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J K Builders Ltd v Dakai [2011] FJHC 244; HBC64.2008L (4 May 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION


Civil Action No: HBC 64 of 2008L


BETWEEN


J. K. BUILDERS LIMITED
Plaintiff


AND


JOPE DAKAI
Defendant


AND


MAISURIA DESIGN LIMITED
Third Party


FINAL JUDGMENT


Judgment of: Inoke J.


Counsel Appearing: Mr V Mishra for the Plaintiff
Mr K Vuataki for the Defendant
Mr E Maopa for the Third Party


Solicitors: Mishra Prakash & Assocs for the Plaintiff
Vuataki Law for the Defendant
Babu Singh & Assoc for the Third Party


Date of Hearing: 11, 12, 13 August 2010 and 14 October 2010

Date of Judgment: 4 May 2011


INTRODUCTION


[1] The Plaintiff was contracted to build a four apartment complex for the Defendant. When the Defendant refused to pay up the balance of the contract sum the Plaintiff refused to give him the keys to the apartments, locked him out and commenced these proceedings.

[2] The Plaintiff claims that it had completed the construction works and is entitled to payment of the balance of the contract sum. The Defendant denies the claim. He says the work was unsatisfactory and incomplete and counter-claims against the Plaintiff for liquidated damages for failing to complete on the agreed practical completion date and for the cost to complete the apartments.

[3] The Defendant also sues his Architect as a Third Party for breach of duty of care by not properly certifying payments and supervising the works. He claims that the Architect should indemnify him if the Plaintiff succeeds in its claim against him.

CASE HISTORY


[4] The Writ of Summons was filed on 24 April 2008 and served on the Defendant on 8 May 2008. No Acknowledgment of Service being filed in time the Plaintiff obtained Default Judgment in the sum claimed on 24 June 2008. On 10 September 2008, the Defendant filed an application to set aside the Default Judgment and to join his architect as a Third Party. On 16 October 2008 Master Udit gave leave for the Defendant to issue Third Party proceedings but the Defendant did not have them issued within the time ordered so further leave was again sought on 6 November 2009. The Third Party proceedings were eventually filed on 18 March 2010. On 12 March 2009 the Master also set aside the Default Judgment. The Summons for Directions was issued on 30 June 2009 and pre-trial directions were given by the Deputy Registrar on 22 July 2009. The matter eventually came before me on 11 December 2009 for a hearing date to be fixed. Six court appearances later I set it down for hearing in July 2010. On 26 May 2010, the Defendant filed an application to amend his Defence and Counter-claim so on 7 June 2010 I fixed the hearing of the Defendant's application for 23 June 2010. No objection being taken by the Plaintiff and the Third Party consenting, I allowed the Defendant to amend his Defence and Counter-claim and gave further directions. The hearing was still to commence in July. On 26 July, the hearing could not proceed so I further adjourned it to 10, 11, 12 August 2010. This is my judgment following that hearing.

THE STATEMENT OF CLAIM


[5] The Plaintiff pleaded that it entered into a contract with the Defendant on 18 January 2006 whereby it agreed to construct a four flat residential building on freehold land CT 34931 at Goundar Road in Nadi for the Defendant. It had completed the building as required under the contract. The Architect issued 10 Certificates of Payment. Part of Certificate of Payment No 9 ($52,784.81) and the whole of Certificate of Payment No 10 ($81,721.72) have not been paid by the Defendant despite demand. The contract also provided for retention monies to be released after 6 months from the issue of the Certificate of Practical Completion which the Plaintiff claims was on 30 July 2007. The retention period has expired but the Defendant has not released the retention amount of $26,480.92. The total of the balance Certificate of Payments and retention of $160,987.45 remains unpaid despite demand. The Plaintiff also claims interest thereon at 10% pa from 3 March 2008 to the date of judgment under the Law Reform (Miscellaneous Provisions) (Death and Interest) Act [Cap 27] and costs.

THE DEFENCE AND COUNTER-CLAIM


[6] The Defendant's amended Defence pleaded that the agreed practical completion date was 13 January 2007 in default of which the Plaintiff was to pay $4,000 a month to the Defendant until the building was completed. Eight Certificates and nine lots of payments totalling $385,810.73 were paid for work done as at 15 March 2007. For the ninth Certificate of Payment, the Defendant refused to pay $57,784.81 because of unsatisfactory workmanship. Eight instances of unsatisfactory work were listed. Despite this work remaining unresolved, the Plaintiff sent Certificate of Payment No 10 for payment so the Defendant refused to pay it. Joint inspections of the building were done on 2 April 2009 and 28 August 2009 and further instances of bad workmanship were discovered.

[7] The Defence also alleged that the Certificate of Practical Completion was obtained in breach of the contract provisions because the works were either incomplete or not done in accordance with the contract or, alternatively, the Certificate was obtained by fraud, and was therefore void. In addition, the Defendant pleaded that the Plaintiff is estopped from relying on the Certificate.

[8] Because the building was not completed by the Practical Completion date, 13 January 2007, the Defendant counter-claimed against the Plaintiff for damages of $4,000 per month from that date as provided in the building contract. The Defendant's second head of counter-claim was breach of warranty by the Plaintiff by failing to build the works in accordance with the "construct drawings" and "variations" in accordance with the contract. He alleged that because of this breach and the Plaintiff's failure to rectify them, the Defendant was unable to rent his four flats from April 2007. The Defendant's third head of counter-claim was that there was an implied term in the contract that the Plaintiff would exercise skill and care in building the flats. The Plaintiff failed to do so in breach of the term requiring the Defendant to carry out remedial works which would cost $83,910.38 and which also prevented the Defendant from renting his four flats.

