In the High Court of Fiji at Suva
Civil Jurisdiction

Civil Action no. 377 of 2006

Between:

The Republic of Fiji Military Forces
Plaintiff

And:

Major Mikaele Racumu
First defendant

And:

Mrs Elizabeth Racumu
Second defendant

Appearances: Mr N.Sharma for the plaintiff
Mr Devanesh Sharma for the defendants

Date of hearing: 30th October, 2012

JUDGMENT

1.	This litigation arises out of an incident that occurred on the day before Christmas of 2005, when the married quarters allocated by the Republic of Fiji Military Forces, the plaintiff, to Major Mikaele Racumu, the first defendant was destroyed by fire. The plaintiff alleges that the second defendant, the wife of the first, set fire to the quarters. The second defendant pleaded guilty and was convicted for arson in May, the following year. She was sentenced to 18 months imprisonment, suspended for 2 years. The plaintiff claims the restoration costs of the quarters.The defendants deny liability. The second defendant states that the fire was started accidentally.The first defendant contends that no liability can be imposed on him.

2.	The pleadings 

2.1.	The amended statement of claim states that the first defendant was allocated married quarters no 16, where he resided with the second defendant. He signed a tenancy agreement on 14th March,2000.

2.2.	The second defendant is liable to compensate the plaintiff as she started the fire that broke out in the quarters on 24thDecember,2005,completely destroying it.The amended statement of claim proceeds to state that the first defendant, by virtue of clause 10 of the Tenancy Agreement is liable to compensate the plaintiff, as the damage was not attributable to fair wear and tear. The plaintiff claims the building costs of $ 160,000, costs and interest.

2.3.	The defendants, in their amended statement of defence state that the first defendant would only be liable for damage caused by him. Alternatively, the first defendant seeks that clause 10 of the Tenancy Agreement be struck down, on the ground that it is an oppressive and unconscionable term. 

2.4.	By way of further defence, the defendants state:

a)	The second defendant admits that she was convicted of arson by her own plea, but denies that the fire was wilful or deliberate. It was started by a cigarette. She was unconscious when the fire started. There is no cause of action pleaded against her.The plaintiff's action is based in contract.She was not privy to the contract.

b)	The first defendant says that he was not vicariously liable for the actions or inactions of the second defendant.Alternatively, he states that the performance of the Tenancy Agreement was frustrated by a novus actus that was beyond his control.

c)	The first and second defendants state that there is no relief sought against them and pray that the action be struck out with costs on an indemnity basis.

3.	The plaintiff filed its reply joining issue with the defendants.

4.	The hearing

4.1.	PW1,(Mosese Rakadrudru,Technical Officer, Ministry of Works, Civil Engineer) testified. In his evidence in chief, he said that he carried out a site inspection of the burnt grade 4 quarter together with Nona Gimagiri, a Quantity Surveyor, on 24 February,2010. He worked closely with him, in preparing a Structural Assessment Report. The report was produced. This contains photographs of the burnt building and the blue print plan together with an estimate of costs of rebuilding in a sum of $ 187,921.PW1 said the building was not totally worthless, certain material could be used, as stated in his recommendations.

In cross-examination, it transpired that this witness had not seen the structure before it was burnt, nor valued an existing structure built in 1930. He said that estimating the cost of building a structure in 1930, was a matter for the Quantity Surveyor. The witness said that he was not informed why no steps were taken to mitigate the loss . He was unaware, if any remedial work was done on the site since 2005, by the plaintiff. 

4.2.	PW2,( Tabuakota, a Regimental Police officer), a neighbour of the defendants, in his evidence, recalled that he woke up after midnight on 24th December, 2005, as he had an unusual feeling. He saw that the defendants' house was on on fire. He went out and found the second defendant sitting on the lawn of the house. He asked her where the children were. She replied that she had burnt the house and her kids were safe. She did not tell him why she did so. The fire brigade arrived late. They could not do anything.

The witness, in cross-examination said that the fire started in the middle of the house, the kitchen area.The fire rapidly spread.The second defendant was seated in the driveway. She was fully intoxicated. She had a bottle of wine in her hand. The first defendant was not present.The fire brigade came late.The fire brigade was in Valelevu, 7 miles away. The MQ was in Nabua. There was fire fighting equipment in the compound. A fire cylinder was inadequate to quell the fire.

