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High Court of Fiji |
IN THE HIGH COURT OF FIJI AT LAUTOKA
CIVIL JURISDICTION
Civil Action No. HBC 109 of 2018
BETWEEN
RELCORP (FIJI) LIMITED a limited liability company duly incorporated under
the laws of Fiji and having its registered office at Level 8, BSP Life,
3 Scott Street, Suva in Fiji.
1ST PLAINTIFF
AND
NAISOSO PROPERTY SALES (FIJI) PTE LIMITED a limited liability company
duly incorporated under the laws of Fiji and having its registered office at
Level 8, BSP Life, 3 Scott Street, Suva in Fiji.
2ND PLAINTIFF
AND
NAISOSO RESIDENTILA MANAGEMENT RIGHTS LIMITED a limited
liability company duly incorporated under the laws of Fiji and having
its registered office at Aliz Pacific, Level 8, Dominion House,
Thomson Street, Suva in Fiji.
DEFENDANT
Counsel : Mr. Sharma D. with Ms. Fathima G. for
the Plaintiffs.
Ms. Muir M. for the Defendant
Date(s) of Hearing : 28th & 29th August 2023
Date of Judgment : 31st October 2023
JUDGMENT
[1] The plaintiffs filed this action against the defendant seeking damages for breach of contract. The 1st plaintiff is a real estate and development entity which has undertaken the development of Naisoso Island. The 2nd plaintiff is the real estate sales and marketing agency that market and sells 1st plaintiff’s real estate in the Naisoso Development. The defendant is the Residential Development Operator and provides letting services as well as non-exclusive agency for sales of property on Naisoso Island.
[2] The 1st plaintiff and the defendant entered into an agreement, 08th September 2010 to purchase management rights from the defendant. The plaintiff avers in the amended statement of claim that pursuant to the contract the defendant was required to maintain a standard of professionalism required of a real estate agent to non-compete provision with the plaintiffs. It is also averred in the amended statement of claim that since the defendant failed to maintain a standard of professionalism required of a real estate agent, the plaintiffs terminated the non-compete provision of the contract but the defendant refused to accept the termination.
[3] Particulars of loss and damage as pleaded in the amended statement of claim are;
(i) Loss of commissions;
(ii) Loss business and revenue; and
(iii) Allegations of breach of contract causing injury to business reputation.
[4] The plaintiffs seek the following reliefs:
(a) A declaration that the non-compete provisions of the Management Rights Contract, are terminated;
(b) A declaration that by selling property on Naisoso Island the plaintiffs are not in breach of Article 31.3 of the Articles of Association;
(c) General Damages;
(d) Post judgment interest;
(e) Costs on an indemnity basis; and
(f) Further or other reliefs as this court thinks fit.
[5] At the pre-trial conference the parties admitted the following facts:
“Residential members must also use the Residential Resort Operator as their agent for the sale of their Lot for the purpose of marketing their Lot within Fiji. This is to assist in potential buyers being aware of the structure of Naisoso Island and the requirements for conveyancing of a Lot in a Residential Precinct on Naisoso Island.
[6] While denying the allegation of the plaintiffs, the defendant by way of a counterclaim alleges that the 1st plaintiff has breached the contract between them and the alleged breaches are as follows:
(a) Failure to perform clause 10.2(a) of the contract by acting to compete with the defendant in respect of lots not owned by the 1st plaintiff both prior to and after the purported termination of the covenant not to compete;
(b) Failure to perform clause 10.2(b) of the contract by not encouraging lot owners to appoint the defendant as their letting agent;
(c) Failure to properly implement the contract in respect of the exclusive real estate agency for lot resales in the structure of the residential precinct and the Body Corporate;
(d) Failure to provide a suitable location for a storage shed and failure to do so in a timely manner as required by special condition 4 of Schedule 1 of the contract, causing the defendant to incur substantial expenses for storage;
(e) Failure to comply with the covenant not to compete contained in special condition 5.5 of Schedule 1 of the contract;
(f) Encouraging and / or conspiring with the others to challenge the validity of Article 31.3 of the Articles of Association of the Body Corporate despite having accepted consideration from the defendant for the exclusive resale rights set out therein;
(g) Encouraging the others to ignore instead of complying with Article 31.3 of the Articles of Association;
(h) Falsely claiming breach of contract against the defendant on spurious grounds;
(i) Promising lot owners, including a consortium purchasing 18 lots, that Article 31.3 would not be enforced or applied to them to require them to use the defendant’s services as real estate agent for resales; and
(j) Intentionally interfering with the defendant’s business relationship with the Body Corporate despite having accepted consideration from the defendant for the management rights.
