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Woodstock Homes (Fiji) Ltd v Utopia Foods Ltd [2000] FJHC 198; HBC0215J.1996L (6 October 2000)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0215J.1996L

Between:

WOODSTOCK HOMES (FIJI) LIMITED
a duly incorporated company having its
registered office at Nadi and carrying on
business as business contractors.
Plaintiff

And:

UTOPIA FOODS LIMTED
a duly incorporated company having registered office at Nadi.
Defendant

For the Plaintiff: S C Maharaj
For the Defendant: Babu Singh, H. Ram

Date of Hearing: 10, 11 March 1999, 25, 26 September 2000
Date of Decision: 6 October 2000

JUDGMENT

Woodstock Homes (Fiji) Limited the plaintiff sues the defendant Utopia Foods Limited for $61,645.04 for material and costs to the point of termination of the contract on 10 June 1996. The parties had entered into a contract on 3 November 1995 for $198,480.70 inclusive of VAT. The plaintiff was to build the defendant’s warehouse as per Exhibit P4. After the original architects were changed, the plaintiff and the new architects, J L Grey Architects, submitted the plans to Nadi Town Council for approval. On 20 November 1995 the Council issued a stopwork order on the basis that the plans had yet to be approved. Final approval was not forthcoming until March, April 1996 from the Central Board of Health although interim arrangements put in place subsequently allowed the plaintiff to continue working. The defendant claims there were considerable delays and on 10 June 1996 it terminated the contract hence these proceedings.

On the morning of 25 September 2000 on the resumption of the hearing, the defendant by its learned counsel sought an order pursuant to Order 35 rule 3 and Order 20 of the High Court Rules. The application sought to declare the continuation a nullity or alternatively clarification of a memorandum from the Acting Chief Registrar dated 29 August 2000 to the effect these proceedings might be heard de novo. The court dismissed the application and advised the defendant that it could pursue the matter on appeal if necessary. In its respectful opinion there was some confusion, for which the court accepts responsibility in the light of agreeing mutually convenient dates and the pending departure of this member of the court. Suffice it to say the learned Acting Chief Registrar’s memorandum was not an order and the court had no hesitation in setting 25, 26 September 2000 for continuation.

The contract between the parties was signed on 15 November 1995 and is in the following terms:

“WOODSTOCK HOMES FIJI LIMITED OF P O BOX 718 NADI, HEREBY AGREES TO SUPPLY ALL THE NECESSARY MATERIALS, TOOLS, LABOUR AND MANAGEMENT TO CONSTRUCT THE NEW FACTORY, OFFICE AND WAREHOUSE COMPLEX FOR UTOPIA FOODS LIMITED AT WAQADRA INDUSTRIAL ESTATE, NAMAKA NADI, SUBJECT TO THE FOLLOWING CONDITIONS.

1 THE CONTRACT IS FOR THE SUPPLY AND CONSTRUCTION OF THE FOLLOWING ONLY -

SITE SURVEY

PLANNING PERMISSION

FOOTINGS

RETAINING WALLS

BACKFILLING OF THE LAND UP TO GROUND FLOOR LEVEL

EXTERIOR DOORS AND WINDOWS

STAIRS AND MEZZANINE FLOOR TO THE INTERIOR OF THE FACTORY AREA

CONCRETE FLOOR TO THE 1ST FLOOR OFFICE LEVEL

INTERIOR DOORS AS PER THE PLANS

ROOF TO THE FACTORY/SPACE AREA FORMED IN CONCRETE

ROOF TO THE WAREHOUSE AREA FORMED IN LONG RUN ROOFING IRON

PLUMBING, DRAINAGE AND ELECTRICAL AS PER THE PLANS

ALL OF THE ABOVE HAS BEEN ESTIMATED

2 THE CONTRACT HAS BEEN ESTIMATED BY WOODSTOCK TO BE UNDERTAKEN TO COMPLETION OVER A PERIOD OF 20 WEEKS SUBJECT TO THE MATERIALS REQUIRED BEING READILY AVAILABLE AND THERE BEING NO ADVERSE WEATHER CONDITIONS.

3 UTOPIA FOODS LIMITED REJECTED THE RIGHT TO WITHHOLD THE 5% RETENTION FUNDS IF WOODSTOCK HOMES FIJI LIMITED FAILS TO COMPLETE STAGE 1 OF THE CONSTRUCTION BY 31/1/96. STAGE 1 COMPRISED THE CONSTRUCTION OF THE FACTORY/OFFICE AREA ONLY TO LOCK UP STAGE.

(STAGE 2) (I.E. WAREHOUSE) IS SCHEDULED FOR COMPLETION ON 31/3/96

4 OUR TERMS OF PAYMENT IN REGARD TO THIS CONTRACT WILL BE AS DISCUSSED AND AGREED WITH YOURSELF AND THE FIJI DEVELOPMENT BANK AS FOLLOWS -

A PAYMENT OF 25% ON COMPLETION OF THE CONTRACT TO THE GROUND FLOOR LEVEL.

A PAYMENT OF 20% ON COMPLETION OF THE FIRST FLOOR AND MEZZANINE LEVEL TO THE FACTORY/OFFICE AREA ONLY.

A PAYMENT OF 20% ON COMPLETION OF THE ROOF LEVEL TO THE FACTORY/OFFICE AREA ONLY.