4.3.	PW3,(Nakaruru, Fire Officer) produced a Fire Investigation Report. He said the quarters was extensively damaged, including the adjacent maid's quarters.The damage was even.The point of origin was throughout the whole building.It was difficult to ascertain the area of origin of the fire. This meant that the point of origin was throughout the entire area. It did not start small. He reached the conclusion the fire was not naturally caused nor accidental.The quarters was fully engulfed. The witness was referred to the phrase "multiple origins of fire" in the Fire Investigation Report. He explained this meant that the fire started from many spots.

In cross-examination, he said that the fire occurred on 24thDecember,2005, and not 23rd December,2005, as stated in the cover page of the report. He said he eliminated that the fire was caused accidentally. The matter was handed over to the Police. The house was old. Timber burns rapidly. The contents of the house was also burnt.

4.4.	PW 4,(Nona Gimagiri, a Quantity Surveyor), said that the married quarters no 16 was a grade 4 quarter. He inspected the site on 24 February,2010, with PW1.They prepared a Structural Assessment Report. He referred to its contents. He was also referred to three other estimates contained in the agreed bundle of documents for $ 90,000, $ 162,823 and $ 176,983. He said that the cost of material increase annually.

It was put to him in cross-examination that the quarters in issue was built in 1930. He said that he was not given the date. He was given the file in respect of standard grade 4 government quarters. It emerged that he had no knowledge of the condition of the building as at 2005. He had no documents as the ownership of the quarters. It was put to him that his report contained a summary, no working papers. The cost could have been far less, if steps had been taken to mitigate the loss with remedial work. He said he was not aware why the plaintiff waited from 2005 to 2010, to obtain a quantity surveyor, to estimate the costs for restoration.

This witness was referred to an estimate given in 2006,for $90,000 by Captain Daurewa, and an estimate in 2008, from the Ministry of Works and Transport for $ 162,823.It was suggested that there was a huge difference in costs. PW 4 answered that the documents were not quotations, but memos. He did not agree that an asset necessarily depreciates, if not maintained. It emerged there was no record of how the building was maintained. 

In re-examination, PW 4 was asked how the re-building costs was ascertained. His reply was that these costs were arrived on Structural Assessment Report, their recommendations and the blueprint plan, as attached to his report

5.	The determination

5.1.	The scene opens in the early hours of 24th December,2005, when the fire engulfed the married quarters of the first defendant. The sole dramatis personae was the second defendant. The second defendant, in her defence, admits that she was convicted of arson by her own plea, but contends that the fire was accidental and was started by a cigarette.

5.2.	The fire was seen by PW2, a neighbour of the defendants. He testified that he saw the second defendant fully intoxicated with a bottle of wine in her hand, in the early hours of the morning of 24th December, 2005. She told him that she had burnt the house.The next witness for the plaintiff, the Fire Officer said that the fire was not naturally caused nor accidental. He made the following remarks in his Fire Investigation Report:

Information gathered at the scene and from the Fiji Military Forces Police revealed that the fire was suspected to be deliberately ignited by the owner's wife after a family dispute.

The information was also consistent with the burn patterns observed and the multiple origins of fire located within the house. (emphasis mine)

The report concludes that the supposed cause of the fire was "deliberate ignition".

5.3.	I found PW2 and PW3 to be honest and reliable witnesses. PW3, the Fire Officer from the National Fire Authority, found that the multiple origins of fire was consistent with deliberate ignition.The evidence of these witnesses accorded with the second defendant's plea.Not surprisingly, the second defendant did not give evidence and prove the contrary.

5.4.	Section 17(1) of the Civil Evidence Act provides that in civil proceedings, a conviction "is admissible in evidence..that the person committed the offence, whether the person was so convicted on a plea of guilty or otherwise".Subsection (3) goes on to state that a person is taken to have committed the offence, unless the contrary is proved. "Otherwise he loses by the very fact of his conviction", in the words of Lord Denning in Stupple v Royal Insurance Co,(1971)1 QB 50 at pg 72 as quoted by the FCA in Prasad v Lata,(2005) FJCA 39.