[7] Particulars of damage as averred in the statement of defence are;
(a) Contractual consideration paid for lettings and resales – AUD 230,000 and FJD 178,123.37;
(b) Consideration paid for template resale contracts – FJD 7,601.00;
(c) Lost or reduced commissions on resale and letting – FJD 818,052.87;
(d) Lost or reduced commissions relating to breach of the covenant not to compete – FJD 767,822.87;
(e) Solicitors costs relating to disputes with or caused by the 1st plaintiff – FJD 79,712.51; and
(f) Storage costs incurred in absence of the storage shed – FJD 140,866.66.
[8] The defendant seeks the following orders:
(a) The plaintiffs’ statement of claim be dismissed;
(b) Judgment be entered for the defendant for special damages and loss and general and consequential damages as per its counter claim;
(c) Order be made restraining the 1st plaintiff and any related companies including the 2nd plaintiff, from acting as real estate agents in respect of any resale of lots in the residential precinct of Naisoso Island as pre the covenant not to compete;
(d) Aggravated or exemplary damages against the 1st plaintiff;
(e) Costs of this action on an indemnity basis;
(f) Interest; and
(g) Such other or further relief as this Honourable Court may deem just or necessary in the circumstances.
[9] When the was taken up for trial the learned counsel for plaintiffs moved to withdraw the plaintiffs’ claim and accordingly, the court struck out the plaintiffs’ claim and proceeded to hear the defendant’s counter claim.
[10] On 08th September 2010 the 1st plaintiff and the defendant entered into an agreement called MANAGEMENT RIGHTS CONTRACT, NAISOSO ISLAND RECIDENCE TO PURCHASE (D1) management rights which means, the defendant to be the residential resort operator under the said agreement.
[11] Under the said agreement the defendant was required to pay the 1st plaintiff AUD 230,000.00 exclusive of Value Added Tax which the defendant had paid and there is no dispute as to the payment.
[12] Clause 10.2(a) on the said agreement the 1st plaintiff has agreed that;
subject to special condition 5, we will not act in competition with you as a letting agent for any lot in the development and sales of any lot in the development and sales of any lots in the development not owned by us.
[13] On 14th February 2018, the Solicitors Lal Patel Bale Lawyers on instructions of the 1st plaintiff sent a letter (D3) terminating the non-compete provision of the contract alleging that it had failed to maintain the professionalism required of a real estate agent with the capability of representing the 1st plaintiff company and related companies as required under Schedule 1, Special Conditions 5.5.
[14] Special Condition 5 –
5.1 You acknowledge that we (or a related company of ours) intended to use your services (and those of your directors or employees) to act as real estate sales persons to sell Lots, after settlement, to the extent allowed by law.
5.2 We (or a related company of ours) intended to carry out a real estate agents business for sale and marketing of our Lots with the ultimate intention to have you carry on a business of selling our Lots once you and your employees have obtained all appropriate licenses and sufficient experience to carry out a professional real estate agency business selling Lots to international and domestic buyers to the standard that we have achieved.
5.3 You will take reasonable steps to procure all necessary licenses and accept tuition and direction from us about how to act as a real estate agent for the development so as to achieve our standard. We agree to give you reasonable assistance (provided it is at no cost to us) in obtaining experience in selling lots to us.
5.5 Once you have achieved a standard that is equivalent to ours, as a real estate agent, we agreed not to compete with your real estate agent business with respect to the sale of Lots (by persons other than us) whilst you maintain standard of professionalism required of a real estate agent we achieved. We retain the rights (together with our related company) to:
(a) carry on the business of selling our Lots;
(b) carry on the letting and sale of commercial Lots; and
(c) act as a real estate agent for the sale of Lots not owned by us in the Residential Precinct where the owner of the Lot is not satisfied with your service or level of professionalism. However we agree we shall not in these circumstances seek listings or appointment as agent to selling Lots we do not own in the Residential Precinct within the terms of this special condition. We will pay to you any commission we earn in selling Lots in the Residential Precinct that we do not own, less any taxes and expenses payable by us in relation to such sales. This arrangement shall continue for two years after the settlement date. The parties agree to meet and reconsider this clause 5.5 at the end of that 2 year period.
[15] Referring to the above clauses of the Management Rights Contract the defendant’s witness (the witness) said that clause 10.2 of the Management Rights Contract confirmed that it could not act in competition with the defendant company as letting agent for any of the Lots in residential development and in selling the Lots not owned by the plaintiff.
[16] The management Rights Contract was entered into between the 1st plaintiff and the defendant on 08th September 2010 where they have agreed for the 1st plaintiff to pay any commission earned in selling Lots in residential precinct to the defendant for two years after the settlement date.
