Sonalisali Island Resort Ltd v Fortune 8 Ltd [2017] FJHC 275; Civil Action 46.2013 (13 April 2017)

IN THE HIGH COURT OF FIJI AT LAUTOKA WESTERN DIVISION
			Civil Action No. 46 of 2013
BETWEEN	:	SONALISALI ISLAND RESORT LIMITED a limited liability company having its registered office at C/- KPMG Level 10, Suva Central, Renwick Road, Suva.
		PLAINTIFF
AND	:	FORTUNE 8 LIMITED a limited liability company having its registered office at Level 3, Aliz Centre, Martintar, Nadi.
		DEFENDANT
Solicitors	:	Krishna & Company for the Plaintiff Fa & Company for the Defendant

R U L I N G

1. The background to this case might be stated briefly.
2. The trial of this case was set for 6 August 2014. However, on that date, neither the defendant company nor its counsel appeared. The matter then proceeded with the hearing, after which I entered the following judgment:
   1. I agree with Mr. Connors argument that traditionally an advertisement to tender is treated as an invitation to treat, not an offer.

2. The tender is the offer.

3. In this case it was accepted as 16/06/12.

4. On the basis, from where I see the defendants’ submission that there being lack of consideration, there is no contract lacks merit.
5. Accordingly I enter judgment in favour of the plaintiff in the sum of $221,000 plus $6,408,69 in advertising costs.

6. In addition, I order cost which I summarily assess at $2,000.00.

7. I note with concern that this is the second occasion when the defendants have exhibited dilatory conduct in handling of their defence.
8. I’m informed that Mr O’driscoll is away overseas and his absence in Court is not explained.
3. On 29 August 2014, Messrs O’Driscoll & Company, the defendants’ former solicitors, filed a Summons to Set Aside Default Order supported by an affidavit of Tracey MacIver.
4. That application was opposed by an affidavit of Aaron James McGrath filed on 18 September 2014. MacIver replied to McGrath by a further affidavit filed on 14 October 2014.
5. The Summons was heard by Master Ajmeer (as the Learned Judge then was). Master Ajmeer ruled that the application was time barred because it was filed some three weeks or so after judgment was entered. In reaching this conclusion, Master Ajmeer was guided by an interpretation of Order 35 Rule 2 as stipulating a mandatory requirement that an application to set aside must be made within 7 days of the trial.
6. On 24 November 2014, Fa & Company filed a Notice of Appeal against the Master’s decision as well as a Notice of Change of Solicitors and on 23 February 2015 an Inter-Partes Summons seeking an order to enlarge the time period for filing and serving a Notice of Appeal by the Appellant/Defendant against the decision of the Master.
7. My ruling on that application was handed down on 07 October 2016 which was in favour of the defendant. The Master, I had observed, had ruled only on the basis of the preliminary issue before him i.e. whether Order 35 Rule 2 imposed a mandatory requirement to apply within seven days.
8. Following my ruling above, Fa & Co would go on to file a Notice of Appeal on 24 October 2016 and further summons dated 27 October 2016 for Direction and for hearing of the appeal.
9. The appeal proper was heard before me on 10 February 2017. I accept the explanation offered by Tracey McIver in her affidavit that the reason why the defendant had not appeared on the date of hearing on 06 August 2014 was that the defendant’s then solicitor’s agent had failed to inform the solicitor of the trial date.
10. Although, the defendant had delayed in filing the application to set aside the Judgment and Order 35 Rule 2, in the circumstances of this cases, I consider the delay to be slight and the explanation offered for it – acceptable.
11. The main thing I have to consider is whether or not the defendant has a prospect of success.
12. The background to this case is as follows. On 02 June 2012, the plaintiff put out an advertisement in a local newspaper inviting tenders for 3 pre-fabricated villas.
13. On 15 June 2012, the defendant put in a tender for the pre-fabricated villas. This tender was accepted by the plaintiff the very next day on 16 June 2012.
14. The issue between the parties is whether or not there was a valid enforceable contract formed between them at the point when the plaintiff had accepted the defendant’s tender.
15. The whole of the plaintiff’s case is premised on the argument that a valid enforceable contract was formed at the point when the plaintiff accepted the defendant’s tender on 16 June 2012.
16. The defendant’s case rests on the argument that there was no valid enforceable agreement yet between the parties at that point because they had not agreed to everything at that point in time.
17. Mr. Fa would go to great lengths to highlight the various email exchanges between the parties after 16 June 2016 which, he would argue, establish that not all essential terms had been agreed to between the parties at the point when the plaintiff accepted the defendant’s tender.
18. Indeed, whether a valid enforceable contract has arisen out of a tender process requires analysis other offer,&#er, acceptance, and> iintention to create binding contractual relations are present.
19. Mr. Connors args argues that the emails were written for for and on behalf of the defendant after the plaintiff had accepted its offer and as far as the plaintiff was concerned, a valid, binding and enforceable contract had been formed at that point.
20. Generally, an invitation for tenders is an invitation to treat and not an offer. The tender is the offer. When a tender is accepted, a contract is then formed. No contractual obligation crystallizes until an offer is accepted (see [1997] 1 NZLR 318 (HC); Prime Commercial Ltd v Wool Board Disestablishment Co Ltd [2006] NZCA 295).
21. Having said that, there are particular complex tender situations as for example in a construction and engineering tender situation about works of a mammoth scale where the acceptance of a tender will simply result in a preliminary contract which is subject to conditions to be finalized later (see Markholm Construction Co Ltd v Wellington City Council [1984] NZHC 232; [1985] 2 NZLR 520 , Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469, where Gallen J said at pp.478-479:
    

"... it is obviously open to persons to enter into a preliminary contract with the expectation that it will lead in defined circumstances to a second or principal cont..Whether or not the particular case falls into one category or the other will depend upon upon a consideration of the circumstances and the obligations expressly or impliedly accepted.

22. Mr. Fa’s submissions seem to argue along the same lines.
23. However, the less formal the tender pr, the less scope there isre is ffinding that the acceptancptance of a tender gave rise only to a preliminary process.
24. Althoughhough the tender process in question in thin this case was a fairly simple one, in my view, it is open to the defendant to argue the same at a substantial trial.
25. In that regard, I would hold that there is some merit in the argument. I would accordingly allow the defendant’s application and accordingly, I do now set aside the judgment I had ordered in August 2014 which was made in the absence of the defendant.
26. However, I am also of the view that the plaintiff, prima facie, has raised a good and a strong arguable case in the sense that would satisfy the granting of a mareva injunction. The plaintiff already has the judgment registered against one of the defendant’s properties. I realize that my setting aside the judgment now will automatically void the registration of the said judgment. In my view, it would serve the interest of justice well if I were to now grant an injunction against the defendant from selling or disposing of or transferring or dealing with the said property (ies) until further orders of this court.
27. Costs to the plaintiff which I summarily assess at $3,500 (three thousand five hundred dollars).
    
28. Case adjourned to 12 May 2017 at 10.30 a.m. for directions on a new trial date.
    

.............................

Anare Tuilevuka

JUDGE

13 April 2017.