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High Court of Fiji |
IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO.: HBC 153 of 2012
BETWEEN:
ABBCO BUILDERS LTD
Plaintiff
AND:
STAR PRINTERY LTD
Defendant
COUNSEL : Mr. B. Patel & Mr. C. Young for the Plaintiff
Mr. R. Newton for the Defendant.
Dates of Hearing : 20th July, 2015 – 23rd July, 2015 and
27th July, 2015 – 29th July, 2015
Date of Oral Submissions : 11th September, 2015
Date of Judgment : 5th November, 2015.
JUDGMENT
[1] The plaintiff company instituted this action claiming $ 155,882 due on the construction contract entered into with the defendant company.
[2] The plaintiff and the defendant entered into a construction agreement whereby the plaintiff agreed and undertook to construct an extension to an existing building of the defendant. The agreed contract price initially was $ 1,850,000 (Value Added Tax inclusive price). The contract price was later increased to $ 2,080,000.00 and the basis of the plaintiff's case is that out of the said amount $ 1,924,117.29 was paid by the defendant and the balance amount of $ 155,882.71 is the amount due to be recovered.
[3] While denying that the plaintiff company has a claim against it, the defendant company counter sued the plaintiff for damages.
[4] The particulars of damages claimed by the defendant are as follows;
(a) As Liquidated damages ($ 1200 per day for 14 weeks) amounting to $ 344,000 for the delay in achieving the practical completion of the contract.
(b) Loss of rental income for 18 months at the rate of $ 5000 per month amounting to $ 90,000.
(c) Interest at the rate of 6.35% on the monies borrowed for the construction of the building for the period between 2nd April 2010 and 10th February 2011 amounting to $ 165,493.13.
(d) Consultancy cost for the quantity surveyor due to the project overrun amounting to 51,233.41.
(e) The charges of the architect due to overrun project.
(f) The loss caused to the defendant due to the delay in installing five colour printing machines, extra cost for having the machines sitting in Auckland and the additional cost borne on the engineers by the defendant due to changing the dates for installation of the machinery.
(g) $ 20000 as additional mobilization cost for employing another contractor to complete the work and to attend to the defects.
[5] There was no written agreement betweenn the parties. Therefore, the Fiji Standard Form of Building Contract (without quantities) 1978 edition was to apply for this contract.
[6] Mr. Narayan, the first witness for the plaintiff company who is its Managing Director testified that in June 2009 he was requested to construct the building in question. It was this witness who discussed matters pertaining to the contract with Mr. Sathish Parshotham and Mr. Chauhan who initially represented the defendant company.
[7] Once the parties agreed on the terms of the contract the witness had a meeting with Mr. Sathish Parthosham and Mr. Convey Beg, the architect appointed for the project by Mr. Chauhan. He was also the administrator of the contract.
[8] The architect by his letter dated 08th October 2008 awarded the contract to the plaintiff and it was agreed that the construction should be completed in twenty working weeks.
[9] When the plaintiff went to the construction site he could not identify the boundaries because the boundary pegs were not visible. This position is corroborated by the e-mail dated 30th October 2009, sent by Mr. Conway Beg, the architect [Page 14 of the plaintiff's bundle of documents]. Once the boundaries were properly demarcated the plaintiff was asked to reduce the floor area of the building by four meters and the witness stated that all these work took about three weeks. When the plaintiff started work on the ground floor it was found that the earth underneath was soggy and it took about two weeks to prepare the ground for the laying of concrete and thereafter the work was stopped for another two weeks for Christmas.
[10] When the reinforcement was done before laying concrete the architect gave further instructions [Architect's Instructions 34] to the plaintiff to increase the thickness of a floor area and the witness states that they had to remove the reinforcement and redo it which took more than a week. The area, of which the thickness was increased, according to the witness, is shown in blue in the original drawing given by the architect [page 186 of the plaintiff's bundle of documents].
[11] On 10th February 2010 the architect instructed the plaintiff [Architect's Instructions23] to extend the floor area of the building which was not in the original drawings given to him.
[12] On 17th February the architect issued another set of instructions [Architect's Instructions 27] directing the plaintiff to make the roller shutter larger than its original size. It is the evidence of this witness that they had to cut the precast wall to make it larger and it cost him more and took about three more weeks.
[13] The witness referring to the original plan given by the architect said that the area marked in pink is the existing building and the area marked in yellow shows the work the plaintiff was expected to carry out.
[14] The evidence of Mr. Narayan is that the architect by his instructions No. 2 to 10 gave additional work that was not there in his original drawings. It is clear from the documents tendered in evidence by the plaintiff that the architect has given seventy one architect's instructions during the course of the construction and the witness testified that some of the variations found in these instructions cost him more money and time.
[15] The witness testified that on 31st May 2010 he wrote to the defendant informing him that the construction work had been completed. The witness, however, admitted that by that time the period of the contract had lapsed. On 30th June 2010 the plaintiff applied for payment of $ 203341.80 [Pages 156-158 of the plaintiff's bundle]. In June and July 2010 architect gave further instructions which were not in the original contract [Architect's Instructions 41- 59] and the plaintiff by its letter dated 09th August 2010 quoted $ 86,780 for these additional work.