5.5.	The second defendant contends that the plaintiff's action is based on a contract, to which she was not privy. The cause of action against the second defendant is set out in paragraph 5 of the amended statement of claim, which avers that the second defendant is liable for setting fire to the quarters,as she was convicted for arson. Correspondingly, issues were raised at the pre-trial conference whether her " actions were wilful, negligent and/or deliberate in respect of setting the fire and hence liable to compensate the plaintiff in order to restore married quarters no. 16", in the light of her plea.

5.6.	On a totality of the evidence, it is evident that the second defendant wilfully ignited the quarters. She is accordingly, liable to compensate the plaintiff for the damage.

5.7.	 I turn to consider the case against the first defendant. The cause of action is founded on clause 10 of the Tenancy Agreement.

5.8.	The defendants' argument that the Tenancy Agreement was not exhibited flies in the face of the admission in their amended statement of defence and the agreed issue at the pre-trial conference that the first defendant entered into a Tenancy Agreement with the plaintiff. 

5.9.	Clause 10 is pleaded in the amended statement of claim and reads as follows:

Damage not due to fair, wear and tear will be charged against the tenant. It is also the responsibility of the tenant to fill a Z7 form to enable repairs to be promptly dealt with by Engineers Unit. (emphasis mine)

5.10.	The amended statement of defence contends that it was understood between the parties that the first defendant would only be liable for damage caused by him, with the exception of fair wear and tear. Alternatively, that clause 10 be struck down on the grounds that "it is an oppressive and unconscionable term if it seeks to impute liability on the 1st defendant in cases where he was not a fault".

5.11.	No evidence was adduced on the alleged understanding.I do not find the clause under review, oppressive and unconscionable. On the contrary, it is the conventional clause incorporated in tenancy agreements. 

5.12.	I would refer to the case of Warren v Keen,(1953) 2 All ER 1118 as referred to, in the plaintiff's closing submissions, Denning LJ said at page 1120:

The tenant must take proper care of the premises... he must not of course damage the house wilfully or negligently;and he must see that his family and guests do not damage it-if they do, he must repair it. But, apart from such things, if the house falls into disrepair through fair wear and tear or lapse of time or for any reason not caused by him, the tenant is not liable to repair it.

5.13.	The closing submissions of the plaintiff also invites my attention to section
90 of the Property Law Act,(cap 130) which reads:

Covenants implied in Leases

In every lease of land there shall be implied the following covenants by the lessee, for himself,his personal representative, transferees and assigns with the lessor and his personal representatives and transferees:-
......

That he or they will, at all times during the continuance of the said lease, keep, and at the termination thereof yield up, the demised premises in good and tenantable repair (my emphasis), having regard to their condition at the commencement of the said lease, accidents and damage from fire, flood, lightning, storm, tempest, earthquake and fair wear and tear (all without neglect or default of the lessee) excepted.

5.14.	In my judgment, the first defendant is liable under clause 10 of the tenancy agreement, to compensate the plaintiff for the damage caused by the wilful act of the first defendant.

Damages

5.15.	It remains, therefore, to assess the damages to which the plaintiff is entitled.

5.16.	Mr Devanesh Sharma, counsel for the defendants, in his closing submissions, contends that the claim for $160,000.00 is, in effect, a claim for special damages, but no particulars are pleaded by the plaintiff, as to how this figure was computed. In support of his contention, he cited Credit Corp (Fiji) Ltd v Khan, (2008) FJCA 26 where the FCA held that "in order to found a claim for special damages, the claim must be specially pleaded. Not the least basis for this rule is fairness to ensure that the party against whom such damages are claimed has proper and particularised notice of the claim".

5.17.	Mr N.Sharma, counsel for the plaintiff, in his submissions in reply, quite correctly points out that a specific amount has been pleaded in the statement of claim, and particularised as building costs. In support, the case of Carpenters Fiji Ltd v Mohammed Yakub Khan and Co. Ltd, (2011) FJHC 104, was cited where Inoke J said "it does not matters that the words "special damages" were not used."

