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Christian Mission Fellowship v Williams Associates Ltd [2011] FJCA 45; ABU0016.2009 (21 September 2011)

IN THE COURT OF APPEAL, FIJI ISLANDS
ON APPEAL FROM THE HIGH COURT OF FIJI

Civil Appeal No.ABU 0016 OF 2009
[High Court Civil Action: HBC 94 of 2004]

BETWEEN:

CHRISTIAN MISSION FELLOWSHIP
by its trustees Pastors Naibuka Gonewai, Sanaila Soqovata, Josaia Tokea,
Emosi Toroca Ratavola and Reverend Suliasi Kurulo
APPELLANTS
[Original Defendants]

AND:

WILLIAMS ASSOCIATES LIMITED
RESPONDENT
[Original Plaintiff]

CORAM : Hon. Justice Kankani Chitrasiri, JA
Hon. Justice Sosefo Inoke, JA
Hon. Madam Justice Anjala Wati, JA

COUNSEL : Mr. I. Fa for the Appellants
Mr. I. Roche for the Respondent

DATE OF HEARING : Friday, 2nd September 2010
DATE OF JUDGMENT : Wednesday, 21st September 2011

JUDGMENT

Kankani Chitrasiri, JA

I have had the advantage of reading the final judgment of my brother Judge, His Lordship Inoke, J.A and wish to concur with his findings and the reasons set out therein.
Having agreed with the decision of Justice Inoke, I wish to mention that the issue here revolves round the terms of the contract entered into between the appellant and the respondent company. Those terms are contained in the letters dated 13th February 1998 and 16th March 1998. Admittedly both parties have acted upon the terms and conditions referred to in those two letters. Therefore a duty is cast upon this Court to ascertain whether the learned High Court Judge who exercised the original jurisdiction had interpreted those terms correctly.
The facts admitted by the parties at the pre-trial conference held on the 4th April 2007

speak to the matters agreed upon by the parties. Admitted facts bearing Nos. (3) and (4) read thus:

“(3) on or about 16th March 1998 the CMF through its servants, agents/employees engaged the services of the Plaintiff as Quantity Surveyors in respect of the World Harvest Centre Project at Kinoya, Nasinu.

(4) On or about the same date the Plaintiff and the CMF agreed on the fees payable in respect of services to be performed by the Plaintiff based on the Australian Institute of Quantity Surveyors Conditions or Engagement dated 1st January 1983.”

Furthermore, the contents of the two letters dated 13th February 1998 and 16th March 1998, upon which the fees was to be calculated, also show the way in which the fees of the respondent was to be determined.
In the two conditions found at the beginning of the letter dated 13th February 1998,

it is stated:

Basis of engagement shall be in accordance with the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services.
The current construction cost of $2,000.000.00 is inclusive of VAT but exclusive of fittings furniture and equipment.

[Emphasis added]

By having the words “current construction cost” in clause (ii) above, it is seen that the assessment of fees of the respondent was made considering the cost of the project determined at the time the said letter was written. Therefore if the cost of the construction was increased subsequently, the fees of the respondent would also have to be adjusted accordingly. The manner in which such an increase of the fees was to be determined is found in the clause (1) above.
Even though the fees of the respondent had been reduced to $45,000 by the letter dated 16th March 1998, it is evident from the two letters, the said amendment was confined to the fees referred to in paragraph 4 of the letter dated 13th February 1998. Therefore it is clear that the paragraphs 1, 2 and 3 in the said letter dated 13th February 1998 that deals with the manner of determination of the fees when there is an increase of the cost of the construction work, still remains in force.
In the circumstances, it is clear that the appellants had agreed to obtain services of the respondent in accordance with the scale of professional charges and conditions of engagement issued by the Australian Institute of Quantity Surveyors (effective from 1st January 1983). Therefore, the conditions referred to in the aforesaid two letters, binds the appellant to pay the respondent according to the increased cost of the construction work.
Therefore it is my opinion that the learned High Court Judge is correct when he concluded the case in favour of the respondent. (Original Plaintiff) His Lordship Justice Sosefo Inoke has also looked at the issue in the same manner when he decided to dismiss the appeal.
Since His Lordship Justice Inoke has not made a decision as to the costs of this application, I conclude that this appeal must be dismissed with costs assessed summarily in the sum of $2,500.00.

