In the High Court of Fiji at Suva
Civil Jurisdiction
Civil Action No. HBC 234 of 2007

Between:

Total Fiji Limited
Plaintiff

And:

Auto World Trading (Fiji) Limited
Defendant

Appearances: Mr N.S. Gedye QC with Mr H.Nagin for the plaintiff
 Mr R.K. Newton QC with Mr Suresh Chandra for the defendant
Dates of hearing: 24thto 28thNovember, 2014

Judgment

1. 	This case opens with a long lease granted by Fiji Investment and Agency Company Ltd, (FIACL) to Shell Fiji Ltd,(as the plaintiff was known prior to its name change). By registered lease no.209221, FIACL demised to the plaintiff two properties at the corner of Loftus Street and Victoria Parade comprising CT Nos 3157 and 3357 for a period of twenty years from 1st January,1980, at an initial annual rental of $ 37,500.00. The lease had a provision containing an option for the tenant to renew the lease. The plaintiff states that it exercised its option and renewed the lease for a further period of twenty years from 1s January, 2000. The plaintiff claims that the two properties were transferred to the defendant on 2nd May, 2007, subject to the existing lease. The caveat lodged by the plaintiff on 5th May, 2004, was removed by the Registrar of Titles. The plaintiff seeks a declaration that it has a lease over the two properties and the notice to quit issued by the defendant's solicitor son 17th May, 2007, is invalid. Alternatively, for relief against forfeiture.
2. 	The defendant states that lease no. 209221 expired on 1st January, 2000. There was no renewal registered on the title. The plaintiff did not obtain a renewal, neither from FIACL nor the defendant. If not, that the plaintiff has breached the provisions of the lease by letting and sub-letting part or whole of the properties. The defendant purchased the properties free from all encumbrances, including any registered or unregistered lease. The plaintiff has failed to-date to register the lease nor obtain a fresh lease. The defendant states that it knew the plaintiff was in occupation only as a monthly tenant. The defendant issued notice to the plaintiff to vacate on 17th May, 2007. The defendant counter-claims for losses and damage alleged to be suffered, as a result of the plaintiff failing to vacate the property.
3. 	The plaintiff, in its reply states that the defendant should have been aware and put on notice that the plaintiff would have and has exercised its option. The renewal is part of lease no.209221 and does not require any further registration on the title. The defendant was aware of the continued occupation of the property by the plaintiff and is estopped from denying the same. The plaintiff denies that the lease has been breached by sub-letting.
The determination
4. 	The preliminary question for determination is whether the lease was renewed by the plaintiff from 1st January, 2000, in terms of registered lease No.209221.
5. 	Clause 10 of the lease contained the option to renew the lease. The precise terms of clause 10 were:
	The Lessor will upon the written request of the Lessee made not less than six months before the expiration of this renewed term and provided the Lessee.. shall have duly and promptly paid the rent payable…grant to the Lessee a Lease of the demised land for the further term of twenty years from the expiration of the term hereof..reserving a rental to be assessed in accordance with the provisions of clause 12 hereof and containing the like covenants..excepting this present covenant for renewal.(emphasis added)
6. 	The plaintiff had not exercised its option within the six months period laid down in cl 10.The six months period lapsed on 1st July, 1999.
7. 	The case for the plaintiff is that the six months requirement was waived by FIACL by letters of 6th and 12th October, 1999, from its solicitors Munro Leys, to the plaintiff. The plaintiff then, exercised the option to renew the lease.
8. 	The letter of 6th October,1999,reads:
	re:Fiji Investments and Agency Co. Ltd. 
	Lease No.209221 affecting Cs. T. 3157 and 3357
	..As you are no doubt aware that the current Lease term expires on the 31st December 1999 and we are instructed to ascertain from your Company what its intentions are particularly whether it would wish to remain in occupation of the premises or alternatively reling(q)uish possession at the end of the term.
	We would appreciate your early response(emphasis added)
9. 	Munro Leys forwarded a copy of Lease No.209221 to the plaintiff on 12th October,1999, as requested.
10. 	On the same day,(12thOctober,1999)the plaintiff forwarded its "formal notification of..intention to exercise(their) option under the lease to renew for a further twenty(20) years from the 1st January 2000".(emphasis added)
11. 	In my view, FIACL, by letter of 6th October, 1999, made an enquiry from the defendant. The letter did not waive the condition precedent in clause 10 as to time, as contended.
