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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
Civil Action No: HBC 222 of 2005L
BETWEEN:
BA TOWN COUNCIL
Plaintiff
AND:
GHIM LI FASHION (FIJI) LIMITED
Defendant
JUDGMENT AFTER TRIAL
Judgment of: Inoke J.
Counsel Appearing: Messrs A Sudhakar and A K Narayan (Plaintiff)
Messrs G Radburn, I Fa and S Fa (Defendant)
Solicitors: A K Lawyers (Plaintiff)
Fa & Co (Defendant)
Dates of Hearing: 30, 31 August and 1 September 2011; written submissions on 29 September, 17 and 28 October 2011.
Date of Judgment: 17 November 2011
INTRODUCTION
[1] The plaintiff, Ba Town Council, claims that it built a garment factory specifically for the defendant at the defendant's request but after completing it, the defendant refused to occupy and rent it. This is the Council's claim against the defendant for damages for breach of contract.
[2] This is the Court's judgment after a three day trial.
CASE HISTORY
[3] The Writ of Summons and Statement of Claim was filed on 12 August 2005. That was immediately followed by an ex-parte application by the plaintiff for interim injunctions and other orders in the form of Mareva injunctions restraining the defendant from dealing with and disposing certain lands and properties owned by it. The orders were granted by Connors J on the same date based on what appears to be representations by the plaintiff that the defendant was closing down its business in Fiji. The Defence was filed on 25 August 2005. On 12 October 2005, the defendant filed an application to set aside the ex-parte orders of 12 August 2005. The application was called on 6 more occasions until it came for inter-partes hearing on 21 November 2005. Connors J delivered his judgment on 2 December 2005 in which he dismissed the defendant's application and continued the ex-parte orders he granted on 12 August 2005
[4] The Summons for directions was issued on 20 July 2006 and by consent the directions orders were granted on 23 August 2006. The action then lay dormant until 30 March 2007 when counsel for the defendant made an urgent application to Phillips J for dissolution of the Mareva injunctions of 12 August 2005. The injunctions were stopping the defendant from selling three of its properties. On 5 April 2007, Phillips J heard the application and ordered the injunctions restraining the sale of the properties be dissolved subject to the defendant paying into Court within 24 hours of settlement $260,000. On 22 August 2007, on the defendant's application, leave was granted by Phillips J for the defendant to deposit $260,000 into Court. The matter was then transferred to Master Udit. Again the matter went dormant and on 15 December 2008 an O 25 r 9 HCR notice was sent to the parties' solicitors to show cause why the matter should not be struck out for want of prosecution. Counsel first appeared before the Master on 11 February 2008 then adjourned to 11 February 2008. The next entry in the Court file is a further mention before Master Tuilevuka on 14 September 2009. The matter was then called nine further times before the Master and Fernando J for the parties to comply with the directions orders. The defendant then filed an application on 5 August 2010 for specific discovery by the plaintiff and on 20 September 2010 Fernando J sent the matter back to the Master. Two further appearances followed in 2011 until the matter came before me on 29 March 2011 and I adjourned it on two more occasions to allow the plaintiff's solicitors to apply to withdraw. On 2 May 2011, the solicitors filed their application. Two days later the solicitors for the defendant filed an application to strike out the plaintiff's claim or want of prosecution. Both applications came before on 6 May 2011. The solicitor for the plaintiff informed me that he had no instructions from the Council. I did not accept his information and directed that he have the Council administrator present in Court on the next occasion. He then appeared on the next day and informed me that he now has instructions from the Council and I struck out his application to withdraw. I then set down the defendant's application to strike out for hearing on 3 June 2011. On 3 June 2011, I informed counsel that instead of proceeding with this interlocutory application which progressed the matter no further, I was prepared to give a priority hearing date for the substantive matter this year should counsel want it. I set the matter, tentatively, for hearing on 30, 31 August and 1 September 2011 and adjourned the application to 5 August 2011 for mention and review of the preparations for trial with liberty to apply for further directions. On 5 August 2011, the parties still had discovery issues so I gave them ten more days to sort out their issues and ordered that the trial proceed regardless. The hearing proceeded on 30, 31 August and 1 September 2011. At the end of the hearing the parties were given time to file written submissions simultaneously within 28 days with replies 14 days thereafter. The defendant filed its submissions within time but the plaintiff did not and despite objection by counsel I allowed them to file late which they did do on 17 October 2011. The defendant filed its submissions in reply on 28 October 2011.