Anjala Wati, JA

I have perused both judgments by Justices Kankani Chitrasiri and Sosefo Inoke and wish to state that I agree with the finding and outcome of the substantive appeal.
However, as Chitrasiri, JA has decided I am of the view that the appeal must be dismissed with costs assessed in the sum of $2,500.00.

Sosefo Inoke, JA

13. This is an appeal from the judgment of Mr. Justice Hickie delivered on 13 February 2009
granting the respondent’s claim for outstanding fees for quantity surveying services provided for the building of the appellant’s new church known as the “World Harvest Centre” at Kinoya, Nasinu. That judgment is reported in Williams Associates Ltd v. Gonewai [2009] FJHC 88; HBC94.2004 (13 February 2009).

The main issue in this appeal is whether the terms of engagement allowed the respondent

to claim extra fees because the initial construction costs increased.

Counsel for the appellant, argued that this appeal was on quantum as well as liability but I

am not persuaded. The grounds of appeal do not cover an appeal on quantum and, in any event, I agree with the reasoning and findings of Hickie J and would not disturb his Lordship’s findings on quantum.

The Background

The appellants were the trustees of the church group called the “Christian Fellowship Mission”. They wanted to build a church on its property at Kinoya in Nasinu Town known to be called the “World Harvest Center”. They engaged Edward Rushton Fiji Limited in late 1997 to manage the project. That company, as the project manager, engaged the plaintiff to provide the quantity surveying services required of the project. The engagement was by way of two letters; one dated 13 February 1998 and the other dated 16 March 1998. The first of these letters was the offer from the respondents which was, so far as relevant to this appeal, incorporated the “Australian Institute of Quantity Surveyors Conditions of Engagement (1st January 1983) Individual Services” (the “AIQS Conditions”). The fee offered in that letter was $53,600 inclusive of VAT based on the total construction cost of $2.0m inclusive of VAT but exclusive of fittings furniture and equipment. Representatives of the project manager and the respondent negotiated and came to an agreement which the respondent confirmed in its letter of 16 March 1998 for a revised fee of $45,000 inclusive of VAT and that the “conditions stated in our previous letter dated 13 February 1998 still apply”.
The construction cost of the World Harvest Centre “ballooned” from $2.0m to a little over

$5.2m.

On 14 July 2000, the respondent wrote to the appellants claiming that it was entitled to

extra fees of $77,081.55 based on calculations using the AIQS Conditions on the cost overrun.

The respondent also demanded payment of the last two installments of $1,400 and $400

outstanding on the initially agreed fee of $45,000.

The demands having not been met, the respondent filed a Writ of Summons and

Statement of Claim on 16 March 2004 claiming these outstanding and extra fees, interest thereon and costs.

The Issues

The trial judge held that there were two issues to be tried:[1] (a) whether the excess fees

were part of the agreement based on the AQIS Conditions; and (b) whether the plaintiff performed those services.

The Findings of the High Court

His Lordship, after analysing the evidence in depth and in detail, held:

“[72] Thus, it is the finding of this Court that the conditions of agreement as set out in the letters of 16 March and 13 February 1998, were that a fee of $45,000 was to be charged on TWO conditions:

(a) That the construction cost be $2million; AND

(b) That it was subject to the AIQS Conditions of Engagement dated 1 January 1983.

[73] Further, it is the finding of this Court that once the construction cost exceeded $2million, then it was covered by the AIQS conditions Clause 8.06.02, that is, “Where, after Bills of Quantities have been prepared, the Quantity Surveyor prepares amendments to the Bills additional fees will be charged on the amount of both measured additions and omissions in accordance with Scale of Fees Clause 6.01.”

In respect of the issue whether the respondent did the work, Hickie J concluded[2] that the

respondent did do the work for the additional fees claimed. His Lordship also held that the appellants failed to meet the evidentiary proof required of it.

The learned trial Judge held[3] that:

“[103] As a result of the above evidential findings, the Court concludes that in relation to the persuasive burden, the Plaintiff has established its case by a preponderance of evidence, that is:

(a) That it is entitled to $1,400 outstanding since 13 April 1999;

(b) That it is entitled to $400 outstanding since 28 May 2000;

(c) That it is entitled to $77,081.55 outstanding since 28 July 2000.”