12. 	The closing submissions of the plaintiff cite Hinde McMorland & Sim, LAND LAW in New Zealand, Volume 2, paragraph 11.158 for the proposition that aright of renewal may be exercised unilaterally by the giving of an unequivocal notice.
13. 	I would read that authority in its entirety. It states:
	Exercise of the right of renewal
	A lessee who wishes to exercise a right of renewal must proceed in conformity with the conditions in the renewal clause in the lease and must indicate clearly and unequivocally his or her intention to exercise the right.(emphasis added)
14. 	The authority reinforces the case for the defendant that options for renewal must be exercised precisely in accordance with their terms.
15. 	Counsel for the defendant in their closing submissions cite the case of United Scientific Holdings Ltd v Burnley Borough Council,[1978] AC 904 at page 929 where Lord Diplock declared that:
	..it is well established that a stipulation as to the time at which notice to exercise the option must be given is of the essence of the option to renew.(emphasis added)
16. 	In the course of his judgment, Lord Diplock referred to the following passage of Lord Denning MR in United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd, [1968] 1 WLR 74 at 81: 
	In order to exercise the option, the lessee must give notice in the specified time..In point of legal analysis, the grant of an option in such cases, is an irrevocable offer (being supported by consideration so that it cannot be revoked). In order to be turned into a binding contract the offer must be accepted in exact compliance with its terms. The acceptance must correspond with the offer.(emphasis added)
17. 	I emphasise the penultimate sentence in the passage I have quoted. Admittedly, there was no written acceptance by FIACL of the plaintiff's letter of 12thOctober, 1999, as confirmed by PW1,(Neil Hernan, formerly Retail Manager of the plaintiff company from 2002 to 2004) in evidence in chief.
18. 	The plaintiff contends that FIACL would have been estopped from denying that it had waived the requisite period of notice. The plaintiff's reply pleads that the defendant is estopped from denying that the plaintiff is in occupation, upon the extension of the lease.
19. 	 The law is clear. Estoppel arises only where there is an unequivocal representation by words or conduct to a party who has acted to his detriment by reliance on that representation.
20. 	It is important to refer to the exchange of correspondence between Rolle Associates,(Real estate agents, engaged by FIACL to sell the properties) and the plaintiff on the renewal, as produced by PW1. 
21. 	On 5th March,2004, Rolle Associates wrote to David Clinton, General Manager, Shell Fiji Ltd that their "research indicated that currently Shell Fiji Ltd is leasing the property on a monthly basis, paying a VAT inclusive monthly rental of $4,033.34".
22. 	Lateef & Lateef, solicitors for the plaintiff at that time, by its reply of 22nd March, 2004, stated that the plaintiff had a valid lease agreement and is contemplating legal action.
23. 	On 24th March, 2004, Rolle Associates replied as follows:
	Re: SHELL FIJI HIBISCUS SERVICE STATION – CL 3157 & 3357
	We refer to your fax dated 22nd March 2004 regarding your client Shell Fiji Ltd and their position on the current lease situation for Shell Hibiscus Service Station.
	We wish to advise you that according to our research, there is no lease agreement in place since the original lease expired in 1999.
	Shell Fiji Ltd did express its desire to renew the lease for a further term of 2 x 10 years but this never eventuated due to disagreement over the lease amount. Since the expiry of the original lease agreement, Shell Fiji Ltd has been occupying the premises on a monthly basis.
	We have also consulted Munro Leys, the custodian for the above properties and they concur that there is no lease agreement in place and that Shell Fiji Ltd is leasing the properties on a month-to-month basis.
	Please note that we will proceed to market the properties for sale as instructed by our clients and should Shell Fiji Ltd insist that there is a lease agreement in place, we will appreciate very much if evidence of any such lease is forwarded to Rolle Associates and Munro Leys.(emphasis added)
24. 	In my judgment, the letter of 24th March, 2004, clearly states that the option to renew the lease was not accepted by FIACL, as there was disagreement over the rental and the plaintiff was occupying the properties on a monthly basis, since the expiry of the lease agreement.