REPLY AND ANSWER TO COUNTER-CLAIM


[9] In reply, the Plaintiff alleged that there was no Completion Date specified in the contract. The Architect was the Defendant's agent and was bound by his actions in issuing the Certificates of Payment. The contract required the Defendant to pay within 14 days of presentation of the Certificates.

[10] In its Defence to the Counter-claim, the Plaintiff alleged that there was no Completion Date because the Completion Chart prepared by it did not form part of the building contract. The Plaintiff also alleged that any delays in completion was due to the Defendant's failure to pay on the Certificates and that the Defendant could not have rented his flats from April 2007 because he did not have a Certificate of Occupancy by that date.

THE DEFENDANT'S CLAIM AGAINST THE ARCHITECT


[11] The Defendant claims an indemnity from the architect for the Plaintiff's claim on the basis that the architect failed to exercise proper skill and care, failed to fulfil his contractual obligations to ensure that the Plaintiff built the building according to the building contract and failed to check each stage of the works during construction and after completion. In breach of those obligations, the Defendant issued Certificates of Payment Nos. 9 and 10 whilst there were defective and incomplete works. Because of this, the Defendant stopped payment of those certificates and the Plaintiff kept the keys to the Defendant's apartments and prevented him from renting them out.

THE ARCHITECT'S DEFENCE TO THE DEFENDANT'S CLAIM


[12] The architect says that he was not privy to the building contract between the Plaintiff and the Defendant and denies that he was under any contractual obligations with the Defendant. He also denies that he owed a duty of care to the Defendant. He denies any breach of his obligations or duty of care and says it was explained to the Defendant that retention monies was for incomplete works and the certificates were to be paid and the reason for the Defendant not paying was that he was having financial difficulties at the time. The Defendant was in breach of the building contract by stopping payment.

THE FACTS NOT IN DISPUTE


[13] It is not in dispute that the Plaintiff and the Defendant entered into a building contract on 18 January 2006. The whole of Certificate of Payment No. 10 has not been paid. The total outstanding retention is $26,480.92.

[14] The Plaintiff has locked out the Defendant from his flats and has held on to the keys.

[15] The Nadi Town Council issued a Certificate of Completion and Permit to occupy the apartments on 30 July 2007.

[16] The architect has not issued a Certificate of Practical Completion.

THE DOCUMENTARY EVIDENCE


[17] The parties by agreement tendered an Agreed Bundle of Documents (ABD) containing the documents to be used at the trial[1]. There was also an Agreed Bundle of Documents between the Defendant and the Third Party (ABD2). The Defendant also provided a bundle of documents (DD), of which only some of the documents were tendered individually at the hearing. The Third Party also provided its own bundle of documents (TPD), of which only some of them were tendered at the hearing.

THE HEARING


EVIDENCE FOR THE PLAINTIFF


PW1
Evidence in chief


[18] The former CEO of the Nadi Town Council gave evidence for the Plaintiff. He was in charge of the Nadi Town Council operations in 2006. On 5 April 2006, the Council wrote to the Defendant advising him that the Director of Town and Country Planning only permitted two flats to be built on his land instead of the four applied for. On 10 May 2006, the Council issued a letter to the Plaintiff and the Defendant to stop construction works until Council approval is given. On 16 May 2006, the Plaintiff wrote to the Council saying that works had stopped on 5 April 2006. The Defendant subsequently applied for re-consideration of his proposal which the Director of Town and Country Planning later approved. The Plans were signed approved by the Council Engineer's assistant on 3 July 2006. Subsequently, a completion certificate was issued by the Council.

Cross-examination of PW1 by Counsel for the Defendant


[19] The witness said he had previous dealings with JK Builders. He said it was not the builder's responsibility to get approval for the plans. He confirmed that the plans were signed "approved" and dated 3 July 2006.

PW2
Evidence in Chief


[20] The Plaintiff's administration clerk, Abdul Munif, gave evidence next. He said he was familiar with the parties' building contract dated 18 January 2006. It was his duty to liaise with the architect and the client. Under the contract, the date for possession of the site was to be confirmed. He could not remember what the actual date was.

[21] Maisuria Design Limited was the architect chosen by Jope Dakai, the Defendant. Hemant Kumar is the director and main architect of Maisuria Design Limited. The witness knew the architect and had many dealings with him. Maisuria Design accepted JK Builders revised tender by letter dated 13 January 2006[2] in which the total contract price was $597,361 VIP of which $236,153 was a "Monetary Allowance" for work such as joinery, to be managed by the architect and Jope Dakai and the balance of $361,208 was the "Building Construction sum" to be managed by JK Builders. The Joiner was International Shop Fitting (ISF). Under the contract, JK Builders was to get the money from Jope Dakai and then pay ISF. Some payments to ISF were paid in that manner but under Certificate of Payment No 9, Jope did not pay the amount for ISF so JK Builders did not pay ISF. The cheques for payment were from Home Finance Company Limited. Mechanical Services was the other subcontractor responsible for all the air conditioning units for the apartments.

[22] According to the acceptance letter of 13 January 2006, the parties were to have a meeting prior to signing the contract but the witness was not sure whether the meeting did in fact take place. He could not remember when construction work started or when the architect gave instructions to start. JK Builders was responsible for the general construction of the building, the roof framing, sheeting, walls, floors, wooden doors and so on. The subcontractors were responsible for joinery, aluminium works (such as the sliding windows, shower screens and doors), solar and air conditioning.

[23] He wrote to the Nadi Town Council on 16 May 2006 saying that construction stopped on 5 April 2006 as directed by the Council. The Council also stopped work on their other job sites. During this time they were bringing materials onto to the job site. It took three months to get the plans approved on 3 July 2006. He was not sure when work started again after that. He wrote to the architect on 4 July 2006[3] asking for an increase in the contract price because of increased material costs during the three months delay but the architect did not approve it. Their office was flooded in the 2009 floods so they lost all their construction documents.

