High Court of Fiji

65. In Pearce & High Limited v Baxter,(CCRTF 98/0972/2 (15^th February,1999) Lord Justice Evans stated that the defect liability clause applies to

“defects [etc] which appear” during the period has to be read objectively, as a description of those defects to which the clause applies. The defects must become apparent, meaning become patent rather than remain latent, during the notice period, regardless of whether any particular person has actual knowledge of it...

...Clause 2.5(the defects liability clause) gives the employers an express right to require the contractor to return, as well as to the contractor himself the right to return and repair the defect himself, if he is willing to do so.It is necessary to cite authority for the proposition that such a right cannot be excluded except by clear, express words or by a clear and strong implication from the express words used or by a clear and strong implication from the express words used. ..

..It gives both parties the express rights referred to above, both of which are likely to be a great practical value to the party concerned, without impinging on the employer’s common law right to recover damages for the contractor’s previous breach..(emphasis added)

Lord Justice Evans cited the following passage from the judgment of Judgment of H.H Judge Stannard in William Tomkinson v St Michael’s P.C.C. 1990 C.L.J. 319:

‘It requires very clear words to debar a building owner from exercising his ordinary rights of suing if the work done is not in accordance with the contract’ – per Edmund Davies L.J. in Billyack v Leyland Construction Company Limited [1968] 1 AII E.R. 783 at p, 787 E-F. .

....the true function of clause 2.5 is in my judgment firstly to confer a remedy for defective works on the employer, i.e. the right to require the contractor to make them good. Such a provision is generally to be regarded as providing an additional remedy for the employer, and not as releasing the contractor from his ordinary liability to pay damages for defective works: Hancock v B.W. Brazier (Anerley) Limited [1966] 2 AII E.R. 901 per Lord Denning M.R. at p.904F-1 .. (emphasis added)

66. It is clear that the clause applies to defects which appear during the defect liability period and gives an owner an additional remedy to request his contractor to rectify apparent defective work. It does not extinguish his right to recover damages under common law for defective work after the expiry of the defect liability period, unless there is express provision in the contract to the contrary.
    
67. In the present case, the contract does not release the defendant from its common law liability to pay damages for defective work.
    
68. Ordinarily, defects are detected by an architect or engineer. In the instant case, the defendant represented that it was a triumvirate, which would provide the services of an architect, engineer and contractor, as stated in the agreed facts.
    
69. In my view, the defect liability period contemplates the rectification of minor defects which are “apparent”, as expressly provided in clause 17(1) and not latent structural defects, which do not emerge during the short defect liability period.
    
70. I am satisfied from the evidence as reviewed below, that the defects, in particular, the condition of the poles, foundation, footings rafters and sissilation were not apparent during the defect liability period.
    
71. Next, it was contended that the building was structurally sound, as it stood intact during Cyclone Gita and TC Winston.
    
72. DW3 said that no part of the residence collapsed during these significant cyclones. In cross examination, he admitted that the residence was not affected by Cyclone Gita, as it is located East of Vanua Levu and that cyclone hit North of Vanua Levu. He said that he had to check if the damaging winds of TC Winston hit the West coast of Taveuni.
    
73. PW1 said that TC Winston did not severely affect his residence on the West coast, except for new cracks on the wall. His neighbours’ 50 year old flimsy house had minimal damage.
    
74. Mr O’ Driscoll put it to PW3 that although TC Winston did not hit land in Taveuni, it brought a significant amount of rain. PW3 said that Taveuni was a reasonable distance from the centre of the cyclone.
    
75. Next, the defence argued that the building was structurally safe, as a Cyclone Certificate, Certificate of Completion and insurance cover was obtained.
    
76. DW3 said that his “crew” did a “visual inspection” in 2012 and “nothing more”, to issue a Cyclone Certificate for insurance purposes. They did not ascertain the size of the footing, founding depth etc. DW3 said that “our inspection was based for the issuance of a Cyclone Certificate and generally this relates to the scrutiny of the integrity of the external envelope and the roof the roof structure, the roof framing, cladding and cyclone shutters”. All other areas that were not open to view or not exposed were “deemed” to be done in accordance with sound construction practice, as qualified in the Cyclone Certificate. He stated that PW3 had done a more detailed investigation.
    