25. 	It is beyond doubt that FIACL had considered the defendant to be a monthly tenant, as evident in Munro Leys' letter of 29th September,2004,to Sherani & Co, solicitors for the plaintiff. This reads:
	We last wrote to you on this matter on 15 June 2004.
	Since that time, in view of Shell's refusal to remove the caveat, we have, as you are aware, taken steps it removed. 
	There having been no action taken by Shell to avoid the caveat lapsing, the Registrar removed Shell's caveat on 11 August 2004.
	We accordingly assume that Shell has no further interest in the property and now considers itself, a monthly tenant, which is of course the position FIACL takes and which we respectfully consider is the correct one. FIACL will resume actively marketing the property for sale on this basis. It will be a matter for the purchaser of the property to come to such arrangements with Shell as the purchaser deems necessary. ..(emphasis and underlining mine )
26. 	I turn to the plaintiff's secondary line of argument. It is argued that rights of renewal contained within a registered lease are an integral part of the register as vested in the lessee. Counsel for the plaintiff refer to a trilogy of cases from the New Zealand and Australian courts.
27. 	The earliest case cited is Pearson v Aotea District Maori Land Board, (1945) NZLR 542. In that case, the Supreme Court of New Zealand held that a right of renewal is "something more than a mere ancillary right....Its registration is, I think, in consequence authorized under the Land Transfer Act". The Court held that there is an indefeasible right to the renewal sought.
28. 	The authority principally relied on is the decision of the High Court of Australia in Mercantile Credits Ltd v Shell,136 CLR 326.The facts of that case are distinguishable from the instant case. The material dissimilarity is in that case, the lessee exercised its right to renew the term of the lease and executed a valid memorandum of extension of lease, unlike in the present case where admittedly, there was:(1) no acceptance by FIACL of the plaintiff's notice of intention to exercise its option to renew the lease after the time period for its exercise had lapsed, and (2) no agreement executed.
29. 	The following paragraph of the judgment of Gibbs J at page 348 contains the essence of his conclusions:
	The appellant's right as mortgagee could only be exercised subject to the respondent's right of renewal and any extension resulting from its valid exercise..(emphasis and underlining mine)
30. 	In the third case to which I was referred: Re Eastdoro Pty Ltd(No. 2), (1990) 1 QdR 242Ryan J stated that:
	The critical question in the Mercantile Credits Case, as in the Pearson's Case, was whether a right of renewal of a lease was registrable. In both cases, it was held that it was. In the former case, Barwick C.J. stated (at 330) the question for determination was whether by dint of the registration of a memorandum of lease containing the rights of renewal, the mortgagee under the subsequently registered memorandum of mortgage was bound by the unregistered extension of the lease effected in pursuance of the exercise of the rights in the registered memorandum of lease. He answered it (at 339) by saying that "because of the specific enforceability of the right to renew, if exercised, the registration of the memorandum of lease containing the covenant for renewal created an interest in the land commensurate with the extent of the covenant..(emphasis and underlining mine)
As Macrossan CJ stated that the "critical fact was that the exercise of the option took place pursuant to the right conferred by the original lease instrument which was registered".(emphasis mine)
31. 	On the plaintiff's contention that there was an oral agreement for two further terms of ten years, it is pointed out that section 54(1) the Land Transfer Act,(cap131) requires any land demised for a term exceeding one year to be executed and registered in accordance with the Act.
32. 	It is at that point the closing submissions of the defendant submits that the plaintiff took no steps to enforce its claim to a new lease, until the titles were transferred to the defendant in May, 2007.
33. 	At the core of the case for the defence is that the defendant, as registered proprietor, acquired an indefeasible title under sections 39 and 40 of the Land Transfer Act. 
34. 	Counsel for the defendant cite the oft quoted cases of Waimiha Sawmilling Co v Waione Timber Co, [1926] AC101(PC) and Assets Co v Mere Rohi,[1905] AC 176(PC) for the proposition that even if the defendant had purchased with notice of an unregistered leasehold interest, in the absence of fraud, the defendant acquires paramount title in the absence of fraud. There is no allegation of fraud pleaded .
35. 	Reference is also made to Mills v Stokman, 116 CLR 61, Frazer v Walker,(1967)1 AC 569 and Star Amusement Ltd v Prasad & The Registrar of Titles, (CBV 0005 of 2012) .
