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Viti Vanua Holdings v Public Rental Board [2019] FJHC 298; Civil Action 304 of 2016 (9 April 2019)

IN THE HIGH COURT OF FIJI AT SUVA

CIVIL JURISDICTION


Civil Action No. 304 of 2016


BETWEEN


VITI VANUA HOLDINGS


PLAINITFF


AND

PUBIC RENTAL BOARD


DEFENDANT


COUNSEL

Mr A.K Singh for the Plaintiff

Ms S. Devan for the Defendant


Dates of Hearing : 18,19,20,21 and 22 March 2019

Date of Judgment : 9 April 2019


JUDGMENT

  1. In the Statement of Claim, the Plaintiff says:
  2. The Plaintiff began the construction circa 6 June 2014 and completed 95% of building 2 and 60% of building 1.
  3. By an email dated 17 November 2016, the Defendant terminated the contract, refused to allow the Plaintiff to proceed further and prevented the Plaintiff from executing further works.
  4. The grounds for termination were, inter alia,
  5. The Defendant agreed it would provide possession of the site without hindrance and obstruction for the Plaintiff to carry out the works.
  6. A massive landslide in December 2014 caused damage to building 2 but the Defendant did not clear the debris until January 2016, and no remedial work could be executed pending such clearance.
  7. The inordinate delay on the part of the Defendant extended over 13 months and caused the Plaintiff to suffer loss and damages. Other delays were caused by the soggy nature of the land and the Defendant’s failure to commission a proper geo-tech report on the suitability of the site.
  8. The Plaintiff proceeded to construct the works in terms of the specifications but the Defendant retained a new engineer who then certified the steel were inadequate and recommended rectification.
  9. The contract provide in clause 21.1 for arbitration of disputes or differences concerning the contract but the Defendant failed to invoke this clause.
  10. And the Plaintiff Claims:
  11. The Amended Statement of Defence and Counterclaim says, inter-alia, as follows:

Counterclaim

(7) The completion date, by mutual agreement was revised several times at the request of the Plaintiff the last being circa 19 July 2016.

(8) The Plaintiff is in breach of the contract thereby causing the Defendant loss and damages.

(9) Particulars of Breach
(10) The Defendant has suffered loss and damage

Particulars

(i) Estimated cost of remedial works - $460,000
(ii) Estimated costs for completing construction works - $343,032
(iii) Liquidated damages for delay at the rate of $500 per day (full particulars will be provided at the trial)

(11) Due to the fundamental breach of the contract the Defendant was entitled to treat the contract as discharged. Accordingly the Defendant terminated the Agreement, regained possession of the construction site and recalled tenders to engage a new contractor to rectify defective works and complete outstanding works.