77. DW3 said that the roof was inspected, but that inspection did not reveal that the defendant had admittedly not complied with the Fire Code to use double sided sissilation, as emerged at the trial.
    
78. In my view, the TRLA would not have been aware of the structural defects when it issued the Certificate of Completion, as it did not make sequential inspections at the various stages of construction and the Certificate of Completion was issued on an assurance given by the defendant’s builder, as I find in the succeeding part of my judgment.
    

The Building Permit

79. The plaintiffs contends that the defendant failed to comply with requirements of the building permit to have sequential inspections by the TRLA.
    
80. Condition 8 required that :“All construction shall be to the satisfaction of the Taveuni Rural Local Authority and inspections shall be done at each stage of construction”.
    
81. PW2,(Vishal Kumar, Health Inspector,TRLA) said that a contractor is required to make an appointment with the TRLA to inspect the building at the different stages of construction, to ensure that the conditions of the building Plans are adhered to. The TRLA carry out 7 inspections.
    
82. In the instant case, after the initial site inspection they were called for the inspection of the footing for the garage, a partial inspection, when the pine poles were being fixed and the final inspection on 18^th July, 2012. PW2 said that unfortunately, the Engineer and the defendant’s representative did not engage with them on 18^th July,2012. The TRLA raised concerns that they had not carried out all the stages of inspection and hence they were not in a position to issue a Certificate of Completion. In support, he produced his written note expressing their concern.
    
83. By letter of 19^th November, 2012, Thomas/Tommy, who they knew was the defendant’s builder on site, assured the TRLA that the building was completed with engineering standards and requested the Certificate of Completion. A Certificate of Completion was admittedly issued after receipt of this letter.
    
84. I note that the defendant was permitted to sub contract under the Contract, but was not relieved of its liability.
    
85. The evidence of PW2 that contractors are required to make appointments with the TRLA to inspect the building stands to reason, as they would not know when each stage of construction is completed.
    
86. Moreso, it was the defendant’s responsibility to make the required appointments, as it admittedly represented to the plaintiffs that it was a one stop shop that would manage the entire process from documentation to construction and deliver a “turnkey” residence.
    
87. The next breach was the failure to obtain stamped structural engineering drawings. Condition 3 of the Building Permit provides that “All works to be certified as structurally safe by a Registered Civil Structural Engineer”.at each stage of construction..
    
88. PW2 said that the TRLA only received the architectural Plans. DW3 said that there were no stamped signed structural engineering drawings for the residence.
    
89. In my judgment, the defendants breached Conditions 3 and 8 of the Building Permit.
    

Geo technical survey

90. It is not in dispute that the defendant got a geo technical survey done on the adjoining Lot and not on the Lot on which the residence was constructed, as emerged in the cross examination of DW4.
    
91. PW1 said that there were tons of lava on the land, on which their residence was constructed. PW3 said that typically a geotechnical investigation should have been carried out prior to any works being carried out, particularly given the slopping nature of the site.
    
92. On 7^th April,2011, Mr Gary Semaan informed PW1 that he spoke to his Construction Manager and a civil contractor in Taveuni and “believe the risk of hitting large quantities of rock is low...we are confident that the risks on this project are low”.
    
93. It emerged that the structure was founded on rock. DW3, in evidence in chief confirmed PW3’s evidence that the poles have been propped on massive rocks under the structure.
    

The remediation plan proposed by the defendant

94. The defendant’s final remediation plan comprised a 30 item action statement with detailed plans. There were six phases of works which included demolition and reconstruction of the link way, removal and replacement of the pine poles with concrete encased steel piles, partial demolition of the concrete floor for construction of a link beam in the garage, replacement of the existing concrete driveway and installation of the roof insulation material, roof sheets and a caretaker’s cottage.
    
95. PW1 said that the remediation plan was inadequate. He told DW3 that the remediation plan would not work. DW3 was focused simply on fixing the poles, but the problem was more systemic and widespread. The ground had not been compacted. The residence sits on rubble. He showed all the progress photographs to DW3, so that he knows the failings in his plan and will re-evaluate it. DW3 agreed that it was necessary to do a site visit and have additional excavations done to see whether there has to be a modification of the structural remediation plan he drafted. He came to the residence with DW2,who dug out 3 meter deep pits.
    