36. 	Kitto J in Mills v Stokman, at page 78 stated:
	.. the appellant.. having become the registered proprietor, is unaffected by an interest not on the register, even though she took with notice of it. If the case were one of fraud it would be otherwise; 
37. 	In Frazer v Walker, the Privy Council at page 580 said that "fraud" where used in a similar provision meant actual fraud, in other words dishonesty.
38. 	I interrupt the recital of authorities to refer to the evidence on this point. 
39. 	DW2, (Ravindra Lal, Managing Director of the defendant company) in cross-examination said that a search of the titles did not disclose a further registered lease or renewal, as stated in its solicitors Maharaj Chandra Associates' letter of 4th April,2007, to Munro Leys. That letter further states that the defendant purchased the property on the basis on "that the lease had expired..and there was no renewal". 
40. 	I find that there is no evidence that the defendant purchased with notice of an unregistered leasehold interest. 
41. 	PW1, in answer to Mr Newton, senior counsel for the defendant admitted that a purchaser of the properties on examination of the titles would know nothing about a lease after the year 2000. All they would see was a reference to the expired lease.
42. 	In any event, as Pathik J said in Satna Wati& Ambika Prasad, (Civil Action No. 44 of 1992L) "Mere knowledge on the part of the Ps of D's occupation is insufficient to constitute fraud".
43. 	The decision of the High Court was upheld on appeal in Ambika Prasad v Satna Wati, (Civil Appeal No.ABU0027 of 1999S).The FCA cited in detail a passage from the judgment of Salmond J., a member of the New Zealand Court of Appeal in Waimiha Sawmilling Co v Waione Timber Co, [1923] NZLR 1137 at pages 1174-5. I reproduce excerpts of that passage:
	One of the main objects of the Land Transfer Act is to facilitate the alienation of land by eliminating the encumbering influence of unregistered interests, and by relieving purchasers from the necessity of inquiring into the existence and validity of adverse equitable claims and interests. ..An owner of land is not necessarily bound to abstain from alienating his property because of the existence of some adverse claim which he does not know or believe to be well founded, and because he knows that the effect of such alienation under the land Transfer Act will be to destroy that claim. Nor is a purchaser necessarily bound to abstain from acquiring the property for the same reason.... Knowledge, therefore, that an adverse claim exists, that it may possibly be well founded, and that it will be destroyed by an alienation of the property, is not in itself sufficient to stamp the transaction as fraudulent within the meaning of the land Transfer Act.(emphasis added)

The decision of the New Zealand Court of Appeal was affirmed by the Privy Council.

44. 	The judgment of the Court in Ambika Prasad v Satna Wati,(supra) also cited Wilson and Toohey JJ in Bahr v. Nicholay, [No 2](1988) 164 CLR 604 as follows:
	It is equally clear that to acquire land with notice of an unregistered interest such as a lease, to become the registered proprietor and then to refuse to acknowledge the existence of the interest is not of itself fraud: (..The point is made by Kitto J. in Mills v. Stokman ((1967) 116 C.L.R. 61, at p. 78, where his Honour said "but merely to take a transfer with notice or even actual knowledge that its registration will defeat an existing unregistered interest is not fraud".(emphasis added)
45. 	I hold that the defendant had a paramount title to the two properties in terms of sections 39 and 40 of the Land Transfer Act.
46. 	In light of the authorities cited, I am fortified in reaching the conclusion that the plaintiff was in possession of the two properties as a monthly tenant from 1st January,2000, after lease no.209221 expired.
47. 	It follows and I hold that the plaintiff was in occupation of the properties as a trespasser from 1st July,2007, upon the notice to quit of 17th May,2007, being issued to the plaintiff by the defendant's solicitors. 
48. 	A fortiorori, section 89(1) of the Property Law Act,(cap 130) provides that in "the absence of express agreement ..a tenancy of no fixed duration.. may be terminated by either party giving to the other written notice ..of (b)..at least a period equal to one rent period under the tenancy.."
49. 	My conclusion provides a complete answer to the arguments founded by counsel for the plaintiff on clauses 2,4 and 5 of the sale and purchase agreement between FIACL and the defendant and Munro Leys' response of 19thApril,2007,toMaharaj Chandra Associates' letter of 4th April,2007, which I have already referred to.