[24] The construction works were stopped by the council engineer at the foundation level. When JK Builders dug the foundation, the engineer inspected and found that there was not sufficient hard ground so they had to do extra steel works and concreting. The work was done as a variation to the contract sum. He was not sure of the delay caused but it was more than two weeks. JK Builders prepared the variation and submitted it; it was verbally approved and then later a certificate was issued for payment for the variation in Certificate No 10. There were ten certificates in total, fully paid up to Certificate No 8 but only $9,000 was paid towards Certificate No 9. Certificate 10 was not paid at all.

[25] Certificate No 8[4] was dated 19 January 2007. According to the certificate, the value of the construction work to that date was $382,769.42. The contract price of $597,361 was adjusted down by a variation in the works valued at $22,000 giving an adjusted total contract price of $575,361.00. That variation was adjusted in the Monetary Allowance sum. The retention amount was $19,138.47. The amount payable under that certificate including VAT was $35,494.57 which Jope Dakai paid.

[26] As for Certificate No 9[5], Jope Dakai only paid $5,000 towards it by his personal cheque, unlike the previous payments. The balance was to be paid later. Construction work continued after March 2007. Jope came and saw one of the company directors and told him that he was selling his Suva property and he assured them that JK Builders would be paid.

[27] The witness said they were not given the date for completion when they started. He could not explain why. But he later said in his evidence that they usually provide their own construction program to the architect which was usually a 12 months construction program. Delays due to variations were not put in the construction program. He said JK Builders completed the construction works. He denied that the defects claimed by Jope Dakai were not rectified and said that on the final inspection neither he nor his architect made any comment about them.

[28] The sewer line connection was completed by 16 May 2007[6]. The Fiji Electricity Authority inspected and gave approval for connection and the Certificate of Completion and Permit to occupy[7] was issued on 30 July 2007 by the Nadi Town Council. Then Certificate of Payment No 10 was issued on 19 September 2007.

[29] On 21 October 2008 Jope Dakai's then solicitors wrote to them asking for a valuer to be let into the apartments to value them for the purposes of his divorce case. By this time they had a default judgment against him.

Cross-examination of PW2 by Counsel for the Defendant


[30] When cross-examined by Mr Vuataki, counsel for the Defendant, the witness said he was not sure when the contract was signed. He only looked at the contract afterwards and filed it away. JK Builders received the tender and the plans. They were told by the architect that approval of the plans was in progress and they should start construction. But he acknowledged that there was no such notification in writing. He was not at the meeting in which they were told to start construction without approved plans. He was not at the meeting of 17 January 2006 that was requested by the architect in the letter of acceptance of 13 January 2006.

[31] He said he did not read the "middle part" of the contract; only the execution part. The contract was a lump sum contract. There were extra works for the foundation. They submitted a quotation on 5 April 2006 for extra work for the foundation up to the first floor and for the ground and first floors. Only approved extra works were paid for. He said with regards to the extra work, they had a gentleman's agreement to carry on with the works and to sort it out later. Hemant Kumar, the principal architect, was frequently in and out of the country so they often dealt directly with Jope Dakai. Their relationship with him was good at the time.

[32] As for the variation to the foundation work, he was not sure if an architect's instruction was given for this but the matter was sorted out in site meeting number 7 on 21 March 2007[8].

[33] Payment Certificate No 9[9] was dated 15 March 2007. It was for $57,784.81. A sum of $31,600 was noted as Monetary Allowance for the supply of floor tiles and sanitary fittings. As for the variations, $42,500 for the joinery subcontractor and $8,855 for the mechanical services subcontractor were added to the JK Builders' account for work done as at the date of the certificate, 15 March 2007. The witness was shown a copy of a receipt[10] from ISF, the joinery subcontractor, and he agreed that it was payment of $4,000 on 13 July 2007. He also agreed that Jope Dakai issued a cheque[11] for $20,000 to ISF dated 1 August 2007. He was also shown a copy of a receipt[12] from Mechanical Services Limited, the air conditioning subcontractor, and he agreed that it was for payment of $8,855 on 10 April 2007. He was also shown another receipt and he agreed that it was for payment to the same subcontractor of $3,795 on 30 July 2007 as the "final claim for (the) town house". The witness acknowledged that the payments due to the two subcontractors were included in Payment Certificate No 9. He also agreed that according to the certificate the joinery work was 85% complete at the time and because Jope Dakai did not pay them the amount due they did not pay the subcontractor.

[34] He agreed that in site meeting number 1[13] on 25 July 2006, the architect's representative requested JK Builders to submit the construction program and their representative promised to do that by that Friday. That construction program[14] was faxed from JK Builders to the architect on 14 August 2006. The program showed commencement of construction on the week ending on 3 July 2006 and completion on the week ending on 8 January 2007. He said those dates were "their target; it was our assumption; it was not for Maisuria Designs". They were not given any completion date; it should have been given to them. He was referred to a letter[15] from the architect dated 16 March 2007 in which it was noted that the practical completion date was 13 January 2007 and JK Builders was almost nine weeks beyond completion. The witness said that the builder asked for an extension of time but did not get a reply.

[35] His evidence was then interrupted by his counsel informing the Court that their position was that there was no completion date; they could not provide a copy of the response to the letter because their documents were lost in the flood. The witness then explained that they did not give a construction program because of the joinery delay and they were not given the joinery program. The witness on further questioning admitted that he could not recall whether there was a response to this letter.

[36] The witness was also shown a letter[16] from the architect to JK Builders dated 19 March 2007 in which the architect itemised tiling defects, interference with the joinery works and progress on the hot water system which needed urgent attention by them and requested a practical completion date to be submitted. He admitted that they had to remove some of the tiles but he said they attended to "almost all defects when told". They did not give a revised completion date because they could not get a completion date from the joinery and other subcontractor. He agreed that again on 3 April 2007[17] the architect pointed out defects which needed urgent attention and again requested confirmation of a practical completion date.