[16] It is the evidence of this witness that by the time he received the Architect's Instruction No. 59 the work of the initial contract was over and only the alucabond panel work was left and the building could be occupied but the defendant failed to pay for the work done. The document 33 of the plaintiff's bundle of documents gives the details and the cost of the additional work done.
[17] The witness stated that all defects in the given schedule [pages 39, 40, 43, 46, 47 and 48 of the plaintiff's bundle of documents] were attended to by him. He also said that in terms of the Fiji Standard Form of Building Contract the defects liability period of six months commences from the day stated in the Certificate of Practical Completion.
[18] It is his evidence that in or about August/September 2010 the keys to the building were handed over to the defendant and thereafter he had no access to the building.
[19] By letter dated 08th October 2010 [Document No. 40 of the plaintiff's bundle of documents] the plaintiff has asked for the payment for the work done and also for the material on the site because payment for the material on the site is a trade practice, but the defendant has not acceded to the request of the plaintiff. Alucobond panel work was delayed because the defendant failed to pay for the materials on the site but that work was completed by 31st January 2011. Admittedly, the plaintiff has not attended to some of the work in the defect list of 04th February 2011 [Page 57 of the Plaintiff's bundle of documents] which according to him, were not part of the original contract. They are as follows;
(i). all exposed piping at the entry level to be boxed.
(ii). all exposed piping at the staff canteen to be boxed.
(iii). Carport columns to be encased with alucobond panel.
[20] When the plaintiff sent the letter dated 31st January 2011 [Document 56 of the plaintiff's bundle of documents] claiming the balance sum due on the contract which is $ 145,882.71 the defendant sent another list of defects [Pages 57 and 58 of the plaintiff's bundle of documents].
[21] Items No. 1, 2, 3, 6, 9, 12 and 13 of the said list were not part of the original contract and the plaintiff has attended to the other defects in the list but even thereafter, the defendant has failed to pay the balance sum due on the contract. It is the evidence of this witness that the architect by e-mail dated 14th March 2011 [page 63 of the plaintiff's bundle of documents] suggested to appoint a neutral mediator and to deposit a cheque for $ 50000 with him but the defendant did not agree to that proposition nor did he terminate the contract.
[22] The witness referring to pages 87 and 160 of the plaintiff's bundle of documents stated that none of these documents were given to him and he discovered these documents from the defendant's bundle of documents. It is his position that the defendant has deleted all the additional work done by the plaintiff and that is his counter claim. He also said that the sum mentioned as cost for variations in "valuation of progress claims No. 6 and 7" [Pages 157 and 159 of the plaintiff's bundle of documents] have subsequently been deleted without informing him.
[23] The witness denied the claims made by the defendant in its statement of claim. Regarding the claim in paragraph 24(a) of its statement of defence which is for lost rentals the witness stated that he was never informed that this building was to be rented out.
[24] According to this witness all parties have, after discussions, agreed on the date of completion of the contract but even after that date the plaintiff was given additional work by the defendant and the architect did not issue interim certificates as required by Clause 30(1) of the Fiji Standard Form of Building Contract.
[25] Referring to document 57 of the plaintiff's bundle of documents the witness said that the burglar bars were originally fixed outside the building and later at the request of the defendant they were fixed inside. However, as borne out by plan A24 fixing of burglar bars was not provided for in the original contract.
[26] Referring to the addendums [Bundle of documents – P201] the witness said that none of these addendums were sent to him and they are addressed to some other person and also that if not for the additional work he could easily have completed the contract in 20 weeks.
[28] The plaintiff has not asked for additional time because these additional works were given every now and then whenever the architect came to the construction site. When the witness was questioned on the defects in the roof he said that just because one can see the sun through the openings in the roof it does not mean that the water can leak through the gaps.
[29] He was shown some photographs [Document 182 of the defendant's bundle of documents] which according to the defendant show some defects in the construction. After perusing the photographs the witness said that he cannot recognize the 2nd and 4th photographs and the defects shown in the 3rd photograph according to him is a minor one not even visible. The defect shown in photograph No. 8 has already been fixed by the plaintiff. The witness could not offer an explanation in respect of defects shown in the other photographs.
[30] Regarding electrical work the witness said that the electrical work was done by another company and the cost was $150,000.
[31] When questioned on the condition of the building the witness said that he could not agree that the building was not suitable for occupation or for a printing press or for storage. The building had been handed over to the defendant after the architect inspected it.
[32] The contract price agreed upon by the parties is $ 2,080,000 [VAT inclusive] and the defendant agreed to pay $ 400,000 immediately. It is the position of the defendant that this $ 400,000 was only a deposit. When the plaintiff's witness was cross-examined he said that it was not a deposit but a payment. To substantiate his position the witness relied on the documents 35 and 37 of the plaintiff's bundle of documents.