[17] The Management Rights Contract was terminated by the 1st plaintiff but only the non-compete provision of the said contract was terminated and the rest of the contract was in operation even at the time of the institution of these proceedings.
[18] Special damages must be pleaded and proved by the claimant. In this matter the defendant claims FJD 2,222,179.28 as special damages the details of which are averred in paragraph 35 of the statement of defence which I have reproduced in paragraph 7 above.
[19] In Attorney General v Burnett [2012] FJCA 15; ABU0023.2009 (21 March 2012) at paragraph 71 the Court of Appeal has cited the following observation of Diplock LJ in Ilkiw –v- Samuels and Others [1963] 1 WLR 991 at page 1006:
“Special damages, in the sense of a monetary loss which the Plaintiff has sustained up to the date of trial, must be pleaded and particularised. _ _ _. In my view, it is plain law – so plain that there appears to be no direct authority because everyone has accepted it as being the law for the last hundred years – that you can recover in an action only special damage which has been pleaded, and, of course, proved."
[20] The same principle was followed in Deo Construction Development Company Ltd v Denarau Corporation Ltd [2017] FJHC 182; HBC184.2014 (10 March 2017) and further cited the following paragraph from Halsbury’s, Laws of England, 4th Edition, Volume 12 at paragraph 812 state as follows;
“...In the context of liability of loss (usually in contract) general damages are those which arise naturally and in the normal course or events whereas special damages are those which do not arise naturally out of the defendant’s breach and are recoverable only where they were not beyond the reasonable contemplation of the parties (for example, where the plaintiff communicated to the defendant prior to the breach the likely consequences of the breach). The distinction between the two terms is also drawn in relation to proof of loss... special damages; in this context are those losses which can be calculated in financial terms. A third distinction between the two terms is in relation to pleading: here, special damages refer to those losses which must be proved...”
[21] The defendant claims AUD230,000.00 and it is clear from the defendants witness that this money had been paid to enter into the Management Contract. The Management Contract was entered into in the year 2010 and this amount was claimed in 2018. The defendants witness did not explain the basis of this claim.
[22] The defendant, as special damages claim FJD178,123.37 but the defendant’s witness failed to explain the basis of this claim and how she arrived at this figure.
[23] The defendant also claims $7,601.00 as the consideration paid for template resale contracts. However, the defendant’s witness did not say in her evidence how the defendant company became entitled to this amount and as correctly submitted by the learned counsel for the plaintiffs, there is no evidence that the 1st plaintiff used this template for their sales.
[24] The defendant also claims $818,052.87 as lost or reduced commission on resales and lettings. According to the evidence of the defendant’s witness she is claiming what the defendant had paid to the 1st plaintiff as Letting Payment fees and Villa Completion fees since 2010. These payments had been paid as agreed by the parties in the contract which is still valid.
[25] Clause 3.3 of the Management Rights Contract provides:
In addition to the purchase price, you must pay us;
(a) $4,750 AUD plus Vat for each Lot during the term (“Villa Payment”); and
(b) $7,250.00 AUD plus VAT for each letting appointment for each Lot during the Term (“Letting Payment”) to be paid in 4 equal instalments, Quarterly in arrears.
[26] As submitted by the learned counsel for the plaintiff the defendant did not seek an order from the court that this clause was oppressive.
[27] The defendant also claims $767,822.87 as lost or reduced commission. The defendant’s witness tendered in evidence several transfers but none of them shows that the 1st plaintiff had any involvement in it. There is also no evidence giving particulars of this claim.
[28] It was a condition between the defendant and the 1st plaintiff that it was entirely up to the Residential Precinct Owner to decide whether to obtain services of the defendant and if the Residential Precinct owner did not want the services of the defendant the 1st plaintiff cannot be blamed or held responsible for that.
[29] The defendant claims $79,712.51 as solicitor’s costs. Legal costs are not special damages and further, the defendant has failed to give particulars of the claim for the court to decide the amount that the defendant is entitled to.
[30] The defendant also claims $140,866.66 as storage cost.
[31] Clause 4.3 of the contract provides:
Subject to special condition 4.2, we agree to make our best endeavours to have the Storage Shed constructed as soon as practicable when you provide us with reasonable evidence of your need for a Storage Shed because of the requirements of the management rights business.
[32] There is no evidence that the defendant made such a request. Furthermore, when the defendant’s witness was asked in cross-examination about the breakdown of the sum since it has not been pleaded in the counter claim she replied that it was part of the rental they had paid for houses they rented and stayed in. Without particulars of the claim the court is unable to ascertain the amount the defendant is, if at all, entitled to.
[33] For the reasons set out above the court makes the following orders.
ORDERS
Lyone Seneviratne
JUDGE
31st October 2023
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