Cross-examination of PW2 by Counsel for the Architect


[37] The witness agreed that there was no document from the architect requiring the builder to commence construction. But he said they were told to build on the plans because approval was in progress. As for the defects itemised by the Defendant he said most of them were not raised with the builder. The correspondence was mainly about tiles which they rectified.

[38] He was shown a letter[18] from the architect to JK Builders dated 14 February 2007 in which the completion date of 8 January 2007 was extended in accordance with clause 23(b) of the contract to 13 January 2007 for inclement weather. He agreed that that was the first and the last extension of time. He also said that all variations ordered by the architect had been done and approved for payment; some had been paid some not; those were the ones in certificates 9 and 10.

PW3
Evidence in chief


[39] The third witness for the Plaintiff was Jitendra Kumar, the principal and director of JK Builders. His evidence was that after they signed the contract the architect and Jope Dakai told them to start. He was given the plans and told to start building. They were stopped by the Nadi Town Council when the Council found out that JK Builders were working without approved plans. He did not know at the time that the plans had not been stamped approved. JK Builders started construction in January or February 2006. When they dug up the foundation, they could not find hard ground. The engineer then told them to dig deeper until they hit hard ground. They were paid for the extra work and materials.

Cross-examination of PW3 by Counsel for the Defendant


[40] In cross-examination by counsel for the Defendant, the witness said he tendered for a lump sum contract. All variations to it had to be approved. After the agreement was signed they were told when to start. He told them that JK Builders would complete within one year. They tendered on the estimates done on the plans and they came up with the lump sum contract price of $597,361.40. He admitted that he knew that JK Builders was not supposed to start building until the plans were approved but it was normal practice to start if the architect told them to. He attended the site meetings including the one on 21 March 2007. He made arrangement with the Nadi Town Council to come and inspect the building for the completion certificate. He understood practical completion to mean that the building was complete but some defects remained to be fixed. After they fixed all the defects they checked with the architect then they went and saw the Nadi Town Council for the inspection. But he could not recall on what dates they did that. The Certificate of Completion was dated 30 July 2007. He admitted that he did not take Jope Dakai through the house on completion. But he went through the house with his foreman and Krishna from the architect who pointed out the defects; no defect list was done.

[41] In August 2009, Jope Dakai requested the keys to the apartments. Jitendra Kumar's brother went and opened the apartments with the keys that he had held since the date of practical completion. He did not know who the quantity surveyor was that inspected the apartments. He had the keys to the apartments at practical completion but did not give them to the architect when asked. He told the architect to pay the money owing first before he would give them.

[42] As for the defective tiles, he said they changed the tiles twice. The defective tiles were marked by the architect and Jope Dakai. Whatever they marked they fixed. After fixing them he and Krishna, the architect's representative, went through and checked. Then the architect issued Payment Certificate No 10.

[43] He and Krishna inspected the apartments with Jope Dakai and they told him where to install the electrical boards. They had an issue with the sewer line connection. It was under the driveway. They had a meeting and sorted this out. They agreed on a 90 degree bend. JK Builders gave a letter that they would be responsible if the line blocked. He was adamant that they fixed all the defects. The plans that they tendered and built on were exactly the same as the approved plans.

[44] After delivering certificate number 9, Jope Dakai came and told the witness that he would pay them after he sold his house in Suva. The witness took the original certificate number 10 from the architect. He said he gave Jope Dakai a copy of it. Jope Dakai asked for the keys so that he could rent out the apartments and he said no. Then Hemant Kumar asked for the keys and he also told him no. No certificate of practical completion had been issued by the architect.

Cross-examination of PW3 by Counsel for the Architect


[45] He signed the contract with Hemant Kumar and Jope Dakai. He understood it. After they signed he told them that contract duration was one year.

EVIDENCE FOR THE DEFENDANT


DW1
Evidence in chief


[46] The first witness for the Defendant was Catherine Croker Caniogo. She is a quantity surveyor. She holds a Bachelor of Quantity Surveying from Queensland University of Technology, having graduated in February 2003. She practiced in Fiji between 2003 and 2004, then in Brisbane between 2005 and 2007, then back to Fiji in 2007 where she taught at the Fiji Institute of Technology. She then became the chief quantity surveyor for Pacific Building Systems for 6 months, then as an estimator and contractor for the main builder. She submits claims to contractors for assessment.

[47] She was asked by Jope Dakai to do an assessment of his apartments. She was given the signed contract and the plans. Jope Dakai gave her access to the apartments about a year ago. She compiled a report[19]. The report covered the main and sub-contract works. The report recites that the site was inspected on 28 August 2009. The report is dated 31 August 2009. It listed the defects and incomplete works.

[48] The quantity surveyor sighted the letter that said it would be the contractor's responsibility if the sewerage is blocked. Normally, the sewerage connections would be at points that were easily accessible. Also, if the connections were at the wrong angle it could lead to blockages.

[49] She observed that the driveway and the carpark were not completed in accordance with the plans. There were also other defective and incomplete works. The report included photographs of them. According to her report $74,587.00 (VEP) [$83,910.38 (VIP)] should be deducted from the final payment certificate. The largest component of that was $34,737.00 (VEP) for variations without architect's instructions. According to her calculations, the amount owing to the builder was $49,570.14 (VIP). It excluded the outstanding variations. This costing was for deductions on defective and incomplete works as at the time the works were built, 2006-7.

[50] Payment Certificate No 10 was a "semifinal certificate". The final certificate was to be done on completion of defects. That is when the retention monies are released. Certificate number 10 was an interim payment certificate. It is a different certificate from the certificate of practical completion.