[33] Witness Sharda Nand was the foreman of the Starprintery construction contract. He started working there in or about February/March 2010. According to his evidence he has handed over the keys of the new building to Mr. Chauhan. At the time of handing over the keys burglars bars, connecting corridor and alucopanel work had not been completed. When the witness was questioned on the defects schedule [Pages 39 and 40 of the plaintiff's bundle of documents] the witness said that he could not remember seeing it. When he was questioned on the subsequent defects list [Pages 46 to 48 of the plaintiff's bundle of documents] the witness said that he attended to all the defects in the list.
[34] When the photographs [pages 72 to 86 of the plaintiff's bundle of documents and document 182 of the defendant's bundle] were shown to him he explained them as follows;
Photograph No. 72:
I do not know where this was taken.
Photograph No. 73:
Ceiling of the office. Two panels are out. We fixed all the panels.
Photograph No. 74:
Gap between alucopanels. It is an enlarged photograph.
Photograph No. 75:
Inside the ceiling.
Photograph No. 76:
This was not in the defect list.
Photograph No. 77:
New roof. Gutter strips. There was a leak. We put silicon. This was done in 2011. You only have to press them down.
Photograph No. 78:
This is between the new roof and the old roof. There was a leak. My plumber later fixed it.
Photograph No. 79:
There was a leak. We repaired it.
Photograph No. 80:
I do not know where this is.
Photograph No. 81:
Silicon between two aluco panels. I do not know where.
Photograph No. 82:
Not clear.
Photograph No. 83:
Aluco panel has been bent. I do not know where.
Photograph No. 84:
A flashing. I do not know where.
Photograph No. 85:
Silicon tape. Same as the earlier one (Photograph 81).
Photograph No. 86:
Some nails which were shown to me.
[35] The witness stated that electrical work and the installation of air conditioners were done by Sigatoka Electricals.
[36] In cross-examination the witness said that he did not attend the meetings but when there were complaints that water was seeping between the roofs of the old and new buildings because alucobond panels were not installed he attended to it and installation of alucobond panels and also the tiling of the kitchen were done.
[37] The defendant called the architect Mr. Conwey Beg to testify on its behalf. It is his evidence that after selecting the plaintiff as the contractor he issued a series of architect's instructions and those variations originated from the discussions at the site and they are in line with the Fiji Standard Form of Building Contract.
[38] When he was questioned on the architect's instructions issued by him the witness admitted that instructions No. 09, 11, 23, 31, 38, 41, 48.2, 50 and 51 involved additional works. However, he was not able to say whether certain other instructions involved any additional work or not.
[39] Referring to page 46 of the plaintiff's bundle of documents the witness said that most of these items were not completed by the plaintiff. The witness testified further that he wrote to Mr. Narayan to come and finish the fixing of alucobond panels but he did not come. However, the witness admitted that the alucobond panels were delivered to the construction site.
[40] The witness admitted receiving the email from Satish Parshotham indicating that Sandeep Chauhan would deposit $ 55,000 into a trust account on 27th November 2010 [page 51 of the plaintiff's bundle of documents] but said that he had nothing to do in sending it. When he was questioned on the email at page 57 of the plaintiff's bundle of documents he said that the plaintiff did not attend to that work.
[41] In cross-examination the witness testified that defects are likely to arise in any contract and that the contractor had six months to repair the defects. It is his evidence that after the defendant took possession of the building in late August 2010 he prepared another list of defects [Pages 39 and 40 of the plaintiff's bundle of documents] in September 2010. When the witness sent this list to Mr. Chauhan he had prepared another list of defects which is at page 43 of the plaintiff's bundle of documents. The last defects list, according to the witness, is found in page 46 of the plaintiff's bundle of documents.
[42] This witness testified after about five years from date of the dispute which led to the institution of this action, without referring to any document or record maintained by him. The witness said that one Ross was in charge of the construction site and he could have seen all the defects at the first site inspection. When he was suggested that the delay was due to the additional work given to the contractor by way of architect's instructions he said that it is the contractor who must apply for extension of time and in terms of Fiji Standard Form of Building Contract an extension of time cannot be granted without a request from the contractor but he did not receive any document seeking extension of time.
[43] When the witness was questioned on his instructions given to the contractor from time to time he responded in the following manner;
Architect's Instructions No. 07 –
This became necessary due to the shortening of the building. This would have required additional time.
Architect's Instructions No. 08 –
This required about additional seven days.
Architect's Instructions No. 09 –
The witness first said that this is new work but subsequently changed his position and said that he could not recollect. In re-examination he said that this work could have been done while the other work proceeding.
Pages 22 and 23 of the plaintiff's bundle of documents (items No. 3) –
The witnesses admitted that the contractor had only to pour concrete when the variation was made.
Architect's Instructions No. 14 –
Variation from single door to double door. This work takes extra time. I would have given maximum of two weeks.
Architect's Instructions No. 23 & 27 –
This was a variation from the original plan. It costs additional expenses.
Architect's Instructions No. 35 –
This is additional work and required more time.
Architect's Instructions No. 37 –
This is additional work.
Architect's Instructions No. 39 –
Further revision. This would not have been an impediment to the other work.