(12) The Defendant counterclaims:
  1. The Plaintiff filed a Reply and Defence to Counterclaim.
  2. The Minutes of the Pre-Trial Conference agreed on 16 August 2018 do not assist as they are a model of prolixity but Agreed Fact 5 merits comment as it states the building works were to commence on 9 June 2014 and practical completion to be achieved by 13 March 2014 (sic).
  3. The hearing commenced with the Plaintiff’s first witness giving evidence. He was Mahendra Singh (PW1). He is a civil engineer, who started working with the P.W.D in 1963. He was the project engineer who had to ensure the designs are complied with. The Defendant changed the placing of the buildings which they accepted and the consequences of the changes. There was a large landslide which damaged the side of the building. It took them 9 months additional time to construct the additional work. The buildings were 80% completed. The contract was terminated due to loss of time and the Plaintiff not completing the buildings in time. At the time of termination both buildings were not completed in time. There was no extension time for the 13 months and the Plaintiff and the Defendant could not decide who should do the clearance work. He said both parties should have come to an agreement on the delay and the costs and both parties failed to do so. There was no geo-technical report and the Defendant said at the site meetings that there was no need for one.
  4. PW1 was about to estimate the damage to building 2 as a result of the landslide when Ms Devan objected because that was not pleaded. The court upheld her objection.
  5. PW 1 continued that the total contract for both buildings was 40 weeks but the work could not be completed within that time frame. At the request of the Defendant, they priced the additional work at $400,000. The Defendant paid them on a daily basis which the Plaintiff accepted. The Defendant did not grant an extension of 40 weeks but only an extension totaling 64 days which was not sufficient. The Defendant gave the Plaintiff about 100 days over the contract period to complete the contract. It was the Defendant’s prerogative to give the days subject to the contract. They could not catch up and took 9 months to overcome the difficulties.
  6. Under cross examination. PW1 said they submitted a works programme of 40 weeks, the contract was on 4 June 2014 and the completion date was 13 March 2015. The performance bond provided by the Bank of Baroda was for 5% of the contract sum ie. $93,786.25. He said the site meetings stated poor workmanship, and the defects continued on the project, the anomalies continued, and there was lack of adherence to the structural drawings. The Plaintiff was given time to rectify. He agreed the defects continued during the construction works. He was not aware of the finances of the Plaintiff and was not aware of their request that the Defendant directly purchase items. The rain claims and the excavation works extensions were approved. He agreed there was no dispute between the Plaintiff and the Defendant until he left on 30 May 2015.
  7. In re-examination PW1 said payment were made for day works. All payments were made after rectification.
  8. The next witness was Mohammed Rizwan (PW2) who said he started working with the Plaintiff as a purchasing officer and assistant project manager. He monitored the construction work. Landslides occurred, work stopped and the rear wall of building 2 was damaged which they repaired. They did not comply with the time schedule. The contract was terminated in March/April 2016 by the Defendant, the major issue for that being the steel which the Defendant says was not placed in the project. The Plaintiff was paid for all the steel placed and there were no outstanding bills.
  9. Under cross-examination PW2 said the Plaintiff did not put up a formal claim for damage to the work done. The insurer was not involved although the Defendant communicated in the meeting that they contact the insurer. A report was given to the Plaintiff of a warning of landslide by the engineer which he gave to his solicitors but had not given to the court. He was not aware if the site had been inspected by the Plaintiff before construction.
  10. The final witness was Mohammed Yasin (PW3) the managing director of the Plaintiff. He said they moved into a position to carry out the work to construct buildings 1 and 2. Landslides damaged building 2. There was a delay in the work of almost one year, the reason for which was the Defendant informed them that the insurance would pay the Plaintiff. They talked to the insurance and were informed that the insurance would not cover them because the insurance said prevention should have been there, because the landslide would have been there before the work started. The damage was repaired by them and he gave the costing of the repair to the damage done to his counsel. He did not have it with him.
  11. PW3 continued that it cost $203-206,000 to repair the damage done by the landslide. The Plaintiff was not reimbursed by the Defendant and absorbed the costs. The Defendant extended the time but the Plaintiff’s labourers were used and were paid normal labour rates by the Defendant, so the Plaintiff did not benefit. They were seeking compensation of at least $120,000, the return of the PB of $93,000 and the 5% retention sum.
  12. This sum was objected to by Ms Devan because the retention sum was not part of the claim. She said it was too late to amend to include the retention sum as it had not been pleaded. Mr Singh said he would file a proper application, but never did.