5.18.	The principle governing the measure of damages where a defendant has caused damage to a plaintiff's building in tort and contract is restitutio in integrum. The damages should put the plaintiff in the same position as he would have been had he not sustained the wrong. In applying that principle, the question has arisen whether restitution is to be achieved by assessing the diminution in value of the damaged premises or the cost of reinstatement .

5.19.	Mr N.Sharma submits that matters of valuation and depreciation, as raised in the cross-examination of PW4, are irrelevant in the present case.

5.20.	The decision of the Court of Appeal in Harbutt's Plasticine Ltd v Wayne Tank and Pump Co Ltd,(1970) 1 All ER 225 is a helpful authority, on this point. In that case,the plaintiff's factory was destroyed by fire due to a faulty heating system installed by the defendants. The court held that, since the plaintiffs had no option but to rebuild so as to carry on their business, the proper measure of damages was the cost of replacement. 

Lord Denning MR said at page 236:

The destruction of a building is different from the destruction of a chattel. If a secondhand car is destroyed, the owner only gets its value; because he can go into the market and get another secondhand car to replace it. He cannot charge the other party with the cost of replacing it with a new car. But, when this mill was destroyed, the plaintiffs had no choice. They were bound to replace it as soon as they could, not only to keep their business going, but also to mitigate the loss of profit (for which they would be able to charge the defendants). They replaced it in the only possibleway, without adding any extras. I think they should be allowed the cost of replacement. True it is they got new for old, but I do not think the wrongdoer can diminish the claim on that account. If they had added extra accommodation or made extra improvements, they would have to give credit. But that is not this case. (emphasis mine)

5.21.	The following passage from the judgment of Cross LJ provides a complete answer to the contention raised by Mr Devanesh Sharma, that the plaintiff had failed to provide the actual value of the structure at the time of the fire. 
At page 242, it is stated:

..in my judgment the value of the building and of the plant and machinery before the fire throws no light on the true measure of damage in a case like this where it was obviously right for the plaintiffs to rebuild and re-equip their factory and start business again as soon as possible. Further, I do not think that the defendants are entitled to claim any deduction from the actual cost of rebuilding and re-equipping simply on the ground that the plaintiffs have got new for old. It is not in practice possible to rebuild and re-equip a factory with old and worn materials and plant corresponding to what was there before, and such benefit as the plaintiffs may get by having a new building and new plant in place of an old building and old plant is something in respect of which the defendants are not, as I see it, entitled to any allowance. I can well understand that if the plaintiffs in rebuilding the factory with a different and more convenient layout had spent more money than they would have spent had they rebuilt it according to the old plan, then the defendants would have been entitled to claim that the excess should be deducted in calculating the damages. But the defendants did not call any evidence to make out a case of betterment on these lines.

5.22.	I would also refer to Dodd Properties (Kent) Ltd v Canterbury City Council, (1980) 1 All ER 928 at 938, where Donaldson LJ said:

In the case of a tort causing damage to real property, this object is achieved by the application of one or other of two quite different measures of damage, or, occasionally, a combination of the two. The first is to take the capital value of the property in an undamaged state and to compare it            with its value in a damaged state . The second is to take the cost of repair or reinstatement. Which is appropriate will depend on a number of factors, such as the plaintiff's future intentions as to the use of the property and the reasonableness of those intentions. If he reasonably intends to sell the property in its damaged state, clearly the diminution in capital value is the true measure of damage. If he reasonably intends to continue to occupy it and to repair the damage, clearly the cost of repairs is the true measure. And there may be in between situations.

5.23.	Mr Devanesh Sharma has also raised the issue of "betterment". The question as to whether a plaintiff has to give credit for betterments was considered in Harbutt's Plasticine Ltd,(supra). Widgery LJ said at page 240:

It was clear in the present case that it was reasonable for the plaintiffs to rebuild their factory, because there was no other way in which they could carry on their business 

and retain their labour force. The plaintiffs rebuilt their factory to a substantially different design, and if this had involved expenditure beyond the cost of replacing the old, the difference might not have been recoverable, but there is no suggestion of this here. Nor do I accept that the plaintiffs must give credit under the heading of "betterment" for the fact that their new factory is modern in design and materials. To do so would be the equivalent of forcing the plaintiffs to invest their money in the modernizing of their plant which might be highly inconvenient for them. (emphasis mine)

5.24.	On the question of betterment,Mr N.Sharma has pertinently pointed out that the burden was on the defendant to establish that the plaintiff had claimed costs, "beyond the cost of replacing the old" quarters. It was also argued for the defence that the estimated costs were inconclusive and lacked supporting evidence. Here again, it was for the defence to dispute each item of the costs by cross-examining PW 4 and leading evidence to the contrary.

