IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 102 of 2006

BETWEEN:

CLAUDINE GALIBERT JONES
Claimant

AND:

SAM NGWELE & JAY NGWELE
Defendant

Coram:	 Justice C.N. Tuohy

Counsel: Mr. Yawha for Claimant
Mr. Ngwele in person	

Date of Hearing: 27th March 2008 
Date of Decision: 21st May 2008

RESERVED JUDGMENT

Introduction

1.	This is a claim against a building contractor by the owner of a house which the contractor agreed to build. The claimant terminated the contract prior to completion of the house and is seeking to recover from the defendants the cost of completion and liquidated damages for delay. As well as denying the claim, the defendants have counterclaimed for the cost of materials purchased for the house but not paid for.

Facts

2.	There was a written building contract between the parties prepared by the architect, the late Geoff Feast of James Ferrie & Partners, and signed on 1 March 2005. Under it the defendants agreed to construct a new residence for the claimant at Anabrou in accordance with annexed drawings and specifications for a fixed price of VT23,967,000. 

3.	Clause 6 of the General Conditions of Contract provided that "the Contractor …… shall…. regularly and diligently proceed with (the works) and shall complete the same on or before the date for practical completion stated in the …. Appendix subject nevertheless to the provisions for extension……" The date for practical completion in the appendix was 31 August 2005.

4.	In Clause 26, "practical completion" is defined as bringing the works to a stage of being reasonably fit for use and/or occupation by the owner. Clause 29 provided for the architect to grant fair and reasonable extension of time for completion if the works had in his opinion been delayed by various specified events outside the contractor’s control.

5.	Clause 28 provided that if the contractor failed to complete the works by the date stated in the appendix or within any extended time granted under Clause 29, and the Architect certifies accordingly, the contractor should pay or allow the owner liquidated damages as provided in the appendix for the period during which the works remain uncompleted. The appendix provided that liquidated damages were to be calculated at 1/2000th of the contract price per calendar day i.e. VT 11,984 per day.

6.	Clause 23 provided that the owner had the right to determine the employment of the contractor under the contract if, inter alia, the contractor failed to proceed with the works with reasonable diligence and such default continued for 14 days after a notice specifying the default. Such determination is without prejudice to any other rights or remedies.

7.	The claimant presented as evidence 4 sworn statements from herself, Geoff Feast, Antoine Boudier and Nathaniel Bue. The latter two related solely to the cost of completion of the house following termination of the contract. None of the claimant’s witnesses were called for cross-examination. The defendants presented as evidence the sworn statement of Jay Ngwele. He was cross-examined. In the event there was little real dispute about the facts.
 
8.	The contract initially progressed well. Mr. Ngwele annexed a letter to Mr. Feast dated 1 April 2005 (one month after taking possession of the site) setting out progress and mentioning that there had been according to the Meteo 16 rainy working days in March. However there is no evidence that this was unusual for Port Vila in March and no evidence that either then or later the defendants asked for an extension on the grounds of "exceptionally inclement weather" (cl 29 (b)).

9.	Mr. Feast stated that three quarters of the way through the contract, it became evident that the defendants were having financial problems which led to difficulties with supplies of materials for the job. Suppliers were refusing to supply or repossessing material supplied. Mr. Ngwele in his oral evidence frankly acknowledged that the firm had become over-extended with commitments also to another big contract in Santo. He also blamed a delay by the company supplying sliding windows and door for the house, but the quotation from that company is dated 23 August 2005, a week before practical completion date.

10.	In any event, 31 August 2005 came and went. During the course of the contract, extras were agreed in the sum of VT925,500. On 19 September 2005, Mr. Feast issued an Interim Certificate No. 7 showing the gross value of work completed inclusive of extras at VT 22,166,665. Less retentions of VT1,200,000, there was an amount due for payment of VT 2m. After that, the claimant paid a further VT 2,272,402 in payments direct to suppliers, making a total paid to or for the account of the defendants of VT23,239,067. I am satisfied from the letters produced during the hearing, that the defendants authorized the payments on their account. The difference between the total contract price, inclusive of agreed extras, and the amount actually paid by the claimant on account of it is VT1,680,433.