96. On 27^th July, 2016, PW1 wrote to Mr Khrishnan as follows:

Thank you for making the time to meet Edwin and myself..

I had not looked as these photos since 2012 and with additional knowledge I have acquired, they make me worry about the scope of remediation planned. We agreed that you will meet me at my home for your inspection on August 8^th.

Based upon your review of the structurals by Mr. Gerry Griffiths, and the Wes Eng Geotechnicals, you are authorized by me to instruct Adrian Roberts as to what excavation or opening of slabs, cracks in cinderblock walls before your arrival. He can also rip up portions of rockpile that Tommy constructed as a mock retaining wall.

Hopefully, your analysis will allow Adrain to seamlessly complete his first scope of work and continue without any interruption to complete the additional remediation that will be necessary on both the main building and garage.

I understand this is a challenging situation as the plans as drafted by Griffiths seem to conform to a rather flat terrain and Tommy had no one to turn to as no structural engineer was involved after the initial draft of November 2011 prior to groundbreaking and no inspections were performed during construction by local authorities causing them to refuse to issue a Certificate of Completion without reservation.

I have come to realize that just as there was no protection to any of the poles interface, there is no protection of the interface with bearer beams lying of bare cinderblock.

The house is moving and cracking and requires everyone to focus on the problem and come up with a solution IF there is one. Finger pointing is counterproductive.

For 1 million dollars, I am entitled to structurally sound home. I sincerely hope there is a real solution. .. (emphasis added)

97. PW1 said DW3 told him that he will submit new notifications of his remediation plan, but none were sent to him. The plans do not exist. The defendant generated paper and repeated pledges, which were not met.
    
98. DW3 confirmed that he visited the residence in regard to the remediation. At the site, a few pits were dug. He admitted that normally, pits should have been dug before the remedial plan was made.
99. On 11 August,2016, DW3 informed PW1 that he will be providing sketches as follows:

Thank you for your email and the additional photos.

I had a meeting with PBS yesterday which I must say was quite productive. We had a thorough review of the possible foundation remedials and I will be coming up with a plan to carry out appropriate additional works that will be needed to ensure long term stability of all three buildings in terms of settlement effects due to gravity loads as well as stability against sliding that can be triggered by an earthquake or infiltrated ground water.

I will prepare relevant sketches and notes to reflect safe founding on the underlying basalt substrate. Workmanship defects evident on the superstructure can be rectified by Adrian to industry best practice.

I hope to have the conceptual design ready for both parties early next week for their perusal and prior approval before embarking on the structural details. (emphasis added)

100. DW3 agrees that “appropriate additional works will be needed to ensure long term stability of all three buildings”. In cross examination, he said that he does not recall doing any sketches or plans. In re- examination, he explained that he was not “fully engaged “ to do any plans.
     
101. It follows and I find that the first plaintiff was not unreasonable in his request for an adequate remediation plan.
     

Container cottage

102. PW1 said that he had to arrange for the transport of the cottage via the golf course, but it was never functional. It had broken locks, broken windows and non closing frames of windows. The floor had buckled, standing water all over, rotten wood and mushrooms growing under the floor and kick board. The ceiling was broken,
     
103. PW5 said the cottage comprises two containers next to each other, but were not sitting levelly. It leaks a lot and the floor is uneven. Part of the ceilings fell down. The windows came cracked. Mushrooms were growing out of the kitchen cabinets. The cottage is not habitable.
     
104. DW1 said that that he was sent to Taveuni in late October,2016, to investigate and find out the reason for the delay in the container cottage being completed and to make sure that it was habitable in the shortest possible time. The cottage was “substantially complete” and habitable. It needed finishing. His involvement was to complete it with Adrian Roberts, the site supervisor.
     
105. It transpired that DW1 had not checked if the floor of the cottage was levelled nor the condition of the toilets, sinks, doors windows or anything else. It was put to him that the windows were cracked and leaked, the cupboards and doors could not be opened. He knew the window was leaking on top. PW1 had pointed out some defective items. He believed the defects were rectified.
     