Cross-examination of DW1 by Counsel for the Plaintiff


[51] Ms Caniogo confirmed that she took the photographs herself and she had no interaction with the architect. The report is her independent assessment. She did not write to the architect to inquire about the number of architect's instructions. Jope Dakai told her that there were 7 architect's instructions. The other variations did not have instructions. She has verified them since writing her report by looking at the documents given to her later. The sum of $49,570.14 should be paid.

Cross-examination of DW1 by Counsel for the Architect


[52] The quantity surveyor confirmed that the inspection was done on 28 August 2009 and her report was dated 31 August 2009. According to her, the intended contract period was 2 years. She costed the works as at 2006. To bring that to date one would have to add to it 7 to 10 percent. The site was locked up in July 2007 according to her client. She prepared her report from certificate 10 which stated that there were seven architect's instructions. Variations that did not have instructions were identified in the certificate. According to her, the architect approved the variations without consulting the client. Inspection and assessment of defects are within the expertise of a quantity surveyor. Her understanding was that practical completion was when the builder was able to give occupancy to the owner with all defects remedied.

Re-examination


[53] Her evidence was that certificates were required from a licensed plumber, electrician and structural engineer. When these are produced, the Nadi Town Council would then issue the certificate of occupancy. Then the architect would then issue the Certificate of Practical Completion. It is advisable to have two joint inspections to sort out the defects.

DW2
Evidence in chief


[54] The Defendant, Jope Dakai, gave evidence next. He is a pilot with Air Pacific. He wanted to build four flats for rental with his wife at the time. He went and spoke to Salesh of Maisuria Design Limited, the Third Party. Salesh showed him some drawings and took him to some of the buildings which they had designed. He was happy with them.

[55] Three tenders were received. The highest was over $700,000, the second was $400,000 and the third $300,000. The architect "declared" to accept the JK Builders tender even though it was the highest. He relied on the architect's professional advice. JK Builders then agreed to reduce the contract sum. He signed the contract for the agreed price of $597,361.40. He said in their discussions, the completion date was within 12 months.

[56] He went to some of the site meetings. At the first one, he expressed concern about the delay that was taking place because he was trying to get tenants at the time.

[57] The payment certificates were done by Maisuria Designs. They would call him and he would go and discuss the works with Hemant Kumar and if he was happy he would take the certificate to Home Finance who would then issue a cheque to the builder. He paid Payment Certificates Nos 1 to 8 from Home Finance cheques. For certificate No 9, he paid ISF and Mechanical Services and a partial payment to JK Builders of $5,000 on 16 April 2007. Before certificate 9, payments were made to the builder for the subcontractors. But after that both subcontractors asked him to pay them personally because their payments were being either delayed or not made at all by JK Builders.

[58] He did not pay on certificate 9 because he had issues with the builder, mainly tiles. They changed them twice. On the third time he informed the foreman that he was still not happy with the way they had laid the tiles. The tiles were uneven and some of them were damaged. The second issue was the electricity distribution boxes. They were installed in the bedrooms. The third issue was the sewerage connection. They were all safety issues. The broken tiles could cut his tenants' feet. The electric boxes installed in the rooms were another safety issue - children could play with them and get electrocuted; could also be an issue with adults. He said at the time he did not understand what electric boxes were. He asked Krishna, the architect's representative, what they were and he said they were "switches". Krishna talked to the builder and they made drawings and sent them with a letter to the electrician to install the boxes where they are now. As for the sewerage connection, Jope Dakai said he regretted signing the letter of 16 May 2007[20] agreeing to the 90 degrees connection and making JK Builders responsible for future blockages. The original design was 45 degrees. It was a safety issue because if all the flats were occupied and all toilets were flushed at the same time it could lead to a blockage.

[59] He had made arrangements for tenants. The first two flats had tenants to rent from April 2007. The other two flats had tenants to rent from June or July 2007. They were to be fully furnished flats rented for $1,800 per month each. He had acquired furniture, fridges, television sets, washing machines and other furnishings which he had bought at his own cost. He had to give away the furniture because the property was locked and he could not get in. He had discussed the renting of the flats with Krishna.

[60] He confirmed the writing of the letter from the architect to the builder dated 16 March 2007[21] noting that it was nine weeks beyond the practical completion date (of 13 January 2007) and asking the builder to give immediate attention to outstanding works to be completed by 21 March 2007. He was not invited to a defects inspection and was never given the keys. He came to know of certificate 10 when he received the Writ of Summons and then he went to see Maisuria Designs. He got copies of the other nine certificates from Maisuria Designs.

[61] He engaged a quantity surveyor to inspect the apartments. He gave the plans to her. He was not an expert in building so he said nothing about the starting of construction. He relied on the architect. He left the decisions on the foundations with the architect and the engineer.

[62] He admitted he had problems with his former wife. They both took out the loan from Home Finance. His wife authorised him to sign for the payments. His Suva house was sold later on and he used the money to pay off the subcontractors in certificate 9.

[63] He had calculated his loss of rental[22] from the four flats from July 2007 to June 2010 to be $185,400.00. The flats remain unoccupied up to now.

Cross-examination of DW2 by Counsel for the Plaintiff


[64] Jope Dakai was adamant that the first time he saw the Certificate of Completion and Permit to occupy was in Court but he accepted that it was granted. As for the 16 May 2007 letter on the agreement with the builder about the change in the sewerage connection he said he remembers signing the letter but he did not see the approval noted on it. He did sign the application[23] for the sewerage connection but he did not consult the architect, only Krishna. As for certificate number 9, he did not pay it except for some subcontractors and $5,000 to the builder. He picked the certificate up but did not take it to Home Finance. He said approval had to be sought from Home Finance stage by stage. He made no payment at all for certificate number 10. Nor has he paid the $49,570.14 recommended by the quantity surveyor because there were still certain works not done by the builder.

