McGowan v Chand [2012] FJCA 37; ABU0026.2011 (7 June 2012)

IN THE COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT

CIVIL APPEAL NO. ABU0026/11
(High Court No. HBC 206 of 2007L at Lautoka)

BETWEEN :

JOE McGOWAN
Appellant

AND :

MUNI CHAND trading as
M. Chand Construction
Respondent

CORAM : Calanchini AP
Chitrasiri JA
Basnayake JA

COUNSEL : Ms. V. Patel for the Appellant
Mr. M. A. Khan for the Respondent

Date of Hearing : 16th May 2012
Date of Judgment : 07th June 2012

JUDGMENT

Calanchini AP

I have had the opportunity of reading the judgment prepared by Chitrasiri JA and agree with his reasons and conclusions.

Chitrasiri JA

[1] The appellant being the Plaintiff in the case instituted in the High Court at Lautoka, filed writ of summons dated 3rd July 2007 seeking damages from the Respondent in terms of the conditions contained in the "Articles of Agreement" which is found at page 87 of the record. Having received the statement of claim filed by the Appellant, Respondent tendered his statement of defence dated 26th July 2007. In that statement of defence, the Defendant whilst answering the appellant's claim made a counter claim against the Plaintiff-Appellant.

[2] When the trial was commenced in the High Court at Lautoka, Plaintiff sought to withdraw his action. Accordingly, the Court allowed the application of the plaintiff-appellant for the withdrawal of the claim against the defendant-respondent. However, the Respondent wished to pursue his counter claim made in the statement of defence against the plaintiff. In that statement of defence four reliefs have been prayed for by the respondent in keeping with the respective claims that he has made in the statement of defence. These distinct claims are found in different paragraphs of the statement of defence.

[3] Having taken up the trial as to the counter claim of the respondent, learned High Court Judge delivered her judgment and made order awarding $18,000 to the Respondent. In that judgment it is stated that this award of $18000 was made in accordance with the cause of action pleaded in paragraph 24 of the said Statement of Defence. This appeal has been filed seeking to set aside the said order made in accordance with the prayer (d) read with paragraph 24 of the statement of defence.

Para.24 reads thus:

"24. On the 3rd of April, 2007 the Plaintiff wrongfully and in breach of the written and partly oral agreement terminated the building contract thereby depriving the plaintiff of a balance contractual sum of $72000.00." (It was later amended to read as $42000.00)

Prayer (d) reads as:

"(d) 72000.00 under paragraph 24"

I wish to discuss in detail the contents of the said paragraph 24 and its relevance to the issue at hand, later in this judgment.

[4] As mentioned before, this case had been filed on the basis of the terms and conditions contained in the "Articles of Agreement" dated 4th November 2005, entered into between the parties to this action. It was entered into for the construction of two storied building consisting of eight apartments. The Respondent is the contractor who undertook to build the said building whilst Mr. & Mrs. Felecia Tugi were the other party to the agreement. They have been referred to in the High Court proceedings, as the employer of the respondent namely Muni Chand who carried the business under the name and style "M.Chand Construction". It must also be noted that at all material times, the Appellant, Joe McGowan had being acting as the power of attorney holder of the said Mr. & Mrs. Felecia Tugi.

[5] The Articles of Agreement referred to above consist of (vii) paragraphs and the last paragraph found therein contains 16 sub paragraphs. Those are the terms and conditions that were to be interpreted by the learned High Court Judge. However, it must be noted that this appeal is confined to the award of $18, 000 made to the Defendant on his counter claim.

[6] Three grounds of appeal have been advanced by the appellant in his notice of appeal. The third ground of appeal has been amended by the Appellant at the time the submissions were filed on his behalf. Learned counsel for the Respondent had no objection to this amendment and therefore the hearing of this appeal was commenced accordingly. Hence, the three grounds of appeal upon which the hearing was taken up are:

(i) That the Learned Judge erred in law in dismissing the Plaintiff's action instead of striking out.

(ii) That the Learned Judge erred in law and in fact and/or misdirected herself in holding that "the forfeiter is wrongful, and the Defendant is entitled to part of the retention money for stage 11, which I assess at $18, 000" in the light of all the evidence, in particular of clauses v and vi of the Articles of Agreement being Agreed Bundle of Documents 1.