THE STATEMENT OF CLAIM
[5] The plaintiff's statement of claim states that the plaintiff and the defendant made an agreement, which was partly oral and partly in writing, between 28 February 2003 and 21 January 2004 in which the plaintiff agreed to construct a building on its land, part of which building was constructed to the specific requirements of the defendant. That part of the building was to be leased to the defendant for a term of 3 years from completion of the building with an option to renew for a further 3 years. The rent was to be $17,500 per month.
[6] After completion of the building on 31 August 2004 at an additional cost of $450,000 due to variations to accommodate the defendant's specific requirements, the defendant refused to rent the building. The plaintiff claims that the defendant was in breach of their agreement. The plaintiff advertised in the newspapers and secured another tenant from 1 May 2005. The plaintiff claims from the defendant the lost rent between 31 August 2004 and 30 April 2005 (8 months) at $17,500 a month totalling $140,000, the additional construct costs of $450,000 and advertising costs of $78.57 as special damages totalling $590,078.57. The plaintiff also claims general damages, interest and costs.
THE DEFENCE
[7] The defendant denies that there was an agreement. The defendant further says that it did not instruct the plaintiff to renovate any building for its specific purchases. It denies the claim.
THE ADMITTED FACTS
[8] The agreed facts from the Pre-trial Conference minutes were that the plaintiff is a body corporate established under the Local Government Act; the defendant is an incorporated company registered in Fiji; and the plaintiff is the registered proprietor of the land on which the building was constructed.
THE AGREED BUNDLE OF DOCUMENTS
[9] The parties filed an agreed bundle of common documents ("ABD") numbering 95 and containing probably 500 pages or more. There was also a bundle of building and construction plans tendered as exhibits.
[10] As usual, these documents were tendered under the hearsay provisions of the Civil Evidence Act 2002 and were subject to the parties' right to challenge their authenticity and to the Judge's discretion as to what weight he was to attach to their contents.
THE EVIDENCE AT THE HEARING
[11] At the beginning of the trial on 30 August 2011, counsel for the defendant objected to counsel for the plaintiff, Mr Sudhakar, appearing because he is a member of the firm which the plaintiff had appointed to look after its interests in this matter and there was potential for conflict. On Mr Sudhakar's assurance that neither he nor his junior were involved in the negotiations and that there was not likely to be any conflict, counsel for the defendant did not pursue his objection any further.
[12] In "tit for tat" fashion, Mr Sudhakar took issue with Mr Isireli Fa appearing in this hearing because Mr Fa's name had appeared as a director of the defendant company in one of the company's returns filed at the Company's office. Mr Fa had appeared on numerous occasions in the past in this Court without objection and he was not giving evidence in this hearing. I dismissed the objection.
[13] In hindsight, these two skirmishes set the scene for the hearing that was to follow.
The evidence for the plaintiff
[14] The Mayor of Ba Town at the time, Mr Praveen Bala, was the only witness for the plaintiff. After finishing his education he worked in Ba for Vinod Patel for 22 years and became branch manager. He was first elected as a Ba Town Councilor in 1993 and became Mayor in 1997 to January 2009 when the Council was dissolved. He is now the special administrator of Lautoka City from August 2010.
[15] The Ba Town Council resolved to have commercial development carried out in the market and bus stand areas in Ba because the Council was finding it difficult to just rely on rates as its source of income. The Council wanted retail outlets in the area and engaged an architect to do the concept plans. The concept plans had three buildings, A, B and C but only buildings B and C were built; building A was deleted because the Director of Town and Country Planning did not approve it being built in the area.