Architect's Instructions No. 44 –
This is new work and would have needed more money and time. My answer to the counsel on Thursday that this is not new work was incorrect.
Architect's Instructions No. 47 –
It is for pricing an order. Carport was in the original plan but there is a variation. This is new work. It would have slowed down the other work.
Architect's Instructions No. 55 –
This is new work and that was done. It could have taken time.
Architect's Instructions No. 59 –
This is additional work. My earlier answer was incorrect.
[44] This witness admitted that alucobond panels were not available in Fiji and the plaintiff had to import them.
[45] When the witness was questioned on the insurance he said that for this contract Clause 20A of the Fiji Form of Building Contract that is applicable and not Clause 20C.
[46] The witness testified further that he administered the contract as the architect and it was his duty to see that the parties sign a formal agreement but he did not get them to sign an agreement.
[47] The witness while admitting that in terms of Clause 30 of the Fiji Standard Form of Building Contract interim certificates of practical completion must be issued stated that he did not issue certificates of practical completion. However, it appears from the plaintiff's bundle of documents some interim certificates have been issued by the architect. [Documents 139, 140, 141/142, 143/144, 145 and 146].
[48] In the interim certificate No.08 [at page 149 of the plaintiff's bundle of documents] the amount approved for variations is given as $ 260,655.69. At first the witness said that without looking at his records he could not say how this figure was arrived at but later he said that this figure was arrived at by the quantity surveyor.
[49] Mr. Sandeep Chauhan who is a director of the defendant company testified that there was no written agreement between the parties and said that the construction program was never provided. Speaking about the defects in the building the witness said that during rainy seasons the roof was leaking and the roller shutter could not be closed properly.
[50] The witness admitted that the defendant brought alucobond panels to the construction site but said that they were later removed from the site. The witness also said that the plaintiff wanted money for alucobond panels but he did not pay him because by then he had paid lot of money and also that there was a deposit of $ 400,000 with the plaintiff. According to him the plaintiff had fixed the alcobond panels but the work was not satisfactory.
[51] The witness admitted that additional works were included in the variations and said that he asked the plaintiff to quote its price for these additional work. According to him by 01st March 2011 the sliding gate, boundary fence, column encasement, toilet refurbishment, Drainage system, water leakage, refurbishment of existing windows and fire protection work were to be completed.
[52] Mr. Vijay Krishnan is a Civil Engineer. Referring to drawing F 01 the witness said that fire proofing paint is important in case of a fire and that work would have taken two week. Referring to architect's instructions No. 07 the witness said that the drawing attached to the instructions was prepared by him and that work would have taken 3 to 4 weeks. He also said that the time factor depends on the resources available and also on the contractor's program. Referring to architect's instructions No. 14 the witness said that that work was not part of the original contract and the additional work would have taken 3 to 4 weeks. It is his estimate that the enlargement of the door on a precast wall and to fix a roller door would have taken four days.
[53] The first issue for determination here is whether the plaintiff completed the contract and handed over the building to the defendant.
[54] The plaintiff's position is that in or about August/September 2010 the keys to the building were handed over to the defendant. It is common ground between the parties that the architect did not issue the certificate of practical completion of the contract to the plaintiff.
[55] It is the submission of the learned counsel for the defendant that the plaintiff failed to achieve the practical completion of the works. The learned counsel submitted that there is no definition for "practical completion" in the Fiji Standard Form of Building Contract. In terms of clause 15(1) of the Fiji Standard Form of Building Contract the practical completion is deemed to have achieved when the architect forms an opinion that the works are completed and issues the certificate of practical completion. The learned counsel also submitted that the witnesses for the plaintiff stated in their evidence that the practical completion occurred when the keys to the building were handed over to the defendant's representative in September 2010, but in view of clause 15(1) of the Fiji Standard Form of Building Contract, practical completion occurs with the issuance of the certificate of completion by the architect and also that handing over the key did not operate to render an incomplete building fit to use as a printing factory. It is also the submission of the learned counsel for the defendant that the practical completion of the building did not occur until at least 29th December 2011 when the Suva City Council issued the Certificate of Occupancy.
[56] The learned counsel for the plaintiff submitted that in terms of clause 16(b) of the Fiji Standard Form of Building Contract the practical completion of the contract could be achieved by handing over the building to the employer.
[57] Clause 16(b) of the Fiji Standard Form of Building Contract reads as follows;
For the purposes of sub-paragraph (ii) of paragraph (f) of this Condition and sub clauses (2) and (3) of clause 15 of these conditions, practical completion of the relevant part shall be deemed to have occurred and the Defects Liability Period in respect of the relevant part shall be deemed to have commenced on the date on which the employer shall have taken possession thereof.
[58] When the entire building is handed over to the owner in view of the above clause it can be construed that the contractor has achieved the practical completion of every part of the contract.
[59] In terms of clause 15(1) the practical completion of the works shall be deemed for all purposes to have taken place on the day named in the Certificate of Practical Completion issued by the architect.
[60] Section 16(a) requires the architect to issue the Certificate of Practical Completion for each and every part of the contract within seven days from the date of handing over the possession of every part of the building.