  13. Under cross-examination PW3 said he is familiar with the contract and he signed the construction agreement. The construction of both buildings had to be completed within 40 weeks and they were confident they could complete the buildings within 40 weeks. The Plaintiff had to ensure reasonable skills and care in carrying out the construction. The Plaintiff had to use quality materials in the construction and proper workmanship and all had to be carried out according to specifications. He was aware of the clause for extension of time and application had to be in writing. The PB is security that they will perform the contract, and would only get the PB discharged if they perform satisfactorily. The issue of poor workmanship was raised more than once by the Defendant in the meetings. They had to apply for extensions to complete the work because it was raining. It is written in the reports that there are still issues regarding the bars. When they bought the rods, it was changed by the supplier by mistake and it was identified later. They had started using those rods. It was their responsibility to purchase the materials. It was his responsibility to check all the materials purchased. That is why his foreman came to know the rods were not according to specifications. This foreman was there at the time of inspection. The report was forwarded to him but the anomalies had already been done. Every report had defects which were corrected upon the engineer’s investigation.
  14. PW3 said they filed the claim against the Defendant because the Defendant did not pay for the damage and said the Plaintiff’s insurance should pay as the work was carried out by them. Their insurance company said it was the Defendant’s fault because they should have prevented the landslide before starting the building. They were informed by the Defendant that they could not make the claim. He agreed that under the building contract he cannot make a damage claim against the Defendant. He said $203 – 206,000 was the cost incurred in repairing building 2. He gave the damage claim to his counsel and counsel had informed the court. He was not aware of the exact reason for their termination but they were told their working period was expiring.
  15. PW3 said if the Defendant had granted the extension they asked for, they would have completed the work on time. They were given an extension till 12 May 2016 to complete but their company still did not complete the work. He was aware the Defendant has to engage a new consultant engineer. In the letter written by him on 12 July 2016, he apologized for the defective and mismanagement of work done at a specific area only.
  16. In re-examination PW3 said to his knowledge, they had completed 90% of the work they had to do and they were paid for that.
  17. With that the Plaintiff closed their case and the Defendant began theirs.
  18. Their first witness was Maloni Daurewa (DW1). He is the properties manager of the Defendant looking after buildings and is familiar with the contract. He said the purpose of the retention sum is to take care of the defects that fall between the practical completion and the end of the defects liability period. The Defendant’s in-house team prepared the design plans which were vetted and approved by their design engineers. The project was not completed within the time frame because there were issues with the foundation of building 1 due to the ground nature. Building 2 had no problem. The Plaintiff requested extension of time for building 1 and were awarded extension of time of 241 days in total over and above the 40 weeks. The works were not completed by 15 February 2015. A retaining wall was built by another contractor employed by the Defendant. Only 12% of the total project was held up by the landslide. The other works were running smoothly. The Plaintiff’s only responsibility was to make good the damage caused by the landslide.
  19. DW1 said in all inspections there were defects in all stages of a similar nature specifically rust in the steel reinforcement concrete cover and steadiness of formwork holding the steel. This contributed to the delay already at hand. The Plaintiff’s work was not up to specifications. This led to the rescheduling of the concrete supply which was delayed due to the construction boom. Defects due to the Plaintiff’s workmanship is not taken into account when awarding extensions. The construction was now completed by the Defendant’s inhouse team. They exhausted all efforts to assist the Plaintiff and had given them ample time to complete the project. The reason for the termination were (1) the financial incapability of the Plaintiff to finance the project. (2) the defects identified in building 1. The defects identified by their structural engineer were the steel reinforcement was inadequate. The Plaintiff was not in a financial position to do the works which they were aware had to be done. They apologized to the Defendant and admitted mismanagement of the project and requested the Defendant to assist them to complete the project. Their request was in writing. The Defendant brought in NRW Macallan (Fiji) Ltd to assess the defects identified and the remedial works report were submitted to the Defendant and the Plaintiff. A response was not forthcoming from the Plaintiff. After giving the Plaintiff ample time the Defendant had no option but to terminate the contractor (Plaintiff). The Defendant incurred for remedial works the sum of $1.1 M. After they reassessed the claim of the Plaintiff, they awarded a certain number of days and awarded a reassessed claim and there was no more dispute from the Plaintiff.