A PAYMENT OF 20% ON COMPLETION OF THE WALLS TO THE ROOF LEVEL OF THE WAREHOUSE AREA.

A FINAL PAYMENT OF 15% ON COMPLETION OF THE WHOLE STRUCTURE.

A RETENTION OF 5% IS TO BE WITHHELD FROM EACH OF THE PROGRESS CLAIMS WHICH IS TO BE RELEASED TO WOODSTOCK HOMES 60 DAYS AFTER THE COMPLETION OF THE CONTRACT (I.E. 60 DAYS FROM THE DATE OF THE FINAL PAYMENT MENTIONED.)

5 ANY WORK TO BE UNDERTAKEN THAT OFFERS FROM THE ORIGINAL PLANS WILL BE CHARGED AS AN EXTRA TO THE CONTRACT. ALL WORK OF THIS NATURE TO BE SIGNED FOR BY THE CLIENT PRIOR TO THE WORK COMMENCING PAYMENT FOR THIS WORK WILL BECOME DUE AT THE DATE OF THE NEXT PROGRESS CLAIM FOLLOWING THE WORK BEING COMPLETED.

6 A FULL VAT INVOICE WILL BE FORWARDED TO THE CLIENT (UTOPIA FOODS LTD.) 7 DAYS PRIOR TO THE DATE OF THE PROGRESS CLAIM BECOMING ONE FOR PAYMENT TO ALLOW FOR ANY VARIATIONS OR EXTRAS TO BE FINALISED PRIOR TO PAYMENT BEING MADE.”

The contract was revised on 12 March 1996 when the contract price was reduced exclusive of VAT. It was further amended on 6 May 1996 when the first phase was to be completed by 15 June 1996 and the second phase by 15 July 1996. On 17 May 1996 the parties agreed a new schedule of payments. On 5 June 1996 the plaintiff’s requested additional payments for expenses incurred. By letter dated 8 June 1996, the defendant’s solicitors unilaterally terminated the contract in these terms:

“Looking at your previous promises, assurances and delays, it is impossible to contemplate completion of phase of construction by 15/6/96. We hereby give you notice to cease continuation of construction on the above site forthwith....”

The plaintiff was also told not to enter the defendant’s property from 10 June 1996

The court heard the evidence of Alan John Harris the plaintiff’s project manager and Ellen Le porte, a director of the defendant and spouse of the defendant’s managing director. Mr Harris set out in detail the complete record of the labour contract and materials bought and used as well as those removed. These are set out in Exhibits P13, 14, 15A, B & C and P16. When the contract was allegedly determined for breach by the defendant on 10 June 1996, it still had five days to run before the plaintiff had to complete the first phase. The defendant by Ms Ellen Le Porte alleged innumerable delay and the further costs incurred. The court finds that as at 10 June 1996, the plaintiff had committed no breach and it was the defendant who did so by locking out the plaintiff and preventing it from having the opportunity to complete the project. Having initially extended the period for completion of the contract, the defendant cannot now cry foul at the alleged delay.

The defendant alleges innumerable delay on the part of the plaintiff and the latter counters with the increased cost of the project as the result of alterations its client demanded. Having considered the evidence of Mr Harris and the documentation tendered, the court is satisfied that the costs incurred were expended pursuant to the contract. Material and labour totalled $154,947.06 less the three payments received of $91,200.00 and a further $2052.02 recovered in materials left a balance owing of $61,695.04. The court accepts that at the time progress payments were made, monies had already been expended on work in progress. For example, at the time of the first progress payment the plaintiff was only paid $42,750.00 whereas the total cost was an additional $22,784.86 (i.e. total of $65,534.76). The defendant’s contention that the additional $61,695.04 was not pursuant to the contract is untenable. Those costs for which there is clear evidence and documentation tendered through Mr Harris establish that they were incurred in the course of the performance of the contract. There was a time log in their submission because at the time claims were submitted for payment, the plaintiff could only forward the receipts and expenditures to hand.

It appears that the plaintiff did not live up to its expectations of promptitude. The court accepts the defendant’s evidence that the plaintiff did not have as many workers on the site as it undertook. It does not appear that they worked on Saturday and Sundays as well. As regards the stopwork notice issued by the Nadi Town Council, the plaintiff must accept a measure of responsibility for that occurrence. For the securing of building approval was a matter between the architect and the construction company with the client playing a secondary role. But as has been stated earlier, all this was obviated by the extension of time to 15 June and 15 July 1996 respectively (for stage 1 and stage 2) to which the parties agreed. As for the expert evidence called by the defendant, the court will disregard it. On his own admission Mr Tiko did not have a specialised certificate in quantity surveying.

It is clear as work progressed the relationship between the parties that was never good to start with steadily deteriorated. It culminated in the defendant’s actions of 10 June 1996. Be that as it may the plaintiff in the court’s respectful opinion was not in breach of contract at that date but the defendant undoubtedly was for the reasons already stated.

The claim for $1800 for the electric drill is dismissed, the court accepting the defendant’s assertion the plaintiff was allowed to take what it owned. Its additional claim for $6874.00 was withdrawn as was the defendant’s counterclaim.

There will be judgment in the plaintiff’s favour for the sum of $61,695.04 and interest assessed at 13.5 percent from the date of breach to date of judgment. Costs are summarily assessed against the defendant for $2000.00.

Joni Madraiwiwi
PUISNE JUDGE

At Suva
6 October 2000