[61] In this case no such certificate has been issued by the architect. The learned counsel for the plaintiff submitted that although the architect is required to act fairly between the plaintiff and the defendant, in this case the architect has been biased towards the defendant.
[62] In this regard the learned counsel cited the decision in the case of Scutliffe v Thakrah (1974) 1 All ER 859 where it was held as follows;
The building owner and the contractor make their contract on the understanding that in all such matters (variations, disturbances, granting additional time, defects) the architect will act in a fair and unbiased manner and it must therefore be implicit in the owner's contract with the architect that he shall not only exercise due care and skill but also reach such decisions fairly holding the balance between his client and the contractor.
[63] It was submitted by the learned counsel for the plaintiff that the architect has failed to get the parties to enter into a formal agreement, failed to issue monthly certificates as required by clause 30(1) of the Fiji Standard Form of Building Contract, certificate of payment for material off-site as provided for by clause 30(2A) and for material on-site as provided for by clause 30(2) and also the Certificate of Practical Completion as required by clause 15(1) of the Fiji Standard Form of Building Contract.
[64] The fact that the keys to the building were handed over to the agent of the defendant was admitted by Sandeep Chauhan. When the architect acts partially towards the owner the contractor becomes helpless. The Fiji Standard Form of Building Contract does not provide for any remedy for the contractor when the architect unreasonably refuses and/or neglects to issue the Certificate of Practical Completion or Certificates of Partial Completion.
[65] In the case of Emson Eastern Ltd v E M E Developments LTD (1991) 55 BLR 114at page 122 it was held;
I have described what I think to be the overall scheme of the contract. In my opinion there is no room for "completion" as distinct from "practical completion". Because a building can seldom if ever be built precisely as required by drawings and specifications, the contract realistically refers to "practical completion", and not "completion" but they mean the same.
[66] In this action the defects list was sent by the e-mail dated 10th September 2010 [Page 38 of the plaintiff's bundle of documents] to the plaintiff. As per clause 15(2) of the Fiji Standard Form of Building Contract the defects list has to be delivered to the contractor within 14 days from the expiration of the defects liability period which is six months from the date of practical completion of the contract.
[67] The learned counsel for the defendant submits that the practical completion of the contract was not achieved until the Certificate of Occupancy was issued by the Suva City Council on 29th December 2011. It is common ground that the parties to this contract were governed by the terms and conditions of the Fiji Standard Form of Building Contract. There is no clause found in the Fiji Standard Form of Building Contract to the effect that the practical completion can be achieved only upon the issuance of the Certificate of Occupancy by the relevant City Council. Therefore, the submission of the learned counsel for the defendant that the practical completion of the contract was achieved on 29th December 2011 when the Certificate of Occupancy was issued by the Suva City Council is without merit.
[68] It is also pertinent to note that unless the building was completed and it was suitable for occupation the defendant's agent would never have accepted the keys.
[69] It was the evidence of Sharda Nand that when he went to the factory extension along with Ross and Sandeep Chauhan on 05th October 2010 for inspection, the building was full of machinery and other materials. This position was not denied or contradicted by the witnesses for the defendant.
[70] As submitted by the learned counsel for the plaintiff if the building was not suitable for occupation due to the defects the defendant could not have brought the valuable machinery and other materials into the building.
[71] Although the defendant and the architect attempted to show the Court that there was no practical completion of the contract, by sending the defendant the defects list under clause 15(2) of the Fiji Standard Form of Building Contract they have admitted that the plaintiff had achieved the practical completion of the contract.
[72] The next issue for determination is whether the plaintiff is responsible for the delay in achieving the practical completion of the contract.
[73] The understanding between the plaintiff and the defendant was to complete the work of the original contract within 20 working weeks. It is an admitted fact that after the commencement of the work the architect issued as many as seventy one architect's instructions.
[74] The learned counsel for the defendant submits that it is axiomatic that a builder cannot complain about time taken by him to properly perform his contractual obligations absent circumstances. If circumstances existed which enabled the plaintiff to promptly notify the architect of delays for which an extension of time should be granted then the plaintiff should have made that notification. The plaintiff did not do so and cannot now complain. Referring to the evidence of the architect and the engineer the learned counsel submits that according to their evidence some variations caused no delay because they did not operate concurrently on a different time path to that of the existing work. If the set of works can proceed independently of the progress of the second set of work then the second set will be said to be concurrent. Concurrent works do not interfere with the critical path for the first set of works and the learned counsel referred to certain architect's instructions as examples.
[75] The evidence of the architect and the engineer do not support this contention of the learned counsel. It was admitted by the very person who issued the architect's instructions that some of the work included in his instructions required more time for the plaintiff to complete. If the plaintiff could employ more people at the construction site it could have minimized the delay. However, a contractor before employing workers will have to decide how many workers he needs to complete the work given to him under the contract without delay. The contractor cannot be expected to employ an additional work force and keep them at the work site expecting the architect to issue instruction with variations. To employ an additional work force also takes time.
[76] It was the position of the architect that he did not grant additional time because the plaintiff did not request for more time.