His Lordship awarded judgment to the plaintiff for $77,081.15 together with interest of

$89,209.60 making a total of $172,505.22. His Lordship limited the interest component to what the respondents would be entitled to under the terms of the agreement. He held that the appellants were put on notice of the claim as early as 26 August 1999 with the account eventually rendered on 14 July 2000. He noted[4] that this was a matter which should have been resolved soon after it occurred or at least by the end of 2000, and, if not, then soon after the Statement of Claim was filed, rather than the plaintiff having to wait for nearly 10 years.

The Grounds of Appeal

There were four grounds of appeal. They were:
1. That the learned trial Judge erred in law and in fact when he found that the contract of services dated 16 March 1998 was subject to variations as a result of the variations in the construction costs when it was expressly agreed that the fees charged would be fixed on the construction cost of $2million.
2. That the learned trial judge erred in law and in fact in determining that the excess of fees were part of the contract of services which the defendant and/or its agents agreed to via the contract of services of the 16 March 1998 when there in fact was no agreement to any excess of fees.
3. That the learned trial Judge erred in law and in fact in finding that the plaintiff was entitled to its claim of $77,081.15 ... without proper consideration that the said sum claimed was based on a completely new account rendered to the defendants after the building had been constructed with the plaintiff refiguring the entire account both pre and post contract based on the actual final construction costs which deviated from the 16 March 1998 contract of service being the only contract entered into by the defendants.
4. That the learned trial Judge erred in law and in fact in holding that the Australian Institute of Quantity Surveyors Conditions of Engagement (dated 1st January 1983) applied to the contract for services of the 16 March 1998 in a way that permitted the plaintiff to render a completely new account refiguring the entire account which was never part of the terms of the contract of services agreed to.
In reality, there is only one ground of appeal, and that is, whether the trial Judge erred in

fact and law in holding that the AIQS Conditions applied to the agreement between the parties thereby authorising the payment of extra fees based on the final construction cost of $5.2m.

Consideration of Submissions and Grounds of Appeal

At the beginning of the hearing Mr Fa objected to Mr Roche appearing as counsel for the

respondent on the grounds that Mr Roche had worked for his law firm previously. Mr Roche was not involved in this case at the High Court or in the preparations for this appeal. Mr Fa’s objection was simply that Mr Roche had worked for his law firm in the past. Clearly, there was no basis for the objection so it was overruled.

Mr. Fa submitted that under ground (iv), this Court is required to consider quantum. As I

have said at the outset, I am not persuaded that this ground, or any other ground for that matter, is in respect of quantum. In any event, I agree with the learned trial Judge’s findings that the plaintiff did provide the extra services for which it charged and the fee thus charged was calculated in accordance with the terms of the agreement, namely, the AQIS Conditions based on the final construction cost. I would not have allowed the appeal had it been an appeal against quantum.

There is no appeal on the award for the two outstanding installments of fees or the award

of interest so the trial Judge’s findings and orders in this respect, with which I agree in any event, will not be disturbed.

In my opinion, the trial Judge was absolutely correct in holding that the AQIS Conditions were part of the agreement between the parties. That is clear from the letters of 13 February 1998 and 16 March 1998.
This appeal therefore boils down to this: Do the AQIS Conditions allow the respondent to

charge extra fees if the construction cost escalated from $2m to $5.2m?

Mr Fa submitted that the extra fee should be calculated based on the extra construction

cost of $3.2m and not $5.2m.

Hickie J dealt with the question in this way[5]:

“[66] In addition, apart from the Plaintiff being wrongly blamed for any perceived inadequacies of the Project Manager, similarly the Plaintiff cannot be blamed for the construction cost of the building. If it increased, the Plaintiff’s work increased and as such sought appropriate recompense as Counsel for the Plaintiff has also set out in his Submissions in Reply: “... the substantial increase from the initial cost of construction from $2million to over $5million directly impacts on the initial contract of service agreed to by the Plaintiff” and is covered by the AIQS conditions 8.06.02 “which binds the Defendants and include the payment of excess fees where the Surveyor prepares amendments to the Bills”.

[67] To be clear on this issue, Clause 8.06.02 states:

“Where, after Bills of Quantities have been prepared, the Quantity Surveyor prepares amendments to the Bills additional fees will be charged on the amount of both measured additions and omissions in accordance with Scale of Fees Clause 6.01.”