11.	The evidence is unclear as to what work was actually carried out on the site after September 2005 but it seems that the defendants had ceased to work at the site altogether by about the start of 2006. There is no real explanation in the evidence as to why. However the evidence of the considerable amount of work outstanding at the date of termination and of the cost of that work confirms that the defendants had underquoted and were unable to meet the necessary costs of completing the contract themselves. The defendants at no time sought an extension of the time for practical completion.

12.	Finally on 12 April 2006, the claimant’s solicitors wrote to the defendants as follows:

"Re: Notice of Termination of Building Contract: For Family JONES

1.	We act for Mr. & Mrs. Jones in the above matter.
2.	We are instructed the delay of the completion of our clients building is long overdue and amounts to a serious breach of the contract.
3.	As of this date our clients are terminating their contract with San Construction and is suing you for liquidated damages".

There is no evidence that before that, the claimant gave notice in terms of Clause 23. However, it is clear that the defendants accepted the letter as termination of the contract. They did not protest about it or ever indicate a wish or an intention to continue work. Nor have they provided any valid reason for ceasing to work at the site from about the start of 2006.

13.	Mr. Feast carried out an inspection of the site as at 12 April 2006 and produced a list of the work required before a certificate of practical completion could be issued. It was extensive. Mr. Bue who is a qualified engineer, has costed that work (apart from electrical) at VT7,081,500. His assessment is detailed and professional and was unchallenged. I accept it. Mr. Boudier costed the electrical work required to complete at VT803,650. Again his evidence is unchallenged and I accept it.

Discussion

14.	I am satisfied that by the date of termination, the defendants were well and truly in breach of their contract. They had failed to complete by practical completion date without any contractual justification. They had failed to comply with the obligation in Clause 6 to regularly and diligently proceed with the works. I am satisfied that by that time, there was no intention by the defendants to resume work at the site. Virtually everything owing to them to date had been paid to them or to their creditors on the contract. Their position at the time, as they must have known, was that there was VT1,680,000 left on the contract price but work to the value of approximately VT8,000,000 to be carried out. Although it was the claimant who formally terminated the contract, I am satisfied that the defendants had by then effectively repudiated it. On that basis, the claimant’s letter of termination can be seen as an acceptance of an earlier repudiation. If I am wrong in that view, I hold that by their lengthy absence from the site, and their acceptance without protest of the termination letter, the defendants waived the requirement of 14 days notice. So I am satisfied that one way or the other, the contract was validly terminated on 12 April 2006 by reason of the defendant’s breach of it. It follows that the claimant is entitled to recover the additional cost of completion.
 
15.	As to the amount to complete, I am satisfied it has been properly proven. Therefore the claimant is entitled to damages under this head as follows:

Amount to complete			
Building work	7,081,500		
Electrical work	803,650		
	7,885,150	7,885,150	
Less Balance due under Contract		1,680,433	
		VT 6, 204,717	

16.	As to the claim for liquidated damages for non-completion, there is no certificate in writing from the architect that in his opinion the same ought reasonably to have been completed by practical completion date. This cannot simply be presumed in the circumstances where there is no evidence that the architect had given any notice to the contractor that liquidated damages were accruing. I am therefore not prepared to award liquidated damages.

Conclusion

17.	There will be judgment for the claimant against the defendants in the sum of VT6, 204,717 together with interest at 5% per annum since the date of filing of the proceeding and costs to be agreed or fixed upon application made within 30 days. There will also be judgment for the claimant on the defendant’s counterclaim. The defendants have been paid or credited with everything they are entitled to under the contract.

Dated at Port Vila, this 21st day of May, 2008

BY THE COURT

C.N. TUOHY
Judge