South Pacific Academy of Beauty Therapy v Coral Surf Resort Ltd [2005] FJHC 359; HBC0370.2000 (7 October 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

ACTION NO. HBC0370 OF 2000

BETWEEN:

SOUTH PACIFIC ACADEMY OF BEAUTY THERAPY LIMITED
PLAINTIFF

AND:

CORAL SURF RESORT LIMITED
DEFENDANT

Mr. S.K. Ram for the Plaintiff
Mr. R. Gordon for the Defendant

Date of Hearing: 31 May and 1 June 2005
Dates for Submissions: 15 June, 29 June and 6 July 2005
(extended to 17 August 2005, then to 9 September 2005)
Final Submission Received: 13 September 2005
Date of Judgment: 07 October 2005

JUDGMENT OF FINNIGAN J.

This is a claim in contract. The Plaintiff claims that on or about 28 January 1999 the Plaintiff and the Defendant entered into an agreement whereby the Plaintiff agreed to set up and operate a beauty therapy salon and to retail various lines of beauty care products at the Defendant’s hotel known as the Warwick Fiji. It claims that on or about 29 March 2000 the Defendant in breach of the agreement required the Plaintiff to vacate the Defendant’s premises by 3 April 2000. The Plaintiff seeks refund of the costs of setting up its business and of removing its equipment which claim amounts to $17,137.38. It seeks also $270,000 as income lost from January 2000 till December 2004 as a direct result of the claimed breach. There is also a claim for general aggravated and exemplary damages on the basis of false and misleading misrepresentations and for claimed breaches of Sections 54, 55 & 56 of the Fair Trading Decree 1992. The Defendant denies the Plaintiff’s claims of fact, especially the claimed agreement, and pleads some further facts.

The Issues

I have had the benefit of Counsels’ full and comprehensive written submissions. From these submissions the issues appear to me to resolve to these:

1. Was there a contract made and
2. What were the terms of that contract. Once those issues are resolved then further issues may arise these being
3. Was there a breach of that contract by the Defendant and
4. What is the nature of damages if any to be paid
5. Quantum of damages.
   

The Facts of the Matter

The evidence for deciding the issues about the contract and its terms was given by two witnesses, one each for the Plaintiff and the Defendant. From their respective accounts of their dealings with each other a clear picture had objectively emerged at the hearing, by time the evidence was completed. From the evidence of those two witnesses taken together I have little difficulty finding the facts. I find that the witness for the Plaintiff, being already a person engaged in the business of providing beauty therapy and massage services at resorts in Fiji, approached the witness for the Defendant with a proposal. As part of the proposal, the witness (hereafter called the Plaintiff) sent a copy of a written agreement that had been concluded with at least one other resort in Fiji (Exhibit P4). The document was already dated as an agreement, 28 January 1999. It was substantially amended to show the Defendant as a contracting party. The proposed signatory parties were to be the Plaintiff company and Treasure Island Resort, another Fijian resort. Clearly it could not be executed in that form and it was by nature a proposal. There has been and apparently still is some confusion in the Plaintiff’s mind about the nature and functions of limited liability companies which is reflected in the document and in the application for change of Plaintiff which was granted before the hearing. I mention this as it is relevant, but it is not decisive in my judgment. It simply lends weight to the impression given by the Plaintiff’s evidence that some of her concepts in her dealings with the Defendant were not hard-edged.

At the time of this proposal the Defendant was in the process of refurbishing its Warwick premises. Its witness (for convenience hereafter called the Defendant) had decided that a beauty therapy salon should be included in the upgraded facilities and that a massage room currently operating should continue to operate. The Defendant did not accept or comment on the proposed written agreement but entered into discussion with the Plaintiff about where the proposed beauty therapy salon should be situated and invited her comments. Subsequently it was agreed between them that the Plaintiff would provide massage services on the beach and by agreement the Defendant erected a bure which the Plaintiff began to use for that purpose. Payment by the clients was the standard resort system of vouchers, charges to clients’ rooms, invoices by the supplier to the resort and payment by the resort to the supplier, in this case the Plaintiff. The Plaintiff’s terms were seventy percent of gross charge for the Plaintiff and thirty percent for the Defendant. The Plaintiff supplied, paid and supervised the massage staff and the Defendant supplied the bure and charging system. These standard arrangements were included in the draft agreement.

