Engineer Procure Construct (Fiji) Ltd v Sigatoka Electric Ltd [2012] FJHC 878; Civil Action 150.2011 (20 February 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. 150 of 2011

BETWEEN:

ENGINEER PROCURE CONSTRUCT (FIJI) LTD a limited liability company having its registered office at 5 Nagaga Street, Lautoka, in Fiji.
Plaintiff

AND:

SIGATOKA ELECTRIC LIMITED a limited liability company having its registered office at Valey Road, C/o P.O. Box 113, Sigatoka, Fiji.
Defendant

Before: Anare Tuilevuka.
Solicitors: R. Patel Lawyers for the Plaintiff
Pillai Naidu & Associates for the Defendant

Date of Ruling: Tuesday 20 February 2012

RULING

INTRODUCTION

[1]. I am being asked to determine whether or not the third party proceedings against Matapo Limited is sustainable under the Momi Bay Development Decree 2010. My authority to deal with this matter derives from a directive dated 06 October 2010 by the Honorable Chief Justice to all Judicial Officers on Procedure for Referring Civil Matters to Chief Registrar[1].

MOMI BAY DEVELOPMENT PROJECT

[2]. Matapo Limited was the owner and developer of the Momi Bay Integrated Resort Development Project (“project”). It began construction work around June 2004. But the project however was halted around December 2006 because Matapo had run into financial difficulties. The extent to which Matapo was crippled by its financial crisis soon manifested in its inability to pay the ever mounting interest on its mortgage debt to Fiji National Provident Fund and to the Fiji Development Bank [2].

[3]. Between September 2006 to January 2009, Matapo Limited tried to convince FNPF and FDB to restructure and to increase the loan facility by an additional grant of some $33 million to enable it to complete stage 1 of the project. FNPF and FDB however refused and eventually sent demand notices in early 2009.

[4]. The FNPF eventually did exercise its right of foreclosure over the property.

THE MOMI BAY DEVELOPMENT DECREE

[5]. The Decree (Decree No. 28 of 2010) was promulgated soon after the FNPF took over the Momi Bay Project.

[6]. The aim of the Decree is to set up a scheme to protect FNPF and FDB and to help them realise their securities to the maximum.

[7]. The Decree protects FNPF and FDB by guaranteeing that FNPF has a smooth and uninterrupted acquisition of the property [3] – which is essential if they are to recover the public funds they had invested on the project.

[8]. Section 9 is very much at the heart of the protective scheme of the Momi Bay Development Decree. What this section does is to grant immunity to FNPF and FDB from any civil claim which relates either to any aspect of their involvement in the Momi Bay Integrated Development Project or to their foreclosure on the land.

[9]. Below I reproduce the relevant provisions of section 9.

Immunity from proceedings

9.— (1) No person shall be entitled to bring any proceeding of any nature whatsoever in any court, tribunal or commission or before any other body exercising a judicial function which, whether directly or indirectly, seeks to make any claim or seeks any relief including compensation, damages, indemnity or contribution against FNPF or the Fiji Development Bank or purports to claim any relief by way of a counterclaim or joinder as a party to any proceeding for anything done or omitted to be done by virtue of any duty or obligation imposed, (whether contractual or otherwise) under the common law, equity, any statutory or other written law, agreement, deed, mortgage, debenture or other document or instrument on FNPF or the Fiji Development Bank in relation to their involvement and actions taken as a financier or mortgagee in the Momi Bay Integrated Resort Development.

(2) Any action which is presently pending before any court, tribunal or commission or before any other body exercising a judicial function, shall immediately terminate upon the commencement of this Decree including any pending appeals and all orders or judgments granted prior to that date shall be vacated save in so far as any decision or judgment, whether directly or indirectly, which had upheld the validity of any securities or rights of FNPF and Fiji Development Bank as mortgagee or lenders under the lending facility agreement with the Developer, and a certificate to that effect shall be issued by the Chief Registrar, tribunal, commission or any other person or body exercising a judicial function, and the provisions of subsections (4) and (5) of section 8 shall apply mutatis mutandi.

THE THIRD PARTY PROCEEDINGS

[10]. Sigatoka Electric Limited (“SEL”), the defendant, was the contractor engaged by the consulting engineers and project manager to install electrical high voltage as well as low voltage infrastructure at the Momi Bay site. SEL then entered into an “arrangement” with the plaintiff, Engineer Procure Construct (Fiji) Limited (“EPCFL”) for the installation of in-ground High Voltage Cable.

[11]. The ongoing issue between SEL and EPCFL is: what exactly was their “arrangement”?

[12]. EPCFL is suing SEL for the sum of $898,069.82 plus interest of $717,566.577 from 01 January 2007 to 20 September 2011 and daily interest of $557.12 from 21 September 2011. Its claim is premised on the argument that it was sub-contracted by SEL to install in-ground high-voltage cable.

[13]. On the other hand, SEL’s statement of defence is built on the theory that EPCFL’s and SEL’s relationship was founded on a joint-venture partnership. Therefore, whatever materials and/or services that the former provided in the Momi Bay Project, was to the developer, Matapo Limited. On that footing, SEL has instituted third party proceedings against Matapo Limited.

DOES THE DECREE PROHIBIT THE THIRD PARTY PROCEEDINGS AGAINST MATAPO?

[14]. Section 9(1) of the Decree in its relevant part only grants immunity to FNPF and FDB from any proceeding “whether directly or indirectly, [which] seeks to make any claim or seeks any relief ..... or purports to claim any relief by way of a counter-claim or joinder as party to any proceeding....”.

[15]. It does not grant any immunity to Matapo Limited.

CONCLUSION

[16]. The third-party proceedings against Matapo Limited is not prohibited under section 9 of the Momi Bay Development Decree 2010. Matapo Limited however is not entitled to institute 4th party proceedings against FNPF or the FDB under section 9 of the Decree.

Anare Tuilevuka
Master

At Lautoka.
21 February 2012.

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^[1] The said directive states as follows:

When the question of whether a case falls within a category where the Chief Registrar may consider termination under one or other Decree, it may be wise to follow the following procedure:

1. If the parties to the litigation agree that the case does come within the relevant Decree, the judge can make the necessary order to refer it to the Chief Registrar for her consideration.

2. If the parties do not so agree, the judge should ask for submissions and have the issue argued, then rule. This way, the litigants have the opportunity of a hearing to argue that it does not come within the respective Decree.
^[2] In about November 2005 the parties entered into a Syndicated Loan Facility Agreement (the loan facility) whereby the Plaintiff secured funding in the sum of $56m from the First Defendant and $18m from the Second Defendant.
^[3] The two lenders had appointed FNPF to act as their agent in respect of all matters pertaining to the loan facility agreement.