to cover the case here. In any event, there does not appear to have been any ‘in writing’ notification or instructions to JK Builders from Maisuria Design as required under Clause 21 of the Fiji SFBC:

22.7	Clause 23 refers to ‘extension of time’:

23	Extension of time

Upon it becoming reasonably apparent that the progress of the Works is delayed, the Contractor shall forthwith give written notice of the cause of the delay to the Architect, and if in the opinion the Architect the completion of the Works is likely to be or has been delayed beyond the Date for Completion stated in the Appendix to these Conditions or beyond any extended rime previously fixed under this clause,

[Here appears a list (a)-(l) of reasons for delay – none of which relates to delay in financing affecting the ‘Employer’ – in this case, Great Pacific’s apparent problems with financing the building project]

then the Architect shall so soon as he is able to estimate the length of the delay beyond the date or time aforesaid make in writing affair and reasonable extension of time for completion of the Works. Provided always that the Contractor shall use constantly his best endeavours to prevent delay and shall do all that may reasonably be required to the satisfaction of the Architect to proceed with the Works.

22.8	JK Builders cannot therefore rely upon these provisions of the Fiji SFBC. As to determination of the contract, provision is made for determination by ‘Employer’ and by ‘Contractor’. Again, the parties have not followed the terms and conditions of the Fiji SFBC in this regard. Hence, neither can make any claim for damages under these provisions.

22.9	As for Great Pacific, the Fiji SFBC provides for ‘determination by employer’. Clause 25 has not been complied with:

25	Determination by Employer

(1)	Without prejudice to any other rights or remedies which the Employer may possess, if the Contractor shall make default in any one or more of the following respects, that is to say:-

(a)	if he without reasonable cause wholly suspends the carrying out of the /Works before completion thereof, or
(b)	if he fails to proceed regularly and diligently with the Works, or
(c)	if he refuses or persistently neglects to comply with a written notice from the Architect requiring him to remove defective work or improper materials or goods and by such refusal or neglect the Works are materially affected, or 
(d)	if he fails to comply with the provisions of clause 17 of these Conditions [going to assignment of the contract]

then the Architect may give to him a notice by registered post or recorded delivery specifying the default, and then Contractor either shall continue such default for fourteen days after receipt of such notice or shall at any time thereafter repeat such default (whether previously repeated or not), then the Employer may within ten days after such continuance or repetition by notice by registered post or recorded delivery forthwith terminate the employment of the Contractor under this Contract, provided that such notice shall [not] be given unreasonably or vexatious.

22.10	Clause 25 (2) relates to bankruptcy or composition or agreement with creditors by the contractor, or winding up, none of which apply here. Cause 25(3) relates to the determination of the employment of the contractor under clause 25 (1) or (2) and sets out the respective rights and duties of employer and contractor.

22.11	None of this applies here, for Great Pacific took no such steps and did not require Maisuria Design to do so on its behalf. Maisuria Design took no steps per clause 25 of the Fiji SFBC. 

22.12	As to JK Builders, clause 26 says:

26	Determination by Contractor

Without prejudice to any other rights and remedies which the Contractor may possess, if

(a)	The Employer does not pay to the Contractor the amount due on any certificate within 14 days from the presentation of that certificate and continues such default for seven days after receipt by registered post or recorded delivery of a notice from the Contractor stating that notice of determination under this Condition will be served if payment is not made within seven days from receipt thereof; or
(b)	The Employer interferes with or obstructs the issue of any certificate due under this Contract; or
(c)	The carrying out of the whole or substantially the whole of the uncompleted Works (other than the execution of work required under clause 15 of these Conditions) is suspended for a continuous period of the length named in the Appendix to these conditions by reason of:

[here is included a list none of which includes delay in respect of financing a building project]

(d)	The Employer becomes bankrupt or makes a composition or arrangement with his creditors or has a winding up order made … receiver or manager … appointed, or possession … taken … by holders of . debentures …

then the Contractor may thereupon by notice by registered post or recorded delivery to the Employer or Architect forthwith determine the employment of the Contractor under this Contract, provided that such notice shall not be given unreasonably or vexatious …

22.13	None of these applies in this case for although Great Pacific did not pay to JK Builders the amount due in respect of the first Certificate, that Certificate was not issued (as noted earlier) and in any event JK Builders gave Great Pacific no notice as required under clause 25.