[65] Counsel referred him to a letter[24] from the builder's solicitors dated 10 July 2008 in which the solicitors suggested that they prepare the rental agreements for the flats and assignment of rental to their client. He said his main concern was that the building was not complete. He did not know that the Nadi Town Council had given the certificate to occupy. He said initially he engaged a lawyer but the lawyer did not reply to the letter. He was referred to a letter from his former wife's solicitor, Ms Puamau, to the builder dated 21 October 2008 in which the solicitor said that she had been informed by Mr Dakai that he owed the builder monies for the construction of the flats. He denied that he said that to Ms Puamau. He only spoke with his lawyer. He attended at the site on 2 to 3 days a month. But he did not participate in the subcontract works. He denied telling the builder to continue work after certificate number 9. All he said to the builder was that he would pay them $5,000 and that was it. He did inform Krishna of the works not being done properly.

[66] He was told of the stop work order because he was allowed only two flats because of the foundations were not good enough for four flats. He knew that work was going on before the plans were approved. He just went along with whatever the architect decided. He was not aware of the law side of things.

Cross-examination of DW2 by Counsel for the Architect


[67] The witness agreed that he was well informed of the progress of the works. He was at some of the site meetings and was aware of the seven architect's instructions that were issued for variations. He was informed of the defects by the architect and to attend meetings. It was put to him that when the builder locked up the flats he did nothing. He said he went to the builder's office and was told that when he paid up he would get the keys. In a meeting in July 2009 with Hemant Kumar, he was advised to rent the property. But he could not get the keys from the builder so he could not rent out the flats.

Re-examination of DW2


[68] He confirmed that in the site meeting of 21 March 2007, Jiten gave assurances that the aluminium works and the solar heater system would be finished by the next week.

EVIDENCE FOR THE THIRD PARTY


TPW1
Evidence in chief


[69] The architect Hemant Kumar gave evidence. He executed the contract with Jope Dakai and JK Builders. The process started towards the end of 2005. He drew up the plans[25]. These were the ones sent for approval. The plans were in the tender set. The law allowed four apartments to be built. Because the sewerage system in Nadi could not cope with four apartments, the Public Works Department (PWD) said only two. He was able to put a case to the PWD for the owner to be able to use his land for maximum benefit. It was Late 2006 when the work started. His advice was to start work knowing that approval would come. It was the normal thing to do. The contract date is tied to the Nadi Town Council approval. The contract period was 12 months.

[70] He issued certificate number 9. It was in the usual format. Retention was 5%. He was aware Jope Dakai had some issues. He issued certificate number 10 also. He issued it because, like all others, he was of the view that the contractor had done the work. The big time gap between March and September was unusual. There were various issues for this – defects and continuous reminders to the builder. The car park was changed from concrete as per the plans to crush metal because it was more cost effective. The builder said this was a variation. Most of the time once the certificate was done they would call Jope Dakai and he would pick it from his office. He was not sure whether Jope Dakai picked up certificate number 10 from his office or not.

[71] In respect of practical completion, he said the builder would apply to the architect who would then inspect the work and verify that practical completion has been achieved - that is - the building has been completed as per the plans and variations, and power, water and sewerage are connected and the local authority has approved the building. The occupational health and safety and fire authority approvals were not required for this building at that time. Maisuria Designs were to issue the certificate of practical completion but it was not done in this case. Their relationship with Jope Dakai had soured a little. That was the only reason for not issuing the certificate. He said if he were to issue the certificate, he would have done it on the latest of the Nadi Town Council approval and the PWD approval, which, in this case, was the Nadi Town Council approval - 30 July 2007. He explained that the Council would have checked the works against the approved plans and other certificates issued by engineers and submitted to the Council.

[72] The architect's last meeting with Jope Dakai was sometime before 2009 when Jope Dakai came to him with his problems. He disagreed that he failed to direct the builder to build according to the plans within the confirmed date for possession and completion. He said they checked regularly. He agreed that there were defects but they had notified the builder. He also disagreed that they did not properly check each stage of the works before issuing the interim or completion certificates. They identified the defects and issued them to JK Builders but could not inspect because of the lock out. The lock out came to him as a surprise because it did not make business sense. He further disagreed he breached his duty of care. As for the defects, he exercised his judgment and retained money to cover them. But he also had to take into account that the builder needed to be paid. He did not want to get sued by the builder for unreasonably withholding certificates.

[73] He was referred to a series[26] of letters in January and February 2007 from his office to the builder itemising defects in the tiling, plumbing works, electrical works and others which needed urgent attention. He agreed that if a house was locked up for a long time some of the items such as towel rails could rust. As for the sewerage connection, the plumber designed it. It was not uncommon to have a ninety degree bend but one would need covers over the connection. This was to save costs. The variations in certificate number 10 were agreed. What was not agreed was the value. They are adjusted when the final certificate is issued. But no architect's instructions were issued for these. They were still holding money so if the builder did not do the work then they could get someone else to do it. He was shown the quantity surveyor's report and his comment was: "if the defects were there we would have seen them". When asked whether his office gave certificate number 10 to Jope Dakai, the architect said: "I'm surprised he did not get the certificate until this action because the system would have ensured that he got it". He had agreed on the foundation variation but not the amount. They were still trying to value it. In site meeting number 7 on 21 March 2007[27] they discussed defects inspection after practical completion and outstanding works for the aluminium windows, fixed joinery, solar heaters and shower cubical. These were the last set of defects.

[74] The architect said that he arranged his office affairs so that he could travel overseas regularly. He employed another architect and competent staff.