  20. Under cross examination, DW1 said Clause 28.1 of the contract provides for the Plaintiff to make good all damage. That is why clause 30 provides for insurance. A landslide is covered by insurance. Only one landslide caused damage, which was assessed as affecting only 1 room. They felt the Plaintiff was responsible because they had been given sole possession of the site. The Defendant felt the risk identified should have been covered by the Plaintiff’s CAR policy. The Defendant was never provided with a copy of the insurance policy. The landslide was not caused by the negligence of the Plaintiff and it caused damages to building 2. Only 12% of Building 2 was stopped and the other parts were accessible and therefore workable. They did not conduct a geo-technic test as they felt it was not required because they had conducted pit tests. Their assumptions was wrong. After they discovered the site of building 1 was soggy, they made separate arrangements with the Plaintiff. They compensated the Plaintiff for their employees giving the Plaintiff a profit margin.
  21. The Defendant paid the Plaintiff $1.6M – the contract was for $1.8M. They were holding $253,000 of which $93,000 is the retention sum. They cashed in the $93,000 from the PB which they called for to complete the project. The steel was not placed properly and the supervising engineer did not approve and he held up $160,000 worth of defects. This was never paid to the Plaintiff. The money kept by the Defendant does not square off with the cost of doing the works. They gave the Plaintiff time but the Plaintiff did not have the funds to do the work. The Plaintiff requested the Defendant to assist them financially.
  22. The next witness was Nathan Aaron Kirk (DW3), a structural engineer with NRW Macallan (F) Ltd. They were the certifying engineer for the drawings for this project. They were asked to conduct an independent review of the structure once it was identified by the supervising engineer that there were deviations from the certified structural drawings. They conducted investigative reports, and discovered significant defects which required remedial works. There was no continuity of the reinforcing bars because it affected the lateral stability of the walls.
  23. Under cross-examination, DW3 said he did the inspection for the Defendant to assess the structural adequacy of the building. There were deficiencies in the building which required remedial works. The major defect is the incorrect lapping of the vertical bars and incorrect spacing of the horizontal bars. He recommended the Defendant to do remedial works.
  24. In re-examination DW3 said they were not engaged to find our who was at fault in connection with the building.
  25. With that the Defendant closed their case and Counsel began their oral submissions.
  26. Mr Singh submitted there were 3 major issues: (1) The landslide (2) The foundation (3) The prolongation caused by the inefficiencies of the Defendant. He said the steel was put in with the consent of the clerk of works (CoW). Payments to the Plaintiff were with the informed consent and the knowledge of the Defendant. No witness was called from Eresito Consulting Engineers and they are crucial witnesses as they are in the best position to inform the court of the short comings of the Plaintiff.
  27. With regard to the Counterclaim, Mr Singh said it cannot be maintained. There is nothing in the building contract that the Plaintiff is to be responsible for the landslide and its consequences and the Plaintiff should not have been called upon to rectify the damages. The Plaintiff should have been paid on a variation basis. A number of months was wasted on not doing anything and this is loss to the Plaintiff. Regarding the PB clause he said contingencies have not occurred. Counsel said the Plaintiff is entitled to judgment and the counterclaim should be dismissed. He said the Plaintiff is entitled to general damages which the Court is entitled to give the Plaintiff, the costs of fixing the foundation i.e. the sum of $120,000.
  28. Ms Devan then submitted. She said for the landslide, the Defendant says a fair extension was given to the Plaintiff as only 12% of the work was affected by the landslide, the Plaintiff was continuing with other works – building 2. With regard to building 1, 38 weeks extension was given to the Plaintiff and the work was still not done. The Defendant agreed to compensate the Plaintiff for dayworks and $300,000 was paid and accepted. The Defendant gave the Plaintiff 241 days extension of time over and above the period in the contract.
  29. Regarding the counterclaim Ms Devan said the Defendant’s evidence is $1M was needed to do the remedial works. The Plaintiff gave a letter that there was mismanagement in the company. The retention sum and the PB were held back and $400,000 not paid to the Plaintiff for the defects. The Plaintiff did not provide proof of the cost of the remedial work. The Plaintiff was required to insure itself and it failed to do so – clause 4.14. The Plaintiff is liable for all costs and damage. She said the Plaintiff has not proved its claim. No particulars were given to the Court and no evidence of how many extensions applied for. The Defendant has provided evidence and asks for $800,000 to be paid by the Plaintiff to them.
  30. Mr Singh did not reply.
  31. At the conclusion of the hearing I informed I would take time for consideration. Having done so I shall now deliver my decision.
  32. It would be useful if the Court were to crystallize below the issues that were canvassed by Counsel on both sides at the final stage of these proceedings, which render it unnecessary to consider the other issues.