106. DW1 and DW2, who were involved in the installation of the cottage were unaware if the cottage had a certificate of conformity.
     
107. I conclude that the container cottage was not completed.
     
108. In my judgment, the defendant has no right to insist on remediating the defects at its costs, for the following reasons. Firstly, the defendant’s remediation plan was inadequate and the evidence (as referred to below) establishes that the plan would require the whole structure to be dismantled. It was not in accordance with the plans and specifications in the Contract and not feasible. The construction was fundamentally defective.
     
109. Secondly, the “ licence (conferred on the contractor by the defect liability clause) to return to the site after practical completion for the purpose of remedying defects” was extinguished on the expiry of the defect liability period, as Judge Stannard stated in William Tomkinson v St Michael’s P.C.C., (supra).
     
110. Thirdly, it emerged that the PW1 was not comfortable to have the defendant remediate the defects. DW3, in cross examination accepted that it is reasonable to expect that a homeowner who finds so many defects in the construction of his house will not trust the builder anymore.
     
111. Justice Akenhead in Mul v Hutton Construction Limited [2010] EWHC 1145 (TCC) (21 May, 2010) as cited by Ms Muir, stated:

It will often be the case that the Employer can be said to have failed to mitigate his or her damage if he or she fails to give the contractor to opportunity to put right the .. the culpable defects... However, it is not invariably the case that the Employer would have failed to mitigate damage in failing to give the Contractor this opportunity, examples might be where there were such whole scale defects that no reasonable employer could be expected to have that Contractor back on site., (emphasis added)

112. PW3 in his Report states the following defects in the construction are difficult to fix:
     1. The pole foundations. It appears that there is agreement between all that these are inadequate from a treatment and stability perspective. The vertical and lateral loads will need to be transferred through some other foundation system. This is likely to be a challenging and extremely difficult undertaking to do it correctly.
     2. The pad foundations are likely to continue to settle which as a minimum will result in continued cracking. The pad for the retaining wall near gridline C is too small should the original amount of backfilling be supplied. This could result in the retaining wall becoming unstable and falling.
     3. The slope adjacent to the NE corner of the site is in danger of failing during a seismic or rain event which could undermine this corner and cause the partial collapse of the structure.
     4. Water ponding due to differential settlement can be a health issue and is inconvenient to remove.
     5. The lack of adequate bracing in most circumstances could cause the house to collapse in a cyclonic event. This would be difficult to rectify and would likely cause the dismantling of much of the structure.
     6. The rafters being undersized would likely require the removal and refixing of the roof.
     7. The fixings to the exterior lining and the exterior lining is difficult to fix as it would require dismantling of the walls (along with the rectification of the lintels).
        

There are a number of other items that are not so difficult to rectify but the sum total of all of these things together would add up to the dismantling of the entire house and even if a rectification strategy were attempted it would be unlikely to rectify all of the deficiencies identified in the above report.

113. DW3, the Engineer called by the defendant said that he reviewed PW3’s Report, but did not carry out any independent investigations. He was not engaged to inspect the residence. He received the Report recently.
     
114. He said that since PW3 inspected the building at a much later date after the construction “things could have deteriorated or foundation areas could have been a bit more exposed”(emphasis added). No evidence was led by the defence to support this suggestion.
     
115. I will in the first instance deal with the evidence on the foundation.
     

The Foundation

116. PW3 said that the presence of very dark soil indicates high level of organic content. There were large loose rocks which are not suitable for founding a building. The house was founded on basalt, which is volcanic hard rock. The photographs indicate that this test was not met. There was no evidence that the soil was compacted and filled nor that a compaction test had been carried out and approved by a registered testing Authority, as stipulated in the Griffiths Drawings.
     
117. DW3 said that it is difficult for him to comment on the founding material and founding depth, as he did not carry out an inspection. He accepted PW3’s detailed investigation, Most of the excavation would have been backfilled and covered up, but there were exposures of rock. He did not dispute the presence of organic material. He said that certainly it should have been removed, but the finding that the ground condition under the structure is inadequate due to high organic content in the soil and large loose rocks is challengeable, as the structure would have shown evidence of much greater distress.
     