(iii) "That the learned Judge erred in holding that "The $42,000 claimed in paragraph 24 of the statement of defence is based on quantum merit, ie. For works carried out for stage 10 and the retention money for stage 11" and awarding the Respondent $18,000 as retention money when quantum merit was not pleaded by the Respondent as an alternative claim in his counterclaim".

[7] The first ground of appeal is to have the order of dismissal of the Plaintiff's action, as stated in the impugned judgment, converted to an order of striking off the action. Learned Counsel for the appellant has contended that the learned High Court Judge is wrong when she used the words "action is dismissed" in her final judgment having made the order; "Plaintiff claim is withdrawn and struck out" previously when the application for the withdrawal of the claim of the plaintiff was made.

[8] An application to withdraw an action is made for the reasons best known to the person who makes such an application. Whatever the reasons may have been, the fact remains that the wish of the person who makes such an application is to discontinue the action filed. In such a situation, the practice of courts is to dismiss the action in order to ensure that the proceedings in those cases are terminated.

[9] However, irrespective of the words that had been used in an order made by a Judge upon an application to withdraw a case, the important issue then is to consider the consequences of the withdrawal of the action. In Rule 4 of the Order 21 of the High Court rules describes the consequences of such a situation. It reads thus:

"4. Subject to any terms imposed by the Court in granting leave under Rule 3, the fact that a party has discontinued an action or counterclaim or withdrawn a particular claim made by him therein shall not be a defence to a subsequent action for the same, or substantially the same, cause of action."

Same verbatim is contained in the Supreme Court Practice Directions in England which appears in the White Book 1988 Vol.1 at page 367.

[10] In this particular instance, an order to strike off the case had been made when the application to withdraw the case of the plaintiff was made. However, in the final judgment, learned Judge has used the words: "I then dismissed the plaintiff's action."
Whatever the way the orders have been recorded, the fact remains that the learned High Court Judge had used those different wordings, consequent to the application made by the plaintiff to withdraw his case. Under those circumstances, it is important to ensure that such wordings shall not become a bar for the plaintiff to re-litigate the matter particularly when the withdrawal had been allowed without any condition being imposed and also without looking at the merits of the case.

[11] Making an application to withdraw the plaintiff's case has not been disputed at any stage. Accordingly, it is clear that the words used by the learned High Court Judge at two different times will have no adverse effect on the plaintiff since the application of the plaintiff is to withdraw his case without a condition being imposed or even without looking at the merits of the case. Words used in both the occasions envisage discontinuing the claim against the respondent. The Court therefore had merely acknowledged the withdrawal of the plaintiff's claim by using those words. Against this background, the only conclusion that could arrive at, is that the Court had discontinued the claim of the plaintiff upon his withdrawal of the case. In the circumstances, I do not see any difference as to the consequences of the two different ways that the decision was recorded by the learned High Court Judge. Hence, it is not proper to consider the legality of the way in which the words are used by the learned High Court Judge at this stage. It seems that it is highly a technical issue on which a considered judgment should not be overturned. In the light of the above, I conclude that there is no merit in the first ground of appeal.

[12] The second ground of appeal has been advanced relying upon the way in which the paragraph 55 read with the order (d) of the Judgment is worded. The said paragraph 55 reads thus:

"Accordingly, I determine that the forfeiture is wrongful, and the defendant is entitled to part of the retention money for stage 11, which I assess as $18,000."

Order (d) is as follows:

"(d) 72000.00 under paragraph 24"

[13] The reasoning behind the decision referred to in the said paragraph 55 of the Judgment is found in paragraphs 53 and 54 of the impugned Judgment. In the last sentence of the said paragraph 54 she has stated that:

"I determine the Defendant is entitled to the balance retention money for stages 1-8 which amounts to $18,000.

Accordingly, it is clear that $18,000 referred to in both paragraphs 54 & 55 relates to the money retained until the practical completion of the work in respect for stages 1 to 8 of the construction work in terms of the clause V of the Articles of Agreement. The said clause V of the Articles of Agreement states:

"V. A retention sum of 5% will be deducted for all payments up to practical completion. Upon issuance of the Completion Certificate, 50% of the retention sum will be released. A further 50%, 6 months thereafter."