For the Plaintiff:

(a) Their claim is $120,000 described as general damages which are the costs of fixing the foundation.
(b) The Defendant’s Counterclaim cannot be maintained as the Plaintiff is not required by the contract to rectify the damage caused by the landslide.

For the Defendant:

(a) The Plaintiff was given extensions of time and the work was still not done. Their claim was not proved.
(b) The Defendant’s claim is $1M needed for remedial works. They ask for $800,000 to be paid by the Plaintiff to them.
  1. I shall start by considering the Plaintiff’s claim for breach of building contract; and shall do by perusing the contract. I note its salient points and append them below:
(10) Clause 4.8 states “There will be no variation of the Contract Sum.”

(11) Clause 4.9 states the contractor shall provide a Bank Guarantee equivalent to 5% of the contract sum which shall cover any liabilities arising during the works and it shall be valid until completion of All works.

(12) Clause 4.13 provides that “Since the contract is a Lump Sum Contract therefore there will be no variation to the contract for delays in construction of the works.”

(13) Clause 4.15 states “The Contractor shall indemnify the Client for any delays, damages, variations etc which may affect the practical completion of the Works.”

(14) Clause 8.1: The Contractor may apply for an extension of time to the Client in writing if the work is delayed due to Force Majeure and rainy days.

(15) Clause 20.1 Termination. The Agreement may be terminated by the Client if the Contractor:
(16) Clause 20.2: The Agreement shall terminate if the delayed actions of the Contractor renders the performance of the Agreement impossible.

(17) Clause 22.1. Liquidated Damages. Except for a force majeure event, rainy days and/or delays caused by the Client or related third parties, any delay in completing the works by the date of Practical completion will require the Contractor to pay delay damages at the rate of $500.00 per day for every day of delay from the specified date unless an extension is granted by the Works Manager in writing.

(18) Clause 23.1. Right to Reject. The Client reserves the right to reject any works performed by the Contractor which is not in accordance with the specifications under this Agreement.

(19) Clause 24. Force Majeure. This was not canvassed in the Issues for Determination in the PTC.
  1. I turn to the crux of the matter. It appears to me that the Plaintiff is relying very much on the landslide/s to exonerate itself, so that the Plaintiff will not be entitled to terminate the contract and in its turn fail in its counterclaim. But this the Plaintiff can only attempt to do if landslides were acts of God.
  2. So, I turn to the Oxford Dictionary of Law, 9th edn, which defines “force majeure” as including acts of God. The latter is defined as an event due to natural causes (storms, earthquakes, floods etc) so exceptionally severe that no one could reasonably be expected to anticipate or guard again it. It may be used as a defence but is unlikely to succeed. (Greenock Corp v Caledonian Rly [1917] UKHL 3; [1917] AC 556(HL).

It certainly will not succeed in the instant case where PW3 said the day the Attorney General did the land breaking, he commented there could be a landslide. They were present there then and there were cracks in the slope. So clearly a landslide could be reasonably expected and the Plaintiff should have guarded against it by taking insurance.