Cross-examination of TPW1 by Counsel for the Plaintiff


[75] The monetary allowance matters were looked after by the architect and his client. He agreed that there was a need for coordination with the subcontractors. Payments were made to the head contractor who then paid the subcontractors. He confirmed that Jope Dakai did accept his advice on subcontractors.

[76] The architect confirmed that all items of work in certificate number 10 were 100% completed. He also confirmed that the Nadi Town Council certificate[28] was issued on 30 July 2007 and the sewerage connection approval[29] was given on 18 May 2007. They agreed with the builder that the delay in the foundation works would not count because they had agreed that the contract period would not start until the Council had approved the plans (3 July 2006).

CONSIDERATION OF THE EVIDENCE AND FINDINGS OF FACT


[77] A chronology of the important events is as follows. The contract was executed on 18 January 2006. The builder took possession of the site soon afterwards and commenced work. The Nadi Town Council stopped the work proceeding in April 2006. The plans were approved on 3 July 2006 and construction began in earnest. Payment Certificate No 9 was issued on 15 March 3007. On 18 May 2007, the PWD gave approval for the sewerage connection. On 30 July 2007, the Nadi Town Council gave approval for occupation. Payment Certificate No 10 was issued on 19 September 2007. When Jope Dakai refused to pay the full amounts due on these two certificates, the builder refused to let him take possession and locked him out of the apartments.

[78] I accept the architect's evidence that the starting date for construction was the date the plans were approved by the Nadi Town Council, namely, 3 July 2006. I also accept that the contract period was 12 months from that date which would make the date for practical completion 4 July 2007. To this should be added the 5 days that were granted as an extension for inclement weather by the architect on 14 February 2007, thereby extending the practical completion date to 9 July 2007.

[79] In his letter to JK Builders dated 14 February 2007 the architect said the initial completion date of 8 January 2007 was extended in accordance with clause 23(b) of the contract to 13 January 2007 for inclement weather. The initial completion date was the date given in the builder's construction program. This contradictory evidence reinforced my observations of the architect when he gave evidence. I noted that he was very general in his answers and he gave me the impression that he did not know much about the contract works and that he had not given sufficient supervision over his staff and the builder.

[80] He also gave me the impression that he was favouring the builder. Take for instance the issue of Payment Certificate No 10. The certificate was dated 19 September 2007. In site meeting number 7 of 21 March 2007, some six months earlier, what was discussed there seemed to me to be substantial defects and outstanding works. He admitted that he could not inspect the flats because JK Builders had locked them up. The report of the quantity surveyor revealed that those defects remained unrectified and in her opinion the certificate was not a "true depiction of the works completed" at the time.

[81] I accept that evidence and find that the builder had not built the flats to a stage of completion where it could have asked the architect to issue the Certificate of Practical Completion. I therefore find that JK Builders had not completed the works by the practical completion date of 9 July 2007.

[82] The architect had not issued the Certificate of Practical Completion and none had been demanded by the builder.

[83] I find that for Certificate of Payment No 9, Jope Dakai had paid the subcontractors for the work done by them and he therefore owed no moneys to the builder for any moneys claimed in that certificate for such works. I also find that he had paid $5,000 to the builder and no further monies are owed to JK Builders.

[84] I accept the quantity surveyor's findings and assessment that the sum of $49,570.14 should be paid to the builder by Jope Dakai. This amount was arrived at, based on the information provided in Certificate of Payment No 10, by adding the contract sum ($597,361) and variations ($39,257) then deducting the cost of the works as per the certificate ($503,137.48) giving the cost to complete ($133,480.52) then further deducting the cost of defective and incomplete works as assessed by her ($83,910.38) leaving the balance of $49,570.14.

THE BUILDING CONTRACT


[85] Clause 22 of the contract provides:

"If the Contractor fails to complete the Works by the Date for Completion stated in the Appendix to these Conditions or within any extended time under clause 23 of these Conditions and the Architect certifies in writing that in his opinion the same ought reasonably so to have been completed, then the Contractor shall pay or allow to the Employer as um calculated at the rate (of $4,000 per month) as Liquidated and Ascertained Damages for the period during which the Works shall remain or have remained incomplete and the Employer may deduct such sum from any monies due or to become due to the Contractor under the Contract."


[86] Clause 30 of the contract provides:

APPLICATION OF THE CONTRACT PROVISIONS TO THE FACTS


[87] The contract did not specify a Date for Completion but as I have found above, by later agreement, that date was fixed as 4 July 2007 and later extended to 9 July 2007.

Is the owner entitled to liquidated damages?


[88] As I have explained above I do not accept the architect's assessment in Payment Certificate No 10 that the works was 100% complete. Instead I find that JK Builders had not completed the works by the Date for Practical Completion and Jope Dakai is therefore entitled to liquidated damages of $4,000 per month.

[89] His counsel submitted that Mr Dakai is entitled to more. The liquidated amount stated in the contract was meant to be an accurate assessment of what he would lose if the building was not completed by the Date for Practical Completion. It was the amount of rental that he expected from the flats; contrast Wadman v Kamea [2001] FJHC 179; HBC307.2000S (19 April 2001). He should be held to that amount. I am therefore not persuaded that he should be entitled to any more than that.

[90] Also as a consequence of non-completion and non-rectification of the defects, the builder is not entitled to any retention moneys.

Can the builder lock out the owner for non-payment of the contract sum?


[91] In this case the works were not completed and the builder had locked out the owner preventing him from taking possession and mitigating his loss. It also prevented the architect from carrying out a final inspection to enable him to issue the Certificate of Practical Completion, had he seen it fit to do so. It raises the question: Was the builder entitled under the contract or at common law to lock out the owner for non-payment of the balance contract sum in circumstances where the builder claims to have completed the works?

[92] I was not able to find, nor were Counsel able to point to any provision in the contract which gave the builder such a right. Counsels for the builder and the architect referred me to clause 16 of the contract but that clause dealt with a different situation. The clause did not give the builder such a right.