5.25.	I would note that Harbutt's Plasticine Ltd,(supra) was overruled by the House of Lords in Photo Production Ltd v Securior,(1980)1 All ER 556 only on the conclusion the court reached on the applicability of exclusion clauses in cases of a fundamental breach of contract. The passages I have quoted extensively were cited in Dominion Mosaics and Tile Co Ltd v Trafalgar Trucking Co Ltd,(1990) 2 All ER 246. 

5.26.	In the light of the authorities I have cited and the totality of evidence,in my judgment, the plaintiff is entitled to reinstatement costs, as estimated by PW4, in a sum of $ 187,921. 

5.27.	Mr Devanesh Sharma was critical of the length of time that passed between the fire in December, 2005, and obtaining the estimate from PW4, five years later in August,2010. He argued that the plaintiff took no measure to mitigate its loss and allowed the costs to accumulate. 

5.28.	The principles on which damages are awarded for tort or for breach of contract are not the same in each case. As Lord Wilberforce stated in Miliangos v George Frank (Textiles)Ltd, (1975) 3 All ER 801 at page 813 it " is for the courts,.. to work out a solution in each case best adapted to giving the injured plaintiff that amount in damages which will most fairly compensate him for the wrong he has suffered".

5.29.	In Birmingham City Corpn v West Midland Baptist (Trust) Association (Inc)2,(1969) 3All ER 172 the question arose whether the reasonable cost of equivalent reinstatement involved taking costs which prevailed at the date of the notice of intention to acquire a property or those which prevailed at the earliest date when the claimants might reasonably have begun rebuilding. The decision was in favour of the latter. Lord Morris of Borthy-Gest said:

The reasonable cost, depending on the facts of particular cases, will be the actual reasonable cost which a claimant has incurred or can be expected to incur; it will be such cost at the time when equivalent re-instatement reasonably does or should take place. (emphasis mine)

5.30.	Birmingham City Corpn v West Midland Baptist (Trust) Association (Inc)2,(supra) was cited in Dodd Properties (Kent) Ltd v Canterbury City Council, (supra). Donaldson LJ said at page 939:

In an era of rising costs, this could only happen if compensation was assessed on the basis of costs applicable at the time at which reinstatement would in fact occur, on the assumption that the owner acted reasonably...

 It follows that, in a case in which a plaintiff has reinstated his property before the hearing, the costs prevailing at the date of that operation which were reasonably incurred by him are prima facie those which are relevant. Equally in a case in which a plaintiff has not effected reinstatement by the time of the hearing, there is a prima facie presumption that the costs then prevailing are those which should be adopted in ascertaining the cost of reinstatement. There may indeed be cases in which the court has to estimate costs at some future time as being the reasonable time at which to reinstate, but that is not this case. (emphasis mine)

5.31.	It follows from the foregoing that the plaintiff is entitled to an award of damages which will meet the cost of reinstatement of married quarters no 16, as at the time of hearing and as estimated by PW 4 in a sum of $ 187,921. 

5.32.	The plaintiff has claimed interest. The power of the Court to award interest on damages is conferred by section 3 of the Law Reform(Miscellaneous Provisions)(Death and Interest)Act,(cap 27)

5.33.	In the exercise of my discretion, I award the plaintiff interest on the sum of $ 187,921 at 3% per annum from 24 December, 2005 to 30th October, 2012,being the date of hearing.

6.	Orders 

a)	The defendants shall pay the plaintiff the sum of $ 187,921 together with interest at the rate of 3 % from 24th December,2005, to 30th October, 2012.

b)	The defendants shall pay the plaintiff costs summarily assessed in a sum of $ 3500.

11th June, 2014

A.L.B.Brito-Mutunayagam
Judge