22.14	Neither Great Pacific nor JK Builders has any claim under the Fiji SFBC, apart from JK Builders’ claim vis-à-vis the Interim Certificate, information for which was provided to Maisuria Design, but which was never drawn up.

23.	Demanded for Payment

Whether JK Builders demanded for payment from Great Pacific and whether Great Pacific refused to pay the amount owing to JK Builders.

23.1	JK Builders on a number of occasions made demands for payment to Great Pacific (through Maisuria Design) by correspondence. However, it appears from the evidence that on one occasion only did it do so in conformity with the Fiji SFBC – that is, by providing sufficient information to Maisuria Design for Maisuria Design to draw up a Certificate for presentation to Great Pacific for payment to JK Builders. No other demands by JK Builders conformed to the requirements of the Fiji SFBC.

23.2	Hence, it cannot be said that Great Pacific ‘refused to pay’ any amount owning to JK Builders under the Fiji SFBC.

24.	Interest Rate

Whether JK Builders and/or Great Pacific are entitled to interest at the rate of ten per centum per annum on the amounts claimed in the claim of JK Builders and/or the Counter Claim of Great Pacific.

24.1	The Fiji SFBC in its Appendix refers to interest rate but this is the ‘Retention Percentage’ and not related to interest rate for claims for loss and damage. 

24.2	If there is any interest due to JK Builders or Great Pacific in terms of their respective claims, the interest rate applicable is six per cent: Mohammed Nasir Khan and Ors v. Tower Insurance (Fiji) Ltd (Civil Appeal No. ABU0057 of 2006; HBC 221 of 2003, 19 November 2008)

25.	Frivolous & Vexatious

Whether JK Builder’s action is frivolous and vexatious.

25.1	On all the material before the Court, it appears that JK Builders had and has a grievance in respect of the building project and the failure of Great Pacific to gain finance, or provide finance, for its implementation. Whether JK Builders has a substantial or maintainable claim, in my opinion there is no basis upon which it can be said that JK Builders’ has engaged in an action that is ‘frivolous and/or vexatious’. My assessment is that it considers it has a genuine, legitimate claim to be litigated. It at least has a claim in respect of the first Interim Certificate which was never issued. 

26.	Completion Date 1 September 2006

Whether JK Builders was to complete work under the Fiji SFBC by 1 September 2006 or 30 September 2006.

26.1	The Fiji SFBC makes certain the date upon which the work was to be completed was 1 September 2006: 

Clause
Date for Completion.	21	1st September 2006: Appendix, Fiji SFBC

26.2	However, for all the reasons aforesaid and on all the material in the proceedings, it is clear that both parties were well aware as time went on that that date could not be complied with. As previously noted, the minutes of the meeting of 12 September 2005 confirm this. 

27.	Breach of Fiji SFBC – JK Builders

Whether JK Builders is in breach of the Fiji SFBC and whether JK Builders failed to complete the works under the Fiji SFBC.

27.1	JK Builders did not commence the building project on 1 February 2005, beyond the boundary fence, sign and ‘infrastructure’. This was condoned by Pacific Hotels as evidenced by meetings, notification of delay in financing, the making of no demand that JK Builders commence. The latter would have been necessary to counter condonation it engaged in through the meetings and (for example) asking JK Builders to provide updated costings to cover changes in pricing, etc, and agreeing to or agreeing to consider a change in the payment regime (agreement re pre-payment or payment of an advance sum, and agreeing to or agreeing to consider two-weekly rather than monthly payments).