50. 	My finding entitles the defendant to obtain vacant possession of the properties. I would grant the plaintiff three months time from date of this judgment, to remove its infrastructure and relocate its business.
51. 	In view of my findings, I do not find it necessary to deal with the defendant's claim of sub-letting. For completeness, I would note that the plaintiff did not pursue its alternative relief against forfeiture. No evidence was led of improvements made to the properties.
The counter-claim 

52. 	The points of counter-claim are twofold. The first head of damages claimed, and in respect of which there was the least controversy, is for loss suffered in consequence of the plaintiff's trespass, known as mesne profits. The second is for losses suffered as a result of rising development costs and loss of rental from the multi-storey structure the defendant claims, it was unable to build on the properties.
A. Mesne profits 

53. 	McGregor on Damages,(17th Ed,2003) at paragraph 34-041 as referred to in the closing submissions of the plaintiff provides that the measure of damages for the period of wrongful occupation is the market rental value of the property. 
54. 	In the present case, the period of wrongful occupation by the plaintiff commenced from 1st July,2007.
55. 	Mr Gedye, senior counsel for the plaintiff produced through PW1, two valuations by "Fairview Valuations". The first valuation of 18th August,2004, provides that the current and market value of the freehold interest in the property was $ 1,870,000.The second valuation of 16thSeptember,2004,reads:
	Valuation of Commercial Land Comprised In CT. 3157 & 3357
	Your letter referenced HKN/ ac S5520 August, 2004 refers.
	The maximum rent changed by the State, Native Land Trust Board and Maritime Ports Authority of Fiji for commercial/industrial leases is 6% of the UCV of the land, with reassessments every 5 to 10 yearly intervals.
	Based on the above the current market rent (ground rent) is assessed as follows:
	6 x $1,870,000.00 = $112,200.00 per annum.. (VEP) per annum (emphasis added)
56. 	PW1, in answer to Mr Newton, said that this valuation with reassessments every 5 to 10 years was acceptable. He said that 6% of the UCV is the customary guideline in Fiji.
57. 	DW5, (Sanjay Kirpal, Registered Valuer of "Professional Valuers Company Ltd") accepted the valuation of "Fairview Valuations" of $1,870,000.00. He said that the normal practice in Fiji is to calculate market rental on 6% of the unimproved capital value of the land. He produced his current, unencumbered freehold market value of the properties at $ 3,000,000.00, as at 8 February,2010.
58. 	Mr Gedye did not challenge nor controvert DW5's valuation of the properties at $ 3,000,000.00.I note that "Fairview Valuations" has adopted the same methodology to calculate market rental, viz, 6% of the unimproved capital value of the land. That would upsurge the annual ground rent to $180,000.00VEP(6% of $ 3,000,000.00) from 8 February,2010, on a "reassessment every 5..yearly interval", in terms of "Fairview Valuations" of 16thSeptember,2004.
59. 	DW5, in evidence in chief said that the value of the properties was$6,000,000.00as at 30th September,2014. He relied on the sale of the Bad Dog Café for $5m and another location in Narseys Building on Renwick Road for $2.3m.
60. 	Mr Gedye, in his cross-examination of DW5 and closing submissions disputed DW5's oral testimony that the value of the properties had doubled to $ 6,000,000.00 between 2010 and 2014, and correspondingly, the rent at $ 30,000 a month, since his valuation was founded on insufficient data, in contrast to his valuation of 8 February, 2010, which contains a detailed analysis of sales evidence and market values of six other properties. I agree there was no such evidence to substantiate the hypotheses that the value had doubled.
61. 	The defendant claims a sum of $ 1,418,207.00, as mesne profits for the period 1stJuly,2007, to 1st November,2014, on the footing that the average monthly increase was 11.3% per annum approximately. There was no evidence placed before me to support that increase.
62. 	In terms of the valuations of "Fairview Valuations" and DW5, the monthly market rental is as follows:
(i) 	$ 9350.00 VEP ($10752.50 VIP) from 16th September, 2004.
(ii) 	$ 15,000.00 VEP ( $17250.00 VIP) from 8th February,2010.
63. 	 From the market rental, I would set off the monthly rent of $ 4125 paid and accepted by the defendant without prejudice, as endorsed in the documents produced.