[16] He said he visited Ghim Li to tell them about the development that was to take place in Ba. He said Mr Nick of the defendant company told him in the meeting that the company wanted to set up a factory in Ba and expand its operation in Fiji. The plaintiff company wrote[1] to him on 28 February 2003 in these terms[2]:
Thank you for your kind visit to my office dated 26 February, to show me the Market Complex drawing ... As I suggested to you, setting up a factory in the same place could bring more prosperity to the town and the people ...
... Ghim Li has its extension plan this year in Fiji. We are seeking a suitable factory building in Ba Town area due to its big population as you are aware that garment factory is a labour intensive industry which needs manpower mainly. You are suggesting to build garment factory in that place (which) can provide more than 1,500 employment opportunities to your citizens, which means more than 1,500 families can benefit ... I would like to provide the following information (to assist you in) your final decision.
I hope the above is to your satisfaction and should you have any further queries, please do not hesitate to contact the undersigned at your convenience.
Looking forward to receiving your response.
Yours faithfully
Nick Zeng
Assistant to Country Director/General Manager
[17] He wrote to the defendant on 6 January 2004[3] informing the company that the Council was intending to offer the company to setup a garment factory in Ba and that the size of the building that would be ready by April 2004 would be 78 metres by 27 metres. The rental was to be $12,000 per month.
[18] This building, he said, was building "C". He said this offer was accepted by the defendant. There was a site meeting near the municipal market during construction between him, Simon Tay of the defendant and the building contractor's representative. He said Mr Tay was happy with the construction works but said the building was too small. So on 20 January 2004, he wrote[4] to Mr Simon as follows:
This is in reference to our conversation today, January 2004. I am happy to inform you that we will offer you a building, size 120 mts x 27 mts and the rental shall be $17,500 per month.
I will appreciate if you can reply (to) me before 3.00 pm tomorrow, 21/1/04.
In the meantime enjoy your trip.
[19] He said the Council wanted commitment from the defendant. The defendant replied by letter[5] dated 21 January 2004 as follows:
We refer to your letter dated 20 January 2004.
We are glad to accept your proposal to lease the building of the size 120mts x 27mts and the rental shall be $17,500.00 (VIP)
Looking forward to your kind consideration.
Yours faithfully
GHIM LI FASHION (FIJI) LTD
Sgd Simon Tay
Country Director/General Manager
[20] He said the size of the building was increased because of the defendant's requirements. He was referred to the approved plan dated 3 February 2004 which showed it as 78 metres x 27 metres. He said the date of the plan for the Council was 9 December 2003. He was referred to the plan[6] of the same building approved on 15 June 2004 which showed its length as 120 metres. But he said the building was already under construction. He said he would talk to the Council, the Council agreed then he wrote to Mr Tay and told him that the building would be extended. The building that was actually built was 120 metres x 27 metres.
[21] He was referred to a letter[7] from Ghim Li Apparel (Fiji) Ltd dated 5 February 2004 which referred to a meeting between him and the company representatives on the previous day at the new factory site in Ba. The letter sets out other building requirements such as 14 roller shutter doors, how high the windows were to be constructed, adequate ventilation, 4 extra toilets and adequate access to the back of the building for 40-foot containers. The letter concluded:
We would appreciate it very much if you could provide us with an updated copy of the layout plan as soon as possible so that we can proceed early with the planning and design of our factory facilities. I would like to suggest that we convene another meeting next week when Simon is back to further discuss details that might be (needed by) both sides.
[Signed Yong Yin Fui
Operations Manager]
[22] The building was completed towards the end of August 2004. The only things left were the location of the offices and toilets. This was to be done by the defendant company. The Council was to provide the "shell" open building space and the company was to do the fixtures such as the boilers. He informed Mr Nick and Mr Simon Tay in the first or second week of September 2004 by phone that the building was ready for occupation.