27.2	JK Builders did not complete the building project. This as noted was condoned or with Great Pacific’s agreement.

28.	JK Builders Aware of Great Pacific’s Hotel Business

Whether JK Builders was aware that Great Pacific intended to have constructed the hotel under the Fiji SFBC and to carry on the business as an hotelier.

28.1	Yes. It is apparent that JK Builders was so aware, from oral evidence and the Fiji SFBC which refers to ‘building apartments, villas and associated facilities’ (a restaurant was referred to in the Minutes of the meeting of 12 September 2005). Further, JK Builders had (necessarily) copies of the design – ‘Contract Drawings’ and so on which apprised it of this. It was also aware of the business of Great Pacific in the hotel industry.

29.	Great Pacific – Loss of Income, etc

Whether Great Pacific is suffering and continues to suffer loss of income by not being able to carry on the hotel business.

29.1	Yes, it is true that Great Pacific ‘is suffering and continues to suffer’ income loss by reason of not being able to carry on the hotel business intended to be facilitated by the building project. Whether this is JK Builders’ doing or responsibility is another question.

29.2	This is not a case, for example, to which Clause 2 of the Fiji SFBC applies. That provision says:

2	Architects instructions

(1)	The Contractor shall (subject to sub-clauses (2) and (3) of this Condition) forthwith comply with all instructions issued to him by the Architect in regard to any matter in respect of which the Architect is expressly empowered by these Conditions to issue instructions. If within seven days after receipt of a written notice from the Architect requiring compliance with an instruction the Contractor does not comply therewith, then the Employer may employ and pay other persons to execute any work whatsoever which may be necessary to give effect to such instruction and all costs incurred in connection with such employment shall be recoverable from the Contractor by the Employer as a debt or may be deducted by him from any monies due or to become due to the Contractor under this Contract.

29.3	Clauses (2) and (3) refer to written instructions. Clause (2) relating to the Contactor’s right to request the Architect to ‘specify in writing’ what provision of the Conditions empowers the Architect to issue an instruction. Clause (3) requires that all instructions ‘issued by the Architect shall be issued in writing’ and any instruction ‘issued orally shall be of no immediate effect’. Confirmation in writing is necessary – so that where the Architect fails to do this, then the Contractor may itself confirm in writing to the Architect the nature/terms of the Architect’s instruction/s and if the Architect does not dissent in writing within seven days then the confirmation is effective from that date.

29.4	This confirms, again, that ‘in writing’ is an essential part of the Fiji SFBC. Again, the problem for the parties is that the Fiji SFBC has not been followed to cover what has occurred. 

30.	Breach Fiji SFBC – Great Pacific

Whether Great Pacific breached the Fiji SFBC and whether Great Pacific is solely responsible for all delays and damages suffered as a consequence thereof.

30.1	Based on the evidence, it appears to me that Great Pacific was responsible for delays in the sense that:

•	It had a problem with financing the building project;
•	It effectively allowed the delay in financing the building project to hold-up the commencement of building by JK Builders (beyond the boundary fence, etc) as:

•	it participated in meetings at which it was readily apparent that JK Builders were not continuing with the building project. In that sense, it appears that Great Pacific condoned the non-start of the building project at 1 February 2005 (apart from boundary fence, etc). it asked for JK Builders to put in a fresh ‘price’ taking into account price increases, etc due to the delay again affirms that it condoned the ‘non-start’ by JK Builders;
•	it agreed to a changed regime of payment, by agreeing to an advance payment to JK Builders;
•	albeit agreeing to this changed regime of advance payment, it did not confirm the amount of advance payment nor make any advance payment to JK Builders;
•	it showed its readiness to consider a changed regime of payment beyond the advance payment, by considering two-weekly payments to JK Builders.