Pine poles

118. The residence comprises three buildings, which is supported by long pine poles, except for the garage, which has no pine poles. The sleeping quarter is supported 100% by pine poles. It is connected by a covered link way to the main building, which has 75 to 80% pine poles and cinder block concrete walls, which represent 20% of the building.
     
119. PW2 and PW4,(Taniela Whippy, Forestry Officer at Ministry of Forestry).confirmed the evidence of the plaintiffs and PW3 that some of the poles were rotting and decaying. PW2 said that they observed that the pine posts were cracking and rotting when they inspected the building on the complaint of the first plaintiff that there were several defects.
     
120. PW4 produced the Report of the Ministry. The Ministry determined that the poles were not sufficiently treated to their specifications and hazard level. Only three poles passed the test. The rest are a high risk item and will rot and deteriorate faster. PW4 said that he carried out the inspection and found that the poles had deteriorated to a stage where rotting has started. The poles had cracks that had developed through the drying of the poles. Due to getting wet by rain, the cracks had increased. The poles had knot mounts and branch stubs embedded in the wood. Thirty three poles were analyzed.
     
121. PW3 said that the analysis of 33 of the 66 poles was sufficient to draw a conclusion on the condition of the poles. The poles would be expected to rot and decay before the end of the design life of the building. This means that its lateral stability could be compromised in a cyclonic event or earthquake and the part of the residence supported by pine posts could be blown over and collapse.
     
122. The defendant does not dispute that the pine poles are defective. DW3 agreed that placing steel and concrete next to the existing poles, shifting the load to the new poles and then taking out the pine poles is unusual. It is not difficult, but it is an involved job. He does not believe that it is impractical.
     
123. PW3 said that the supporting pine poles were not sufficiently embedded and did not meet the depth stipulated in the Griffith Drawings. Some of the foundations for the poles were not founded into the ground and instead had raised concrete footings poured around them. Some were founded on a pile of rocks with a blot of concrete, as depicted in a photograph. The reinforced concrete footings were not constructed in accordance with the Drawings.
     
124. PW2 said that the TRLA advised the defendant to meet the required depth.
     
125. DW3 accepted PW3 finding that the footings were not installed to sufficient depth into solid ground, as it was his detailed investigation. He did not scrutinize the footing depths in detail. PW3 had done a more detailed investigation by excavating around the footings.
     

Pad foundations

126. DW3 said that it was difficult for him to comment on PW3’s concerns that the pad foundations are likely to settle and will result in continued settlement, as he has not seen the actual situation. It depends on the extent of deterioration or lack of integrity that surfaced after any further excavation works around the pad to expose it was carried out. If the poles are adequate, it should be acceptable to remediate their bases with concrete pads and ensuring that it’s founded and reinforced on good ground and reinforced appropriately. The pad is not the best detail. He would have done something more positive and secure. It has got massive rocks under the structure. The structure is founded on rock. He could not see to what depth the concrete pad goes down to. The defendant needs to ensure that that footing is taken down to sound subgrade rather than relying on those rocks. It is an involved job, since the rocks and rock placement has to be removed and then go down to subgrade.
     
127. DW3 said that the structure may be safe but it could be subject to some instability if there is a shake or a seismic event. It could get affected, as it is sitting on a large volcanic rock under the structure. He would not have done it that way, but the residence has been stable for a number of years. Nothing has actually collapsed. There has been slight settlement on the slabs on the ground.
     

Slope stability

128. PW3 said that there is no evidence that the corner of the main house, which is a near a steep slope had been assessed for stability. The slope could potentially collapse in the event of rain or an earthquake undermining the house and causing a collapse of that corner. DW3 said that a construction methodology is required to build on a sloping site.
     
129. I note that the geo technical study on the adjoining Lot states that that a slope stability analysis was not carried out.
     

Water ponding

130. DW3 said that PW3’s concern is that there’s been some settlement of the slabs on the ground.
     
131. I would agree with DW3 that it does not appear to be a major job to demolish the slabs and re-do it.
     

Bracing

132. PW3 said that the progress photographs depicted that the bracing capacity of the walls was insufficient. Some were too far apart. There was no diaphragm installed. The lack of bracing could result in the building being pushed over. There were a number of locations with “tie down rods” within the walls, the rods run vertically through a wall and have bolts and nuts on the top and the bottom to hold the top plate to the bottom plate to try and attempt to transfer load from a cyclone to the footings. In some cases, bolts and nuts were not installed. All the cladding has to be taken off to improve the fixings.
133. DW3 said that he believes PW3’s concern on the bracing is not sustainable. It is not contained in the remedial plan. His disagreement is premised on the ground that there has neither been any collapse nor failure of any braced wall, despite two significant cyclones.
     