[93] Mr Mishra also argued that to allow the owner possession of the apartments would in effect to allow the owner to take advantage of his own wrong of not paying on the last two certificates. He cited New Zealand Shipping Company Limited v Societe Des Ateliers Et Chantiers De France [1919] AC 1, 6 per Lord Finlay LC as authority for his submission. The law is no doubt correct but I think it does not apply to this case. Firstly, it assumes that the builder was not at fault which I have found to the contrary. Indeed, the principle is equally applicable to his client. Secondly, it assumes that the owner must pay on the certificates regardless. In other words, that the certificates are conclusive evidence that the work had in fact been done but that is not what the contract provides and is not as I have found as fact.

[94] Counsel further submitted that I should not imply a term into the contract to the effect that the builder was obliged to hand over the keys without being paid. I agree with counsel but that does not take his case any further. The question that he should be asking is whether the contract or the common law gave his client the right to retain possession when his client has, as it claims, completed the works and performed all that it needed to do under the contract.

[95] Clearly, the builder's rights under the contract are personal and not proprietary. The contract did not give him a lien over the buildings or the land. If my analysis is correct then it would follow that the builder's right to payment is personal only. Such a right cannot defeat the proprietary rights of the owner for possession, occupation and enjoyment of his buildings and land.

[96] Such an analysis, with respect, is supported by the case submitted by Mr Vuataki of H G & R Nominees Pty Ltd v Caulson Pty Ltd [2000] VSC 126 (28 March 2000) which is directly on point:
  1. This proceeding raises squarely for consideration, therefore, the question whether a building contractor has a lien over land in respect of materials he has used in the construction of a building on the land or for work he has done in connection with the construction of the building.
  2. In the third edition of Halsbury's Laws of England, Vol.3 at Para.1002, the authors say:

"When the property in the materials has passed to the employer by reason of their having been affixed to the freehold, the contractor has no lien on them, or on the works constructed with them, unless he has expressly contracted with the employer that he shall have such a lien."

A footnote to the sentence reads:


"The law on this point is so clear that it never seems to have been necessary formally to declare it in any judgment in England. In Upper Canada, however, Macaulay, J. stated the law as follows: 'Although a right of lien frequently attaches to goods or chattels sold or made until the price be paid, yet no such lien attaches upon houses erected under building contracts, unless expressly sanctioned by the terms of such agreement, when it forms a species of mortgage, including an interest in the estate' (Johnson v. Crew (1836), 5 O.S.200, at p.204)."


  1. In Volume 4(2) of the fourth edition the authors say, at Para.382:

"Once materials are fixed as part of the permanent works, the maxim quiquid plantatur solo, solo cedit applies and the property in fixed materials passes to the owner of the land. A contractor has no lien on fixed materials and can only sue the employer for sums due under the contract. A contractor has no right to materials which although once fixed are subsequently severed."


The English translation of the Latin is "Whatever is fixed to the soil belongs to the soil."


[97] In the circumstances therefore, JK Builders should pay liquidated damages for the whole of the period that it prevented Jope Dakai from taking possession. That period, in my opinion, commenced from 9 July 2007 and ends on the date of this judgment, 4 May 2011, which is approximately 46 months. The amount of liquidated damages is therefore 46 x $4,000 = $184,000.

[98] From this amount must be deducted the amount of $49,570.14 found by the quantity surveyor to be due to the builder, leaving the balance sum of $134,429.86 which the Plaintiff, JK Builders, is to pay to the Defendant, Jope Dakai.

INTEREST


[99] The Defendant claims interest in its counter-claim. No basis for claiming interest has been given. Further, it seems to me that liquidated damages would, or should, have a component of interest in them so I will therefore not award interest on damages.

THE DEFENDANT'S CLAIM AGAINST THE ARCHITECT


[100] Having come to the conclusion that the Defendant is not liable to the Plaintiff, it is therefore not necessary for me to consider the Defendant's claim for indemnity from the Third Party architect.

COSTS


[101] The Defendant is entitled to his costs against the Plaintiff which I summarily assess at $5,000. I make no order as to costs for the Third Party because it seems to me that the architect could have taken a more pro active role in having this matter resolved earlier.

THE ORDERS


[102] The orders are therefore as follows:
  1. The Plaintiff's claim against the Defendant is dismissed.
  2. Judgment is entered for the Defendant for his counter-claim against the Plaintiff in the sum of $134,429.86.
  3. The Plaintiff shall deliver the keys and possession of the buildings and land described in CT 34931 at Goundar Road in Nadi to the Defendant forthwith.
  4. The Plaintiff shall pay the Defendant's costs of $5,000 within 28 days.

............................................................
Sosefo Inoke
Judge

[1] Tendered as Exhibit 1
[2] ABD No 2
[3] ABD No 17
[4] ABD No 30
[5] ABD2 No 17
[6] ABD No 4
[7] ABD No 3
[8] ABD No 32
[9] ABD2 No 17
[10] Exhibit D5 (DD No 29)
[11] Exhibit D6 (DD No 30)
[12] Exhibit D7 (DD No 31)
[13] ABD No 18, item 1
[14] Exhibit D2 (DD No 11)
[15] Exhibit D9 (DD No 22)
[16] DD No 23
[17] DD No 24
[18] Exhibit D1 (TPD)
[19] Exhibit D3 (DD No 35).
[20] Exhibit D8 (DD No 28)
[21] Exhibit D9 (DD No 22)
[22] Exhibit D12 (DD No 36)
[23] ABD No 5
[24] ABD No 8
[25] Exhibit D11
[26] Exhibits TP15-18
[27] Exhibit TP8 (ABD No 32)
[28] ABD No 3
[29] ABD No 5

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