30.2	On the other hand, JK Builders should have taken steps as per para [21.7] and para [22.4]. When, albeit demanded a Certificate was not drawn up, or if drawn up it was not paid, JK Builders could have taken steps per the Fiji SFBC provisions. This it did not do, waiting for a ‘green light’ from Pacific Hotels that finance was in place before commencing with the building project. To that extent, then ‘delay’ could be attributed to JK Builders in that it did not commence the building project on the start date of 1 February 2005.

30.3	JK Builders’ failure to commence the building project on the assigned date (1 February 2005) occurred because of discussions between JK Builders and Great Pacific, together with Maisuria Design, which were related at least in part to the finance problems Great Pacific faced in respect of the building project. An additional problem for JK Builders was that as time went on, it was requested to provide new costings. This meant a further hold up not attributable to it – although there was then the earlier referred to ‘stand off’ in July 2005, with JK Builders saying it would not provide new costings without advance payment.

30.4	However, had JK Builders taken the aforesaid steps, this could have precipitated the confirmation ‘on paper’ of the financial difficulties as causing the delay. Great Pacific may have produced monies sufficient to make an interim payment or may not. It seems to me on all the evidence that Great Pacific did not want JK Builders to commence on the Fiji SFBC ‘start date’.

30.5	By letting matters ‘drift’ as appears to be the case, or relying upon meetings and discussions rather than having the problem committed to writing, JK Builders has not protected its position as against Great Pacific in relation to the delay in financing which it accepted as standing in the way of commencing the building project.

30.6	What ultimately happened here took place in accordance with cooperation on the part of JK Builders, and agreement by Great Pacific by its actions and the instances cited herein, that JK Builders would not commence the building project. JK Builders appears not to have been ready to commit its resources to the building project until it was assured that finance was in place. Great Pacific at minimum allowed JK Builders to defer commencement (and on the evidence I accept it requested JK Builders to do so) as it appears not to have wanted the building project to commence until finance was assured or confirmed. This resulted in:

•	JK Builders not undertaking the building project;
•	Great Pacific not having the building project completed.

31.	Determination

The findings made in relation to the matters in evidence and the issues in dispute per the Pre Trial Conference lead to the following outcome.

31.1	(a)	Monies Due on Interim Certificate: As from the foregoing it appears to me that neither party conformed to the requirements of the Fiji SFBC, neither can claim damages, etc in that regard, except that JK Builders can succeed insofar as the costs and expenditure on the boundary fencing, signage and ‘infrastructure’ to the extent that it provided information to Maisuria Design for an Interim Certificate.

31.2	This is consistent with the principle expressed by the English Court of the Exchequer in Taylor v. Laird (1856) 25 LJ Ex 529. There, a ship’s captain understood to serve as vessel commander at £50/0/0 per month. He abandoned the contact after eight months, leaving the last month unpaid – he having been paid for seven months only. It was held that although (in that case) he ‘abandoned’ the contract, he was nonetheless entitled to the full amount contracted. Under the contract, said the Court:

... ‘per month’ means each month or monthly and gives a cause of action as each month accrued which once vested is not subsequently lost or divested by the plaintiff’s desertion or abandonment of his contract: at 273, per Pollock, CB

31.3	Applying the principle to the present case – whether or not JK Builders were seen as ‘abandoning’ the Fiji SFBC (and in my opinion that was not the case), JK Builders were entitled to payment under the Fiji SFBC for that which had been provided to Maisuria Design for drawing up an Interim Certificate.

31.4	Here, there was a ‘monthly’ payment agreement, or ‘payment on monthly (Interim) Certificate’ agreement. The decision by Maisuria Design not to facilitate payment because the sum was ‘too small’ for a Certificate cannot deprive JK Builders of its entitlement to payment of the sum due on Interim Certificate.

31.5	This is consistent also with Stubbs v. The Holywell Ry (1867) LR 2 Ex 311, where a consulting engineer was employed at a salary to be paid by five equal quarterly instalments. He worked for three quarters of the period, and received one instalment. At his death shortly after, his personal representative sought to recover the two unpaid instalments. Although the contract was dissolved by death, the Court upheld the estate’s entitlement to recovery of the two unpaid, but accrued, instalments. The right of action had vested prior to death.