64. 	On that basis, I quantify the mesne profits payable to the defendant as follows:
(i) 	From 1/7/2007 to 31/01/2010  -	$ 205,452.50(10752.50 less 4125 x 31months)	
(ii) 	From1/2/2010to30/10/2014  -	$ 748,125.00(17250.00 less4125 x 57 months)	
	$ 953,577.60	
65. 	I award the defendant a sum of$ 953,600.00,as mesne profits payable by the plaintiff to the defendant for the period commencing 1 July,2007, to 30th October,2014.
66. 	The plaintiff continues to be in possession. The defendant is entitled to the market rental until the plaintiff vacates the properties.
B. The multi-storey building development

67. 	In the course of trial, the defendant amended its counter-claim pleading that it had "an approved building plan since July, 2007, to build a multi-storey structure on the property", but was unable to do so, since the plaintiff was in occupation. A sum of $ 25,335,556.66is claimed, as the total loss suffered resulting from the expected rental income, rise in development costs since 2007 and interest. The hearing then, commenced de novo by consent.
68. 	At the pre-trial stage, the defendant had served on the plaintiff, a report dated 31st July, 2014, prepared by Crowe Horwath (NZ) Limited, an "assurance, tax and advisory firm". The report "analysed the profit lost by the Defendant as a result of not being able to commence and complete the planned development of the 22 storey Pacific Square complex". The report concluded that the "lost profit faced by the defendant ranges from FJ$ Nil to FJ$4.13 million depending on when the date of construction commences".
69. 	The plaintiff responded with a report from PW4, (John Schellekens, National Director of Professional Services at CBRE Limited, a real estate company in New Zealand). PW4 testified on the feasibility of the proposal for a 22 storey building and provided his comments on the "Crowe Horwath" report.
70. 	DW2, in evidence in chief said that when he purchased the properties, his intention was to build a multi-storey complex. When his Architect Vijay Sharma, (DW1) lodged an application for a 22 storey building, the Suva City Council had advised that only a 10 storey building could be built. 
71. 	In cross-examination, DW2 said that he was pursuing a claim for damages for loss of chance of constructing a 10 storey mixed retail, commercial and hotel development on the properties.DW2's stance is re-echoed in the closing submissions of the defendant.
72. 	In my view, the claim for a chance of loss to build a ten storey building is inconsistent with the preponderance of evidence presented at the hearing, including the two applications for building approval made to the Council, both of which relate to a 22 storey development. 
73. 	The plaintiff did not produce a feasibility or Quantity Surveyors' report in respect of a ten storey building. The "Crowe Horwath" report and that of DW4,(Emosi Lutu, Quantity Surveyor of Rawlinson Jenkins Ltd) were in respect of a 22 storey structure. DW5 too, presented a valuation of a 22 level building.
74. 	Moreover, the defendant had not submitted a plan for a ten storey building to the Council.
75. 	DW2 said that he did not submit an application in that regard, as the plaintiff is in possession and these proceedings are pending.
76. 	As Mr Gedye pointed out in cross-examination, those factors had not impeded him from making two applications to the Council, in respect of a 22 storey building. DW1 and DW4 confirmed that possession of the site is not required to do an outline application to the Council. 
77. 	It emerged in the cross-examination of DW1 that his estimate of construction costs for 22 levels in 2011, was strangely, half that for building 10 storeys in 2010.
78. 	To elaborate further, his single page estimate of 3rdAugust 2010, for building 10 levels vis a vis that of 21st October,2011, for 22 storeys provide as follows:
(i) 	The building cost in 2008 for 10 levels in August,2010, was $12,025,000/, while the building cost in 2008 for 22 levels in October,2011, was $ 6,917,270/. 
(ii) 	The building cost in 2009 for 10 levels in August,2010, was $ 15,755,000,while the building cost in 2009 for 22 levels in October,2011, was $ 7,263,134/. 
(iii) 	Finally, the building cost in 2010 for 10 levels in August,2010, was $ 17,080,000, while the building cost in 2010 for 22 levels in October,2011, was $7,626,290/.
79. 	DW4, in cross-examination accepted that DW1'sconstruction costs cannot be correct. The closing submissions of the plaintiff concludes that the figures make "no sense".
80. 	That disposes of the claim for loss of chance of constructing a 10 storey mixed retail, commercial and hotel development.