Subsequently the person operating a massage room in the resort resigned and the Defendant asked the Plaintiff to supply the massage room services. The Plaintiff had asked for permission to sell products on a ninety percent to ten percent division of the revenue and this had been granted. The Plaintiff began to use the massage room and to offer therein all or most of the services of a beauty therapy salon. What was not supplied was spa treatment therapy. The Defendant meanwhile was preparing its proposed salon in another part of the resort, which was to include spa therapy. The Plaintiff had asked if she could have some input and the Defendant, taking this to be input of ideas readily agreed. The Defendant went away for some time and returned to find that little or no progress had been made by the construction team on the new beauty therapy salon. As a result of his enquiries he believed that the work had stopped because of confusion caused by the Plaintiff’s input. The workmen said she had been giving directions about their work. He decided to terminate the relationship. He did so, there were some discussions and the Plaintiff removed its equipment as required. It then commenced this action.

The First Two Issues: The Contract

In my opinion there clearly was a contract. The Plaintiff entered upon the Defendant’s premises and began to provide services and was paid for them. There was offer acceptance and consideration. The services were provided and the payments were made on the basis set out in the proposal or draft agreement. Whether or not these were standard procedures in Fijian resorts is immaterial. They were the terms of this contract accepted as such by both parties.

What services were provided? At first they were beach massages. Payment was not discussed, neither party had a problem with what the Plaintiff had proposed. The Defendant normally paid its creditors monthly, the Plaintiff in the draft agreement had stipulated weekly, both parties agreed without demur on fortnightly payments.

Soon after this the parties agreed that the Plaintiff would set up beauty therapy services in the massage room. The terms for this were as before. The Plaintiff wanted in addition to sell beauty products and, even though this was covered in the draft agreement, wrote to the Defendant for its agreement. This was given and the ninety percent to ten percent payment ratio came into effect. The parties had a contract. On balance I think it was a development in the contract that they already had rather than a new contract but the point is immaterial to my decision.

The Plaintiff then began to take an interest in the larger beauty therapy room which the Defendant had begun to construct. Without doubt she thought she would be the occupier. Also without doubt the Defendant on his return was so perturbed by the input she had made that he asked her to leave. The question raised by the pleadings is whether the Plaintiff had at that time an expectation of five years’ occupation which was based on a contract. In other words, did the Defendant breach the contract in terminating it?

In my opinion clearly not. There was no offer acceptance and consideration for a five-year contract whereby the Plaintiff was to operate the beauty therapy salon once the Defendant had completed construction. There was simply no agreement about that. Even taking the Plaintiff’s evidence at face value, she claimed that the Defendant was unwilling to enter into a written contract until it saw what its expenses would be upon setup of the new salon. What she claimed in her evidence therefore is an oral contract, an agreement in principle for five years subject to negotiation of financial and management aspects. I do not believe there was ever any agreement reached about the Plaintiff staying for five years, but even if there were the Defendant would have been entitled to withdraw from it at any time either without notice for sufficient cause or else upon reasonable notice.

What the Defendant did was give six days’ notice which terminated the previous contract and would have been sufficient to terminate a further agreement had there been one. Did this action entitle the Plaintiff to damages? In my opinion it did not. What the parties had was an oral agreement on standard terms for first the beach massage services and second the beauty salon services. The services were provided and the payments made largely in terms of the draft agreement. The terms in the draft agreement suited both parties but that does not make the draft agreement into the contract. There had certainly been no agreement reached about a five-year term. There had been no agreement reached about means of terminating the contract. In those circumstances, what was required by the law was either sufficient cause or else reasonable notice. The six days appears reasonable in itself but the Plaintiff complied without difficulty and either stored the equipment or used it elsewhere, the evidence was not clear. Partly used product she says she destroyed. That claim did not carry conviction. I conclude that in the event, termination within six days was reasonable.