  1. The result is the Plaintiff is not able to rely on force majeure or act of God to escape liability to the Defendant. In other words it cannot, even if it wanted to, resort to clause 24.2 of the contract – Force Majeure- which provides no delay in performance of or failure to perform any obligation by the Contractor (Plaintiff) shall constitute a breach of its obligations if such breach is occassioned by any Force Majeure. To my mind, absent force majeure, absent act of God present the Defendant’s breach due to the Defendant’s delays and failure.
  2. I note Hudson’s Building and Engineering Contracts, 10th edn., says at page 316, that the employer owes no duty to the contractor to do work to render the site easier to work upon or to conduct surveys, or sink boreholes or make other investigations. This establishes the Defendant had no duty to conduct a geo-technic test on the site.
  3. It is significant that the Plaintiff by its letter to the Defendant dated 12 July 2016 stated “I must admit that the defects were due to the mismanagement of the project and we apologies (sic) and seek your assistance to move forward as we are still very optimistic in completing this project regardless of the financial hurdles we are currently facing. The rectification works for both the buildings will be at no cost to the board” (Defendant).
  4. Consequently as a result of such non-fulfillment the Defendant terminated the Agreement by its solicitor’s letter dated 17 November 2016 to the Plaintiff, citing delay and poor workmanship.
  5. I note the Defendant had already by its letter dated 12 January 2014 informed the Plaintiff that the latter was in breach of Clause 30.1 of the contract for non-provision of the insurance cover. This is relevant to what follows.
  6. The Plaintiff’s claim has failed because it has not shown why the Defendant was not entitled to terminate the agreement when from the evidence the delays were due to the Plaintiff’s admitted supply of defective steel for instance, its poor workmanship and its financial difficulties. Even more the Plaintiff did not take out any policy of insurance as contractually obliged which would have provided it with financial cover for the problem at hand. Finally if for no other reason its managing director’s above letter (para 49 above) accepts responsibility for the rectification works at its own cost. It cannot now contradict that by claiming the $120,000 for rectification works to the foundation from the Defendant.
  7. Nevertheless I will consider, for the sake of completeness, the Plaintiff’s claim for general damages and special damages (which have failed). The Court is immediately confronted by a problem of the Plaintiff’s own creation. What exactly are the loss and damage suffered by the Plaintiff as the result of the alleged unlawful and wrongful actions of the Defendant? Careful perusal of the Statement of Claim reveals no indication of what the claim entails. An equally careful perusal of the evidence led by the Plaintiff’s own witnesses discloses not an atom of evidence of any alleged claim of the Plaintiff. No documents were supplied. It is clear to my mind that the Plaintiff cannot be claiming general damages. They are claiming special damages. But it is axiomatic that special damages must be specifically pleaded and proved. There is nothing in the Statement of Claim except for the bare statement in para 28 ii that these will be quantified prior to the trial. This was never done. Neither has any evidence being given by any of the Plaintiff’s witnesses substantiating the claim for $120,000 being the alleged cost of fixing the foundation. Even if they had a claim, the Plaintiff has failed to prove it.
  8. With regard to the appropriating of the PB the Defendant was entitled to apply it towards remedying the defects caused by the Plaintiff. This is provided in para 2 (c) of the PB which states the amount of the bond will satisfy and discharge the damages sustained by the Defendant on the termination of the contract. (Also see para 24 above where PW3 confirms this in his evidence).
  9. The claim for the retention sum cannot be allowed as it was never pleaded in the Statement of Claim.
  10. Clause 4.15 in my opinion also precludes any claim by the Plaintiff because it provides the Plaintiff shall indemnify the Defendant for any delays, damages etc which may affect the practical completion of the works. This certainly has occurred here.
  11. In the light of the fact that I have concluded the Plaintiff had breached the contract I shall now consider the Defendant’s Counterclaim. These are the cost of remedial works and the cost of completing the construction works. Both, however, are only estimates. This will not do in a court of law. The Defendant failed to provide any evidence whether documentary or through their witnesses of the actual costs incurred by the Defendant. Since these have to be specifically proved, and the Defendant has failed to do so they cannot be allowed.
  12. Their claim for liquidated damages suffers the same fate as no proof whatsoever has been provided.
  13. (1) In the result, the Plaintiff’s claims are hereby dismissed with costs summarily assessed at $3,000 to be paid by the Plaintiff to the Defendant.

Delivered at Suva this 09th day of April, 2019.


....................................
David Alfred
JUDGE
High Court of Fiji


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