81. 	The defendant had made an application to the Suva City Council on 1stAugust, 2007, in respect of a building of 22 levels. The Council on7 December,2007, in the first instance, had declined the proposed development of 25252m2 for the stated reason it constitutes an overdevelopment of 256%.The permitted building development was 7084m2.
82. 	DW1,(Vijay Sharma, Registered Architect)in cross-examination, said that the "Lodgement Outline Application" made to the Council on 1st August,2007, was the first step in the process. Once that stage passed, a building permit application has to be made with detailed drawings. The defendant had not proceeded to that stage, as was also confirmed by DW4.
83. 	DW1 agreed that there was no building in Suva with 22 storeys. MHCC has approval for 17, but has not built up to that level.
84. 	Mr Gedye produced the amended application titled "NEW LODGEMENT "OUTLINE APPLICATION"" made by DW1 on 1st September,2010, to the Suva City Council for a 22 storey building. DW1 said the drawings attached to this application were more aesthetic and detailed than the drawing attached to the first.
85. 	It was put to DW1 that for a period of two and a half years, there was no follow up of that application.DW1 denied that proposition and said he was working with the Council on the project. 
86. 	DW1 said that in response to his second application, the Director of Town & Country Planning, by letter of 29th November,2010, agreed to relax the existing provisions to allow the proposed height of 60.7 metres from the permitted 30m and over-development of floor space by 256%.The defendant was requested to put sign boards to notify the general public of the major proposed development to facilitate a consultation process with the public and property owners of Victoria Parade and Loftus Street.
87. 	There followed an advertisement by the Suva City Council on 13th May,2011, in the Fiji Sun calling for objections from owners or occupiers of property within the area and for a presentation to be made by the defendant and its consultants a week after the advertisement. 
88. 	A permit was given by the Council to the defendant to erect two signboards on the properties. But there was no follow up by the defendant. 
89. 	DW2 said that he had not put up the sign boards, as the Council had not allocated a space to erect the sign boards. He discussed that problem with the Council, but there was no response. 
90. 	Mr Gedye pointed out to DW2, in cross-examination, that the tax returns of the defendant does not disclose that it had been property investors. The defendant's tax returns and its Memorandum of Association provides that the principal business activity of the defendant company was the importation and wholesale/retail of second hand vehicles, spares and accessories. DW2 admitted that the defendant had not done any property development to a conclusion.
91. 	DW5, in his valuation report of 8thFebruary, 2010, had analysed the comparative commercial rentals of Frontier-Mid City, Chicken Express-Mid City, Central Pharmacy-Gloria Jeans Coffee shop and Kadavu House and provided a forecast of rentals for the proposed 22 levels at $ 450 per square metre.
92. 	Mr Gedye put it to DW5 that his report does not contain a single word on hotel market research, albeit the hotel in the proposed building would comprise 6000 sq metres. 
93. 	It was also put to DW5 that his brief three and a half line description of the project in his report stating that: "The site will have an executive multi storey building consisting of 22 levels. The building upon completion will have retail businesses/ supermarkets, office space, parking area, coffee shops/ food court, and convention hall, hotel rooms with all necessary facilities, bar/ night club, and swimming pool", would not be acceptable to any Bank. His riposte was that he would give the Bank whatever they require thereafter. 
94. 	DW6,(Lawrence Munia, Head of Strategic Plans, BSP) in cross-examination confirmed that the description referred to in the preceding paragraph was inadequate.
95. 	On a review of the evidence as a whole, in my view, the defendant's proposals for its multi-storey building project are "materially deficient in the context of undertaking detailed development feasibility", as PW4 concludes in his comprehensive report.
96. 	I would reproduce in extenso, the following extract from that report:
	4.6.1. ..apart from architectural plans for the shell of a proposed hotel, as far as I am aware there is no other detail in the hotel available;
	4.6.2. The construction costs may (I am unable to confirm) contemplate a hotel fit out for the hotel component, but they explicitly do not allow for FF & E.(furniture, fittings and equipment)…
	4.6.3 .. I am unable to reconcile to a satisfactory level of detail the correct gross floor areas (GFAs) and net lettable areas (NLA)
	4.6.5. The PVL report relied upon for Horwath's analysis is mostly focused on the 'as is' value of the site in 2010, and then references some very basic and wholly inadequate analysis of the proposed project on completion;
	4.6.6. There is no reference to the depth of the office and retail markets to absorb some 9,600sqms of office and retail space (nearly 16,000sqms if the hotel area is included as office space) at the rents referenced by PVL. There is no allowance for letting up periods and incentives.