[68] The Defendants’ case was that whilst the Plaintiff’s work was subject to the AIQS Conditions of Engagement dated 1 January 1983, it was set at $45,000 (as reduced by them from the $60,000 figure quoted in the Plaintiff’s letter of 13 February 1998) and that although the construction cost went from $2million to over $5million “the variation in the construction cost did not vary the contract of service that was entered into between the parties” set at $45,000 for a $2million project. The problem with this submission is what does one do when the cost of the project exceeded at least double and a half the initial amount? Should the Defendants retain the benefits of a clear exploitation of the Plaintiff? Further, this submission does not deal with clause 8.06.02 of the AIQS Conditions of Engagement which, as the Plaintiff has correctly submitted “binds the Defendants and include the payment of excess fees where the Surveyor prepares amendments to the Bills”.

[69] No person was called as a witness on behalf of the Defendants either as an expert or a professional in this field (such as from the Fiji Institute of Quantity Surveyors) that the manner in which the Plaintiff had “gone about” the preparation of their final account whereby they prepared a new account for the entire “job” based on the new final construction cost was not the standard practice for a quantity surveyor and in accordance with the AIQS Conditions of Engagement dated 1 January 1983.

[70] In addition, no oral evidence was called from the Project Manager, EDWARD RUSHTON FIJI LIMITED, to testify their firm disputed this condition or their understanding of this condition or that it was not the standard practice for a quantity surveyor and in accordance with the AIQS Conditions of Engagement dated 1 January 1983. Indeed, a Jones v Dunkel (supra) type inference can be drawn that the uncalled evidence would not have assisted the Defendants’ case.

[71] Significantly, it was also never put to Mr NAIDU, as the Architect for the project, that there was something untoward in what was done nor that it was not in line with the general ”commercial” or “professional” practice in this field. All that was put to Mr NAIDU was that the other professionals involved did not do the same, that is, render new accounts.

[72] Thus, it is the finding of this Court that the conditions of agreement as set out in the letters of 16 March and 13 February 1998, were that a fee of $45,000 was to be charged on TWO conditions:

(a) That the construction cost be $2million; AND

(b) That it was subject to the AIQS Conditions of Engagement dated 1 January 1983.

Mr Fa’s submission that clause 8.06.02 could not apply after the building is constructed

cannot be correct. Clause 6 of the AIQS Scale of Fees provides for “Post Contract Services.” Amendments to the bills of quantities cannot be finalised until the building is completed. It is only at that time could the final costs, including the quantity surveyors fees, be determined.

Mr. Fa also argued that the respondent was estopped from charging extra fees because

they agreed not to charge extra fees. The trial Judge rejected the argument. His observations of the appellants’ two witnesses who gave evidence on the point were that one was a “forgetful and unreliable witness” which was to “put it kindly” and the other was “evasive to say the least”.[6] This Court cannot on the face of those observations reject the learned trial Judge’s findings: Ali v. Ali [2009] FJCA 66; ABU0029.2006 (3 December 2009). The trial Judge has not made a “palpable and overriding error”: Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010: http://scc.lexum.umontreal.ca/en/1997/1997scr3-1010/1997scr3-1010.html.

Counsel also submitted that the doctrine of estoppel prevented the respondent from

asserting that it is entitled to extra fees because the respondent had represented to the appellants that the construction costs would not exceed $2m. The submission is based on a misconception of the responsibilities of a quantity surveyor. The quantity surveyor does not fix the construction costs. The quantity surveyor calculates the costs based on information given to him by the builder and the client, in this case the appellants. In any event, the point was not pleaded, and if pleaded, could not have arisen out of the facts because the agreement included the AQIS Conditions. Hickie, J was quite correct in dismissing the submission.

I find no error of law or fact in the learned trial Judge's findings to justify allowing the appeal. I also find that the arguments and submissions made by the appellants are without merit. I would dismiss the appeal.

Costs

I think this appeal is unmeritorious. However, I would defer to the costs suggested by

Justices Chitrasiri and Wati.

Kankani Chitrasiri JA

Orders

The appeal is dismissed.
The judgment and orders of Mr. Justice Hickie of 13 February 2009 is affirmed.
The appellants shall pay the respondents costs of $2,500.00.

........................................................
Hon. Justice Kankani Chitrasiri
Justice of Appeal

.......................................................
Hon. Justice Sosefo Inoke
Justice of Appeal

.......................................................
Hon. Justice Anjala Wati
Justice of Appeal

^[1] Para 12.
^[2] At para 102.
^[3] At para 103.
^[4] At para 115.
^[5] At paras 66 to 73
^[6] At para 78.

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