[23] Attempts by counsel for the Council to elicit evidence from the Mayor as to the value of the extra construction costs to meet the defendant's requirements were met by objection by counsel for the defendant on the grounds that no particulars were pleaded in the statement of claim. I upheld the objection. In any event, it seems to me that the extra costs would have been subsumed in the increased rent and there was no legal basis for such a claim. Similarly, claims for the extra costs of rezoning and other additional expenses have no legal bases and must fail.
[24] In cross examination, the former Mayor agreed that as at 6.00pm on 21 January 2004, when he raised at the Council meeting[8] the issue of renting part of the buildings to garment manufacturer, the Council did not have permission to build it because the land was then zoned as "commercial". The minutes of the meeting, with which he agreed as accurate, stated:
... [His Worship] informed the Councilors that approaches have been made by some garment manufacturers for setting up a factory in Ba. He said that because of the uncertainty in the sugar industry, a garment factory would give a lot of people employment. He informed the Councilors that even though the rental may not be as much as for a Supermarket, the overall revenue will give relief to may people and as well as the Council.
He said once approved, the Contractor will be asked to make changes to the building so that the required size of the building is constructed with the agreed amount with some other alterations like extra toilets, change rooms and other associated buildings.
He then asked the Councilors to discuss and make a decision on whether the buildings should be given for a garment factory.
After some discussions, Cr James Benjamin moved that mandate be given to His Worship to discuss with the interested companies and confirm their tenancy, seconded by Cr Khalid Ali.
The full Council unanimously agreed.
[25] He was shown a letter[9] dated 16 March 2004, in which the acting town clerk wrote to the Director of Town and Country Planning informing him of the Council's intention to change the use of the land from 'Shopping complex' to 'Garment factory' for building C. The letter as said that the land was zoned 'Civic' so the garment factory was not permissible as it needed approval of the Director and requested relaxation of the Town planning scheme and approval for a temporary period of 5 years. He agreed that consent was required for the garment factory. The Director responded on 6 April 2004[10] and required the Council to advertise in the papers and the government gazette to allow residents to object to the changes.
[26] He was shown a copy of an advertisement[11] in April 2004 in the Fiji times which read:
This is to (inform) the Public that effective from 1st April 2004, GHIM LI FASHION (FIJI) LTD has ceased its operations in Fiji. This has come about as a result of the expiry of its Tax Free Factory License. All outstanding transactions of Ghim Li Fashions (Fiji) Limited is no being handled by Ghim Li Apparel (Fiji) Limited. All enquiries and matters relating to Ghim Li Fashion (Fiji) Ltd are to be referred to:
Mr Simon Tay
Ghim Li Apparel (Fiji) Ltd
Lautoka
[27] He said he did not see the advertisement. He only came to know of it in 2005 the Council sued the company.
[28] He also said that there was a rental agreement with the company in August 2004. He said he got it from the Council. It was only a draft document prepared by the accountant, Jesuman Khan. But he could not explain why he did not have a copy or why the Council did not produce one for this case. He was referred to his affidavit filed in this case on 12 August 2005, with which he agreed, that paragraph 6 referred to such an agreement, and also said:
THAT after the agreement had been reached I did try to have all the terms noted on a further written agreement a draft of which I gave to the defendant's employee, Mr Simon Tay. I also tried to seek some variations of the original agreement but the defendant did not agree so the agreement previously reached remained as evidenced by (the Council's letter of 20 January 2004 and the defendant's letter of 21 January 2004). The term of three years with a right of renewal was agreed between Mr Tay of the defendant and myself on behalf of the plaintiff.
[29] He said he was dealing with both companies Ghim Li Fashions (Fiji) Ltd and Ghim Li Apparel (Fiji) Ltd. It was pointed out to him that the letter of 21 January 2004 was on the letter head of Ghim Li Apparel (Fiji) Ltd. But he insisted that Ghim Li Fashions (Fiji) Ltd was to be the lessee of the building. He knew that by July 2005 Ghim Li Fashions (Fiji) Ltd was no longer operating. He could not recall when the certificate of completion was given for building C.
[30] In re-examination he said because of the urgency and the size of the development, the building was built before approvals were given which were later regularised.