134. I have found that the two cyclones did not affect PW1’s residence .Accordingly, DW3’s contention on the bracing fails.
     

Rafters

135. PW3 said the rafters were undersized and there is a risk of the roof blowing off in cyclonic event. In cross examination, he agreed that additional rafters can be added.
     
136. DW3 said that additional rafters are not required. PW3’s conclusion is based on the premise that there should be full internal pressure.
     
137. There was a divergence of opinion between the PW3 and DW3 on the issue of the internal pressure.
     
138. PW 3 said that the rafters have to be designed for full internal pressure.
     
139. DW3 said that he disagrees with PW3 and “another engineer who had done an earlier report” for the plaintiffs on that matter.
     
140. It suffices to state that the defendant had agreed with Mr Lodhia on the internal pressure calculations. I refer to the following email from Mr Micheal Fishenden of the defendant of September 17, 2015, to PW1 which reads:

We wish to request your approval and direction to Mr. Lodhia to carry out the structural Engineering requirements for the remediation works, the new build requirements including the inspection and certification on completion

Following our recent meeting with Mr. Lodhia, PBS agreed with the Code understanding especially for the internal pressure calculations and building tie-down requirement. There was a clear acknowledgment by both parties of the fixtures, products and elements that do not current fully comply under testing criteria to the current code. Mr. Lodhia clarified that these elements will be clearly listed and the revised code parameters are undertaken to notify the elements and mitigate exposure as per the current code provisions.

Mr. Lodhia’s concern is that he was engaged to act on your behalf Mr. Seidman, we wish for him to do exactly this as this eliminates the design to review process and provides definite direction to the issues without further delay.

Could you please discuss this with Mr. Lodhia to gain clarity to his position. (emphasis added)

Sissilation

141. PW3 said that the insulation used did not comply with the fire rating requirement of the Fiji Building Code, which requires double layer fire rated sissilation. Single layer sissilation is not fire rated. In order to upgrade the lintels and replace the rafters and the sissilation, the entire roof has to be removed. Sissilation stops the spread of fire and reduces the amount of radiated heat that comes into the house.
     
142. DW3 agrees that the sissilation paper laid between the purlins and the roof should be double sided.
     
143. The remediation plan provides for the installation of specialized roof insulation and replacement of roof sheets.
     
144. Item 7 of PW3’s Report states that it is difficult to fix the exterior linings, as it would require the dismantling of walls.
     
145. DW3 said that Item 7 relates to the screw fixing of the claddings to the structural members which is the studs. If there had been some missing screws or connections, it is easy to provide the additional screws. It does not require dismantling.
     
146. I find that DW3 accepted most of the findings of PW3 except with regard to the bracing, rafters and internal pressure and dismantling of the walls.
     
147. I have found that DW3’s contentions on the bracing and rafters are not sustainable. The defendant has accepted Mr Lodhias’ view on the internal pressure issue, as noted above.
     
148. In Lal v Chand & Ors. [1983] 29 FLR 71 (28 March 1983) as referred to by Ms Muir, there was conflict of expert evidence from the engineers. It was held that the lower court made a correct inference in accepting the evidence of an Engineer who had actually dug up the foundations and inspected them closely.
     
149. In Byrne v JS Hill & Associates Ltd, (supra) Fatiaki J (as he then was) stated :

It must be remembered that building a house is different from drawing plans on paper and that rectification of defective building work can often only be effected with great difficulty and considerably more expense than constructing a completely new building.

In this case the plaintiffs' claim that it was the very basis or essence of their contract with the defendant that the defendant would build the study and bathroom in a 'good and workke manner'&#1r' consistent with inishes in s in the existing structure. This standard of workmanship was not provided by the defendant as promised and in that failure the plaintiffs were led tat the contract aact as having been repudiated by the defendefendant.