31.6	In the present case, the sum according JK Builders’ figures contained in the letter of 21 January 2007 to its lawyers is $19,095.00 – incorporating payment of materials, labour, sign board printing costs, preliminary costs, office costs and transportation costs – the latter amounts being as it would appear ‘infrastructure’ referred to by JK Builders in its earlier referred to correspondence to Great Pacific.

31.7	(b)	Advance Payment: To become payable under the Fiji SFBC, any agreement for advance payment would be a variation of the contract. Accordingly, it had to be in writing. Albeit there was writing in relation to it – for example, the Minutes of 12 September 2005, it was not committed to writing as required under the Fiji SFBC. Even if the writing that exists were taken as a ‘variation’ as required, it is not a variation stating any particular sum. Without a written statement as to quantum, there can be no ‘true’ variation of the Fiji SFBC, or one that has an effect as a variation.

31.8	In any event, an ‘advance payment’ is just that: payment in advance for work which will be done. No work was done, so there is no advance payment or money in the nature of that is in issue. The Statement of Claim says that further notices were given through Maisuria Design, however, the information provided to Maisuria design:

•	does not equate to that required under the Fiji SFBC, in that requisite detail was not provided;
•	no payment is due on Certificate beyond that referred to in paragraph 31.5, as no further work was done on the building project.

3.9	(c)	Breach of Contract: The Statement of Claim is expressed as a claim in respect of breach of contract. The relevant contract is the Fiji SFBC. Any damages in breach of contract must be referable to the terms of the Fiji SFBC. Clause 25 which relates to ‘Determination by Employer’ commences: ‘Without prejudice to any other rights or remedies which the Employer may possess, if the Contractor shall make default …’ 

3.10	Great Pacific in its original Defence included a Counterclaim. The Amended Defence omitted to include the Counterclaim. Therefore, Great Pacific is taken to have abandoned its Counterclaim. Even were it not, the Counterclaim is pleaded in contract only. The relevant contract is the Fiji SFBC. As all the foregoing makes clear, in my opinion the Defendant, Great Pacific, has no claim in contract as against JK Builders.

3.11	As for the Plaintiff, JK Builders, Clause 26 of the Fiji SFBC ‘Determination by Contractor’ similarly provides: ‘Without prejudice to any other rights and remedies which the Contractor may possess …’ Having presented its claim solely in contract, JK Builders has no claim to assert outside the Fiji SFBC.

3.12	(d)	Interest: Insofar as interest is in issue, as noted earlier, in Mohammed Nasir Khan and Ors v. Tower Insurance (Fiji) Ltd (Civil Appeal No. ABU0057 of 2006, 19 November 2008) the Court of Appeal held the ‘appropriate rate of interest is 6%’. The Court recognised that the ‘present economic situation, which appears destined to have a global impact, may require a revision in the future of the interest rate set by the Courts in Fiji’: at para [43] However, this is for the future and for future claims. The present rate of interest is 6 per cent and if interest is to be allowed, there is no cause to alter that here. Interest should remain at 6% per Khan and Ors v. Tower Insurance.

3.13	(e)	Costs: As to costs, as the Plaintiff, JK Builders has partially succeeded in its claim, whilst the Defendant, Great Pacific, has partially succeeded in its defence but not in its (original) counterclaim, costs should be awarded 1/3rd as to 2/3rd in favour of the Plaintiff, JK Builders. Costs are to be agreed between the parties or otherwise to be taxed.

ORDERS

1.	The Defendant is ordered to pay to the Plaintiff the sum of $19,095.00 in full and final settlement of the claim.

2.	Interest at 6% payable from the date of the writ to date of judgment.

3.	Costs awarded on a 2/3rd: 1/3rd basis in favour of the Plaintiff, to be taxed or agreed between the parties.

Jocelynne A. Scutt
Judge

Suva
20 November 2008