However, nothing is referred to either in the pleadings or in the evidence as to the said figure of $18,000. Basically, it has been decided on the basis of the aforesaid retention money that was calculated having regard to the total contractual sum of $440,000.00. Therefore it is crystal clear that $18,000 is the balance retention money in respect of stages 1-8 referred to in the progress payment schedule [page 90 of the record] that has been awarded to the Defendant in the impugned judgment.

[14] However, the learned High Court judge, in paragraph (d) of the orders made in the final judgment had stated that:

"(d) The defendant to be paid $18,000 (eighteen thousand) on the counter claim under paragraph 24 within 21 days hereof"

Plain reading of the said order of the learned High Court judge is that the awarding of the $18,000 had been made on the counter claim made under paragraph 24 of the statement of defence. The said para.24 reads thus:

"On the 3rd of April 2007 the Plaintiff wrongfully and in breach of the written and party oral agreement terminated the building contract thereby depriving the Plaintiff of a balance contractual sum of $42,000."

The aforesaid paragraph 24 shows the way in which the respondent was deprived of the balance contractual sum of $42,000. No such basis is found in the judgment for the award of $18000 to the respondent. It does not refer to any retention money deposited under the agreement either.

[15] Therefore, it is seen that the award of $18,000 referred to in the said paragraph (d) of the order made at the end of the judgment would not have been awarded under paragraph 24 of the counter claim. At the same time, by looking at para.54 of the judgment, it is also clear that this award of $18,000 is in relation to the retention money in respect of the work done for stages 1-8.

[16] Accordingly, as mentioned in the Appeal ground two, the learned High Court judge has erroneously made orders without having regard to her own reasoning in the judgment. Therefore, it is desirable for this court to make necessary corrections in the orders made by the learned High Court judge to fall in line with her reasoning stated in the judgment, particularly in paragraphs 53 and 54 of the Judgment.

[17] Appeal ground 3 also refers to the retention money that had been discussed in preceding paragraphs of this judgment. In the said ground of appeal No.3, it is stated that paragraph 24 of the statement of defence is based on quantum meruit. However, as discussed above, the award of $18,000 was in respect of the retention money as clearly stated in paragraph 54 of the Judgment and not on quantum meruit. Having considered this issue, Court has already come to the conclusion that the order to pay $18,000 was in respect of the retention money and therefore it was not on the basis of quantum meruit as referred to in the third ground of appeal.

[18] Accordingly, when the order made by the learned High Court Judge is corrected as suggested in para. 15 of this judgment, it becomes unnecessary to discuss the issues raised in the third ground of appeal. It must be noted that both the appeal grounds 2 and 3 are framed relying upon the words used by the learned High Court Judge as to the award of $18000.00. This issue has now been clearly discussed herein before in this judgment. It is also necessary to state that the aforesaid decision of the Court is made in order to correct the orders of the learned high Court Judge in keeping with her reasons appearing in the judgment.

[19] In the light of the above, it is necessary to make an order to expunge the final order (d) made by the learned High Court Judge in the judgment and replace with the following order thereto.

(d) The defendant to be paid $18,000 (Eighteen Thousand) which is the balance retention money for the work carried out in stages 1 to 8 of the construction work.

Basnayake JA

I agree with the reasons and the conclusions of Chitrasiri JA.

The Orders of the Court are:

1. Order number (d) of the orders made in the Judgment is amended to read as:

(d) The defendant to be paid $18,000 (Eighteen Thousand) which is the balance retention money for the work carried out in stages 1 to 8 of the construction work.

2. Circumstances do not warrant ordering costs on either side, and therefore the parties are to bear their own costs of the appeal.
   

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THE HON. MR JUSTICE W. CALANCHINI AP
ACTING PRESIDENT

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THE HON. MR JUSTICE K.T.CHITRASIRI JA
JUSTICE OF APPEAL

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THE HON. MR JUSTICE E.BASNAYAKE JA
JUSTICE OF APPEAL