[78] The question then arises for determination whether it is the responsibility of the contractor to seek additional time or it is the duty of the architect to grant an extension of time. Granting an extension of time is provided for in Clause 23 of the Fiji Standard Form of Building Contract.
[79] The learned counsel for the defendant submits that where, as in this case, a contractual mechanism exists for the granting of an extension of time to cover delays caused by variations and the contractor fails to avail himself of that mechanism, the contractor is not permitted to rely on the prevention principle to have time set at large.
[80] In the case of Dodd v. Churton [1987] 1 Q.B. 562 it was held:
Where in a contract for the execution of specified works it is provided that the works shall be completed by a certain day, and, in default of such completion, the contractor shall be liable to pay liquidated damages, and there is also a provision that other work may be ordered by way of addition to the contract, and additional work is ordered which necessarily delays the completion of the works, the contractor is exonerated from liability to pay the liquidated damages, unless by the terms of the contract he has agreed that, whatever additional work may be ordered, he will nevertheless complete the works within the time originally limited.
[81] In the case of S M K Cabinets vs. Hill Modern Electrics Pty Ltd [1994] VicRp 26; (1994) VR 391 it was held that the employer under a building contract cannot recover liquidated damages from the contractor for delay in completion where the employer himself delays completion by ordering extras or other variations, unless the contract makes it plain that the contractor is undertaking to complete by the due date notwithstanding extras or other variations or unless resort can be had to an appropriate extension of time clause.
[82] In that case it was also held that unless the contract provides otherwise, liquidated damages for delay in completion cannot be recovered by the employer where the ordering of extras or other variations causes or contributes to the delay in completion, notwithstanding that the contractor may in fact have disabled himself by his own delays from completing by the due date.
[83] The prevention principle in essence is that a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non performance. In the construction law context the principle applies to acts or omissions of the principal within the scope of the contract that prevent practical completion within the agreed period. Variations in the absence of a contractual stipulation may amount to acts of prevention.
[84] In the instant case there is no undertaking by the plaintiff that it would achieve the practical completion of the contract within twenty weeks despite the several architect's instructions issued from time to time.
[85] In the case of Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [1970]1BLR 111 it was held:
.......the failure in this case of the architect to extend the time would be fatal to the claim for liquidated damages. There had clearly been some delay on the part of the corporation. Accordingly, as the architect has not made "by writing under his hand such an extension of time", there is no date under the contract from which the defendant's liability to pay liquidated damages for delay could be measured. And therefore none can be recovered.
[86] It is also his submission that the plaintiff's case included the irrelevant assertion that the date of completion of the works was extended from time to time and was eventually rendered at large by new instructions, variations, extras, additional work and bad weather. Firstly, Mr. Narayan conceded that the plaintiff had never notified the architect of a need for or sought an extension of time under clause 23 of Fiji Standard Form of Building Contract, either on account of variations or weather. Secondly, it is doubtful, on careful analysis of architect's instructions that any delay was caused on account of variations prior to the original agreed time for completion on 21st April 2010. The learned counsel goes on to comment on various architects instructions and effects of them. I have earlier in my judgment considered the architect's instructions relevant to the issues for determination and how these instructions, according to the architect, affected the work.
[87] In the case of Trollope & Colls v North West Metropolitan Regional Hospital Board (1973)2 All ER 260 at page 266 it was held:
It is well settled that in building contracts – and in other contracts too – when there is a stipulation for work to be done in a limited time, if one party by his conduct – it may be quite legitimate conduct, such as ordering extra work – renders it impossible or impracticable for the other party to do his work within the stipulated time, then the one whose conduct caused the trouble can no longer insist upon strict adherence to the time stated. He cannot claim any penalties or liquidated damages for non-compliance in that time.
[88] The entire claim of the defendant and the submissions of his counsel are based on the ground that it was the plaintiff who should have sought extension of time whenever the architect issued instructions with additional work.
[89] The learned counsel for the plaintiff submitted that the architect did not grant extensions of time when he was aware that his own instructions were likely and did delay the works. Instead he wrongly insisted that an application for extension by the plaintiff was a prerequisite to grant an extension under clause 23 of the Fiji Standard Form of Building Contract which is identical to clause 23 of the Standard Form of Building Contract (July 1971 revision of 1963 edition published on behalf of the Joint Contracts Tribunal by Royal Institute of British Architects).
[90] For the convenience of reference I will reproduce here the relevant parts of clause 23 of both the Fiji Standard Form of Building Contract and RIBA Standard Form of Building Contract.
[91] Clause 23 of Fiji Standard Form of Building Contract:
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 of 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 time previously fixed under this clause, .............
....... 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 a fair 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.
[92] Clause 23 RIBA Standard Form of Building Contracts:
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/Supervising Officer, and if in the opinion of the Architect/Supervising Officer 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 time previously fixed under either this clause or clause 33(1)(c) of these conditions, .............
....... then the Architect/Supervising Officer shall so soon as he is able to estimate the length of the delay beyond the date or time aforesaid and make in writing a fair 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 be reasonably required to the satisfaction of the Architect/Supervising Officer to proceed with the Works.