The evidence for the defendant
[31] Mr Tay Jin Yong gave evidence for the defendant. He was also known as Simon Tay. He was employed by Ghim Li Fashions in 1999 as the company manager. He became the country director and general manager of Ghim Li Apparel in 2003. Ghim Li Fashions' thirteen year tax exemption had expired in 2004 so he advised them to set up Ghim Li Apparel to take over the operation of Ghim Li Fashions from 2004. Ghim Li Apparel obtained its licence to manufacture clothing from 1 April 2004.
[32] In 2003, the company wanted to open a factory in Ba. They went to the Ba Town Council to enquire about it and met up with Mr Bala. He showed them around and showed them several buildings but they were not ideal. Later on Mr Bala took them to his office and showed them the proposed shopping complex plan. He said if they were interested he could convert it to a factory. Mr Tay said he asked Mr Bala for a copy of the plan to study it and a few days later Mr Bala came to their office in Lautoka and showed him the plan. He said it was a plan for a shopping complex. Mr Bala told him to study and he would do something about it. That was the end of their conversation. He then had a letter sent to the Ba Town Council. That was the letter[12] written by Nick Zheng dated 28 February 2003 from the defendant company. Nick Zheng was his assistant. The purpose of the letter was to let Mr Bala know of the requirements for the garment factory. After the letter was written he did not hear any more from Mr Bala. He visited Mr Bala in Ba to follow up but Mr Bala was not around. He opened another factory outside of Ba in April 2003 after he did not hear from Mr Bala because of the urgency of the situation and the company (Ghim Li Apparel) operated from there in 2003. The company employed 500 workers most of whom were brought to the factory by the company bus from the Ba Town bus stand. The factory operated from 2003 and ceased operations in November 2004. The lease commenced on 15 May 2003 for three years. Towards the end of 2003 they wanted to move closer to Ba Town because they had lots of issues with floods and absenteeism of workers because of floods and most of the workers were from the town. He made enquiries towards the end of 2003 and in early 2004. He was shown the same plan that he had been shown by Mr Bala in early 2003 and was again told that if the company was interested Mr Bala would convert the building from a shopping complex to a garment factory. He asked if Mr Bala could do something in early 2004. So Mr Bala wrote to him on 6 January 2004[13] informing of the Council's intention to offer the company a garment factory 78 metres x 27 metres that would be ready by April 2004. Mr Tay said he received the letter and told Mr Bala that he needed a bigger building. Mr Bala asked what other requirements he wanted so he wrote back with the other requirements but never heard any more from Mr Bala.
[33] He was away in Singapore on 20 January 2004 when Mr Bala wrote to the company. Mr Bala called him up and said the Council was willing to sign up but needed a letter from him so he said to Don, his financial controller, to accept the offer subject to building specifications. That was the letter written on 5 February 2004 to Mr Bala by Yong Yin Fui. On his return from Singapore he asked his colleagues about the plans and meetings but they said they had not heard from Mr Bala. No meetings took place after that letter. He went and saw Mr Bala about this and Mr Bala told him that he could not do anything because the plans had already been approved by the Council and any changes had to wait until the building was completed then new plans would be submitted for the changes. Mr Tay said he told Mr Bala that if he was not able to make the changes to the building there was no point him leasing the factory. Mr Bala said there were a few people interested in leasing the building so they shook hands and he walked away and had nothing to do with Mr Bala after that. The company continued to operate from its factory outside of Ba Town until November 2004. He did not receive any lease document or notice to take up a lease from Mr Bala in August 2004. If a lease was taken up it would have been taken up by Ghim Li Apparel and not Ghim Li Fashions.
[34] In cross examination, Mr Tay confirmed that after March 2004 he never received a letter from or spoke to Mr Bala. He left the company in November 2004. Nick Zheng could not have had dealings with Mr Bala because all the discussions were with or through him, Mr Tay. He denies reaching or receiving any agreement to lease. When asked about the letter from the company dated 21 January 2004, he said he could not explain why Don who sent the letter had not put in it that the acceptance was subject to building specifications being agreed as instructed. The plan which they requested with their requirements was never given to them; only a plan of the building was given to them to keep.