The Submissions

Counsel for the Plaintiff relied on Waltons Stores (Interstate) Ltd –v- Maher (1988) 164 CLR 387 and Attorney-General –v- Pacoil Fiji Ltd (1996) FJCA 9, ABU0014 of 1996S Judgment 29 November 1996. He supplied copies, for which I am grateful. His main submission was that there had been a promise made by the Defendant, reliance on that promise caused by the Defendant’s conduct and detriments suffered by the Plaintiff as a result. I accept the principle upon which Counsel relied but find that the facts are against him. In particular there was no evidence that the Plaintiff’s expectation of a five year term and its high hopes ever became a term agreed between the parties. An agreement for a five year term may have well have resulted had the relationship in its early days gone smoothly. It did not and the Defendant tossed the Plaintiff out. The Plaintiff’s evidence alone destroys the submission that the Defendant had made a promise. Her evidence was that the Defendant’s witness was proceeding cautiously and waiting to see what its commitments might be before it entered those commitments. The Defendant’s evidence confirmed that beyond doubt.

The same findings take the force also out of Counsel’s submissions about breach of the Fair Trading Degree 1992. On the evidence of both the witnesses I am unable to make any findings that the Defendant’s conduct was misleading or deceptive or likely to be. I could not find that it was unconscionable. I cannot hold that the Defendant by its conduct led the Plaintiff to believe that it would be given a five year contract for operating a beauty spa as Counsel submitted. I am quite certain that the Plaintiff proceeded with optimism and high hopes and the Defendant proceeded with studied caution. The proposal or draft agreement by itself illustrates this. It was a detailed proposal and needed amendment before it could be signed. It was never signed. The Plaintiff chose to act as if it had been although it never could be enforced. Money was spent by the Plaintiff. That it chose to proceed this way is not evidence of misleading deceptive or unconscionable conduct by the Defendant. The Plaintiff took out public liability insurance. The Plaintiff’s evidence was that this was normal practice wherever the Plaintiff (and others) offered these services. The Plaintiff issued invoices in what again is the normal course of such businesses. It employed staff. None of this amounts to evidence against the Defendant. One is bound to admire the entrepreneurial enthusiasm of the Plaintiff but it cannot impute to the Defendant conduct which is absent from the evidence.

Counsel for the Defendant submitted that the Plaintiff was not authorized by its Memorandum and Articles to enter into the agreement upon which it brings this action. This was not a strong submission. I do not need to decide that point. Counsel for the Defendant was on much stronger ground arguing that there was no contract at all. It is unnecessary to set out the many authorities upon which he relied. Each is sound authority for the proposition advanced under its name. Each has some application to this case. On the facts however I find without hesitation that the evidence established all the ingredients of a contract but not all the ingredients of the contract which the Plaintiff claims came into existence. I am bound to reject the submission of Counsel for the Plaintiff that there was a five-year contract part-performed giving rise to a promissory estoppel. The Lautoka case which he supplied does not fit the present facts.

In respect of promissory estoppel Counsel submitted that Waltons Stores Ltd (above) is not good law in Fiji. That submission cannot be upheld since the approval given to the principle in that case by the Court of Appeal in Pacoil Fiji Ltd (above).

Conclusion

This case was conducted with considerable energy by Counsel for both parties and that is reflected in the high quality of their submissions. After considering these submissions I have been led to the clear conclusion that I have set out above. I give judgment for the Defendant with costs for the Defendant. If Counsel are unable to agree quantum then Counsels’ bill will be taxed by the Registrar.

D.D. Finnigan
Judge

At Lautoka
07 October 2005