[93] In the case of London Borough of Merton v Leach (1985) 32 BLR 68 at pages 89 & 90 Clause 23 RIBA Standard Form of Building Contracts which is identical to Clause 23 of the Fiji Standard Form of Building Contract was discussed by Vinelott J:
It will be convenient at this stage to interpose the last of the preliminary issues determined by the arbitrator, that is, Preliminary issue No. 14, which is in the following terms:
Upon the true construction of clause 23 is the contractor entitled to an extension of time in respect of any cause of delay falling within sub-clauses (a) to (k) if he fails to give written notice thereof forthwith upon it becoming reasonably apparent that the progress of the work is delayed?
The case of Merton is that the Architect is under no duty to consider or form an opinion on the question whether completion of the work is likely to have been or has been delayed for any of the reasons set out in clause 23 unless and until the contractor has given notice of the cause of a delay that has become "reasonably apparent" or, as it has been put in argument, that the giving of notice by the contractor is a condition precedent which must be satisfied before there is any duty on the part of the architect to consider and form an opinion on these matters. The arbitrator's answer to the question was that "a written notice from the contractor is not a condition precedent to the granting of an extension of time under clause 23".
I think the answer to Merton's contention is to be found in a comparison of the circumstances in which a contractor is required to give notice on the one hand and the circumstances in which the architect is required to form an opinion on the other hand. The first part of clause 23 looks to a situation in which it is apparent to the contractor that the progress of the works is delayed, that is, to an event known to the contractor which has resulted or will inevitably result in delay. The second part looks to a situation in which the architect has formed an opinion that completion is likely to be or has been delayed beyond the date for completion. It is possible that the architect might know of events (in particular "delay on the part of artists, tradesman or others engaged by the employer in executing work not forming part of the contract") which is likely to cause delay in completion but which has not caused an actual or prospective delay in the progress of the work which is apparent to the contractor. If the architect is of the opinion that because of an event falling within sub-paragraphs (a) to (k) progress of the work is likely to be delayed beyond the original or any substituted completion date he must estimate the delay and make an appropriate extension to the date for completion. He owes that duty not only to the contractor but also to the building owner. It is pointed out in a passage from Keating on Building Contracts (4thEdn) at p 346, which is cited by the arbitrator, that if the architect wrongly assumes that a notice by the contractor is a condition precedent to the performance of the duty of the architect to form an opinion and take appropriate steps:
"...... and in consequence refuses to perform such duties the employer loses his right to liquidated damages. It may therefore be against the employer's interests for an architect not to consider a cause of delay of which late notice is given or of which he has knowledge despite lack of notice."
The construction advance by Merton in effect involves reading the words "and if in the opinion of the architect" as equivalent to "then if in the opinion of the architect". That, I accept, is grammatically the most natural way of reading clause 23. But, as I have said, it leads to a consequence which cannot have been intended: that the architect can ignore events which he knows are likely to cause delay beyond completion date even though, to the knowledge of the architect, the contractor is not aware that progress of the work is delayed. A more rational result can be achieved if the word "and" is taken as conjoining two related but independent duties. It does not, of course, follow the failure by the contractor to give notice of the cause of a delay when it is reasonably apparent to him that "the progress of the works is delayed" will leave his right to an extension of time unaffected. Failure to give notice is a breach of contract on the part of the contractor. I agree with the learned author of Keating on Building Contracts that if no notice or late notice is given by the contractor and in consequence the architect does not become aware that the completion date the architect can
".....take into account that the contractor was in breach of contract and must not benefit from his breach by receiving a greater extension than he would have received had the architect, upon notice at the proper time, been able to avoid or reduce the delay by some instruction or reasonable requirement".
(The emphasis is added).
[94] In the instant case it is well established that the architect's instructions [Clause 23(e) of the Fiji Standard Form of Building Contract] have contributed to the delay in achieving practical completion of the contract. In view of the decision in London Borough of Merton v Leach (supra) it was the responsibility of the architect who issued such instructions to grant a reasonable extension of time to without waiting for the plaintiff to make a request.
[95] According to the minutes of the project meeting held on 28th October 2009 [Document 12 of the plaintiff's bundle of documents] the works were scheduled to begin on 12th November 2009 and were to be completed within 20 weeks. The architect continued to issue instructions till September 2010 without any extension of time. Architect's instruction No. 59 was issued on 04th August 2010 long after the contract was due to be completed and the architect in his evidence admitted that this involved additional work. It is thus clear that the architect employed by the defendant has acted unfairly and without having regard to the terms and conditions of the Fiji Standard Form of Building Contract.
[96] The learned counsel for the defendant relying on the decision in Mc Alpine Humberoak v Mc Dermott International (1992) 58 BLR 383 submitted that once the right to liquidated damages has accrued by reason of the failure of a contractor to meet a time stipulation then the right to liquidated damages cannot be lost by later delays caused by variations outside the original time period.