	4.6.7. I cannot find within the Defendant's expert's report any commentary whatsoever on the hotel market, even though the proposed hotel occupies more than 6,000sqms of the propped complex. I cannot in my mind comprehend how a development if this type can be analysed to establish loss in development profits when the information and analysis on the hotel opportunity is so lacking.
	5. Development feasibility – market overview, industry approach and methodology
	5.1. I note from the outset that the Defendant's proposed high rise tower is an ambitious and high risk project by any measure, providing retail, office and hotel accommodation all in one building and in a market where there are few comparable projects. I say ambitious, because projects of this type are complex and challenging to fund and deliver, and they carry a high level of development risk, particularly in markets such as Fiji which is relatively unsophisticated, lacks transparency and where the depth of occupiers able to pay economic rents is limited…
	5.3. I observe also that the most recent new towers developed in Suva were delivered by institutional parties (BSP, Proud and Tappoo) who typically have a lower cost of capital than private individuals and significantly more equity that enables them to fund what would otherwise be challenging developments.. the MHCC Centre was I understand promoted in two stages; the retail complex which has been built and a proposed office tower still to be built and presumably on hold until the development economics of the office sector improves..Fijian Holdings Group is also contemplating a new 12 – 14 level office tower; again I understand institutional money.
97. 	On the financing of the project, DW2 testified that he would have obtained funding from BSP. He said that Lawrence Munia, Commercial Manger of that Bank,(DW6) informed him that he would finance 60% of the construction cost. He had other properties to provide the equity for the balance 40%. It transpired DW2 had not submitted an application to the Bank.
98. 	DW2's evidence was contradicted by DW6. In answer to Mr Gedye, DW6 said that his Bank would not commonly grant a loans for a $71 million project. The Bank would require a high level of assurance that the development would be profitable and a feasibility assessment that would determine profitability for an office hotel retail complex. 
99. 	DW4, in cross-examination accepted that the full cost of the project for "by far the biggest building in Suva" with the inclusion of furniture, fittings and equipment was $ 71 million, as estimated by PW4.
100. 	The financial position of the defendant company was reflected in its Income Tax Returns for 2007, which provided that its operating profit was $ 171,805.00 and it was paying "Finance cost" of $ 151,068.00.
101. 	In my judgment, the evidence I have referred to establishes that the defendant neither had the funds nor provided an acceptable feasible assessment report to seek equity from a financial institution to finance its project.
102. 	Amidst all the improbabilities and unconvincing evidence on this claim, the material fact is that no approval was granted at any stage contrary to the claim as pleaded. And the defendant had neither followed up its "OUTLINE APPLICATION" for building approval made to the Council on 1st September, 2010, nor placed up sign boards calling for public consultation, as directed. 
103. 	I conclude that the defendant has not established in the words of Brennan J in Sellars v Adelaide Petroleum NL,(179) CLR 332 at 368. "a chain of causation that continues up to the point where there is a substantial prospect of acquiring the benefit sought by the plaintiff".
104. 	I would reproduce the entire passage from the judgment of Brennan J as referred to in La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd,(2011) 273 ALR 774 and cited by counsel for the defendant: 
	Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point where there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities.
105. 	In my judgment, the defendant's counterclaim for loss of rental profits, loss caused by rise in development costs and interest is unfounded.
106. 	Orders 
(i) 	The plaintiff's claims are declined.
(ii) 	The plaintiff shall vacate the properties contained in CT Nos 3157 and 3357 within a period of three months of this judgment.
(iii) 	The plaintiff shall pay the defendant mesne profits in a sum of $ $ 953,600.00.
(iv) 	The plaintiff shall continue to pay the defendant the market rental until it vacates the properties.
(v) 	The defendant's counter-claim for a sum of $ 25,335,556.66, is declined.
(vi) 	The plaintiff shall pay the defendant a global sum of $ 8000 as costs summarily assessed.
A.L.B. Brito-Mutunayagam
Judge
30th March, 2016