[35] In re-examination he confirmed that the three year term of the proposed lease was never discussed. The factory that they wanted relocated was the one outside of the town. He did not write after March 2004 because after he spoke to Mr Bala about their requirements Mr Bala told him that they could not be met and they did not receive anything more from the Council even after the notice in the newspaper of 1 April 2004.
ANALYSIS OF THE EVIDENCE AND FINDINGS OF FACT
[36] I found Mr Bala a rather evasive and unreliable witness. I think in his haste to "seal" a deal with the defendant he took a few risks and cut a few corners. This action was taken, in my view, to make good those risks. For example, when he wrote the so called letter of offer dated 20 January 2004, assuming that it could constitute an offer, he did not have the authority to do it. He pushed the company to respond to it by 3.00pm on the next day because the Councilors were meeting to approve his proposal at 6.00pm later that day. He needed the written "acceptance" to sure up his proposal to the meeting. But de did not inform the meeting that the company had already "agreed" to lease. That in itself is evidence that there was no agreement to lease as at 21 January 2004.
[37] On the other hand, I find Mr Tay answered the questions put to him confidently and without hesitation. Apart from his demeanour I find his story more plausible than Mr Bala's. I accept his evidence that the letter of "acceptance" of 21 January 2004 was to be subject to agreed building specifications. Even if it was not, the Council had not proven that the requirements were in fact built. I also accept his evidence that the three year term was not discussed in their meetings. It was something not agreed. It was neither referred to in both letters nor recorded in the minutes of the Council's meetings. Mr Bala appears to be running his own show only going back to the Council to get endorsement when he needed it.
[38] It seems to me quite clear that Mr Bala's letter to Mr Tay dated 20 January 2004 could not constitute an offer capable of acceptance giving rise to an enforceable agreement. It did not contain the term of the lease and other fundamental terms such as those with regards to the specific requirements of the defendant for a garment factory. The subsequent letter from the company on 5 February 2004 setting out some specific requirements clearly showed the further negotiations that had to take place before agreement could be reached. Nor further negotiations took place and no further plans were submitted by the Council.
[39] I also prefer Mr Tay's version of the negotiations than that of Mr Bala's that after Mr Tay returned from Singapore, he saw Mr Bala who told him that the building could not be converted until after completion and that there were other tenants interested in renting the premises as constructed.
[40] I therefore find that as a matter of fact, there was no offer capable of acceptance being made by the Ba Town Council. The parties were still negotiating. The negotiations did not progress to completion because the building could not be converted from a shopping complex to a garment factory in time for the defendant to lease it. The Council failed to prove that the building was built specifically for the defendant. Even if it did, the defendant did not agree for it to be built. The Council had it built at its own risk.
LIABILITY
[41] I find the defendant not liable for the following reasons. There was no offer capable of acceptance. There was no acceptance. There was no agreement capable of being enforced. There was no contract. The plaintiff therefore has no claim against the defendant. The claim is dismissed.
[42] There is no proper basis to hold the sum paid into Court so it should be released forthwith to the defendant.
COSTS
[43] The plaintiff is entitled to its costs. I think this was a speculative case. It should not have been brought. I summarily set costs at $5,000.
ORDERS
[44] I therefore make the following orders:
- (a) The plaintiff's claim is dismissed.
- (b) All monies paid into Court shall be released to the defendant forthwith.
- (c) The plaintiff shall pay the defendant's costs of this action of $5,000 within 21 days.
Sosefo Inoke
Judge
[1] ABD 13
[2] Grammatical errors have been corrected, in brackets.
[3] ABD 38
[4] ABD 39
[5] ABD 40
[6] ABD 57(a) plan
[7] ABD 44
[8] ABD 41 Minutes of special Council meeting
[9] ABD 45
[10] ABD 49
[11] ABD 48
[12] ABD 13
[13] ABD 38
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