[97] This decision cannot be applied to the facts of the case before this Court for the reason that in this case the architect started giving additional work by way of variations from the time the contractor commenced construction work. It cannot, therefore, be said that a right to liquidated damages accrued to the defendant at any time during the course of the contract.
[98] In the circumstances I am of the view that the defendant and the architect cannot in law to place the responsibility on the contractor for not requesting extension of time since the architect who issued the architect's instructions with variations was well aware that certain variations would cause delay. In view of the principle enunciated in London Borough of Merton v Leach (supra) it was the architect who should have considered granting a reasonable extension of time.
[99] The damages claimed by the defendant in his counter claim are based on the ground that it had to suffer damages due the failure of the plaintiff to achieve the practical completion of the work as agreed. Had the architect performed his duty as required by the Fiji Standard Form of Building Contract, the Court could have had no difficulty in ascertaining the plaintiff's contribution towards the delay if any, in achieving the practical completion of the contract. Since the architect has unfairly attempted to place the entire responsibility for the delay in completing the contract on the plaintiff, the Court is not in a position arrive at any conclusion as to the extent of the responsibility of each party towards the delay in completing the contract.
[100] For these reasons the Court holds that the defendant is not entitled to recover the damages as claimed in its statement of claim.
[101] Mr. Narayan by his letter dated 31st January 2011 [Documents 56 of the plaintiff's bundle of documents] informed the architect and requested for the balance payment due for the work done. Thereafter, many e-mails were exchanged between the parties and since the defendant did not pay the money, the plaintiff through its solicitors sent the letter dated 31st October 2011 [pages 69 and 70 of the plaintiff's bundle of documents] demanding the payment. Thereafter, on 25th November 2011 the quantity surveyor for the first time sent the e-mail titled "VALUATION OF PROGRESS CLAIM NO. 8" [Documents 87 and 88 of the Plaintiff's Bundle of Documents] wherein the quantity surveyor has shown $ -260,000 under the sub-heading "VARIATIONS" and the final balance is shown as $ -226,693.07. None of the witnesses for the defendant could explain the basis on which this negative balance was arrived at.
[102] There is a dispute between the parties as to the payment of $ 400,000. The defendant says that it was only a deposit but the plaintiff's position is that it is a payment towards the work done.
[103] When the original contract sum was revised the plaintiff quoted $ 2,100,000 but after discussions the plaintiff agreed to complete the contract for $ 2,080,000. The document 35 of the plaintiff's bundle of documents is an e-mail sent by Mrs. Narayan who is a director of the plaintiff company to Sandeep Chauhan which reads as follows;
I have discussed with Mr. Narayan and he said if you are paying $ 400,000 the best and final he can do is $ 2,080,000.
[104] It is clear from this e-mail that the plaintiff company has expected a payment of $ 400,000 for it to agree for the contract sum of $ 2,080,000. Mrs. Narayan has not mentioned the word "deposit" in her e-mail. The word "deposit" was once mentioned by Sandeep Chauhan in his e-mail of 19th August 2010. [Document 36 of the plaintiff's bundle of documents]. Document 37 of the plaintiff's bundle of document is an e-mail sent by Emosi Lutu of Rawlinson Jenkins Ltd to the architect where he says;
"Agreed sum of $ 2,080,000.00 VIP and immediate payment of $ 400,000.000"
[105] In the interim certificate No. 07 dated 19th August 2010 the architect has recommended the payment of $ 400,000 to the plaintiff as payment for the work done.
[106] On a careful consideration of these documents it cannot be said that $ 400,000 was a deposit. If it was so there was no reason not to so mentioned in these e-mails and also as submitted by the learned counsel for the plaintiff the architect's evidence does not support the defendant's version. The only reasonable conclusion the Court can arrive at, on the evidence is, that this payment of $ 400,000, is a payment made for the work done by the plaintiff and not as a deposit.
[107] In terms of the provisions of the Fiji Standard Form of Building Contract where the contractor is required to insure against loss or damage caused by fire, lightening, explosion etc. is applicable to a construction of a new building whereas in a case of extensions to existing buildings the responsibility to insure against such losses and damages is on the employer. [Page 13 of the Fiji Standard Form of Building Contract – Foot note].
[108] Although the defendant's position is that this is a new building, the letter dated 15th July 2009 addressed to Mr. Satish Parshotam by Mr. Narayan on behalf of the plaintiff company and the letter dated 08th October 2009 addressed to Mr. Narayan by the architect refer to an extension to an existing building. Not only that in the course of the evidence on both the plaintiff and the defendant, the architect's drawings and the structural drawings very clearly show that this is an extension to the existing building of the defendant. Therefore, it was the responsibility of the defendant to insure this project against any loss or damage.
[109] Apart from the damages claimed on the basis of the alleged delay in completing the contract on the part of the plaintiff the defendant claimed $ 20000 for additional mobilisation cost for getting another contractor on site to complete the work and also to attend to the defects. The burden was on the defendant to establish by evidence that it spent the amount claimed or even a lesser amount for this work but there is no evidence on record in that regard.
[110] For the grounds set out above I make the following orders.
ORDERS.
Lyone Seneviratne.
JUDGE
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