Gonewai v William Associates Ltd [2012] FJSC 21; CBV0010.2011 (20 August 2012)

IN THE SUPREME COURT OF FIJI
AT SUVA

Civil Petition No: CBV0010/2011
Civil Appeal No. ABU16 of 2009

BETWEEN:

1. PASTOR NAIBUKA GONEWAI
2. PASTOR SANAILA SOQOVATA
3. PASTOR JOSAIA TOKEA
4. PASTOR EMOSI TOROCA TARAVOLA
5. REV. SULIASI KURULO
Petitioners

AND:

WILLIAM ASSOCIATES LIMITED
Respondent

Coram: Hon. Justice Suresh Chandra, Judge of the Supreme Court.
Hon. Justice, Sriskandarajah Sundaram, Judge of the Supreme Court.
Hon. Justice Chandra Ekanayake, Judge of the Supreme Court.

Counsel: Fa, I for the Petitioners
Terere,T for the Respondent.

Date of Hearing: 8th August 2012
Date of Judgment: 20th August 2012

JUDGMENT

1. The Petitioner in this application is seeking Special Leave to Appeal from the Judgment of the Court of Appeal dated the 21st of September 2011. The Court of Appeal by its Judgment dismissed an appeal of the Petitioner against the decision of Justice Hicki in the High Court at Suva dated 13th February 2009, wherein the Learned Judge has held that the Plaintiff is entitled to the additional sum charged in terms of the Australian Institute of Quantity Surveyors Conditions of Engagement.
   
2. The Petitioner has raised seven grounds of Appeal. They could be summarised as follows:
   
   1. The Court of Appeal erred in upholding the findings of law and of fact of the trial Judge that the contract for services dated the 16th of March 1998 was subject to variations in the construction costs when it was expressly agreed that the fees charged would be fixed on the construction costs of $2,000,000.00 (Two Million Dollars).
      
   2. The Court of Appeal erred in upholding the findings of law and of fact of the Trial Judge that the Respondent was entitled to its claim of $77,081.15 without proper consideration that the said sum claimed was based on a completely new account rendered to the Petitioners after the building had been constructed, which the Respondent refiguring the entire account both pre and post contract based on the actual construction costs which deviated from the 16th of March1998 contract for service being the only contract entered into by the Petitioners.
      

The First Ground of Appeal

3. At a meeting held by the Petitioners on 30th of January 1998 the representatives of the Architects, Engineers and the Respondents(Quantity Surveyors) were told subject to the agreement on final terms and conditions of engagement, appointment of the consultants in their own roles were confirmed. They were also told that the work should start by 01/05/1998 and completed by 30/04/1999. The Petitioners appointed Edward Rushton (Fiji) Limited as the Project Manager for the construction of their new church known as the "World Harvest Centre". Adish Naidu was appointed as the architect and Respondent William Associates was appointed as Quantity Surveyors.
   
4. After the aforesaid meeting the Project Manager Rushton Ltd had several correspondence with the Respondent, the first of which was the letter of 3rd February 1998 calling for a firm fee quotes/submissions and terms of Engagement. The Respondent by its letter of 13th February 1998 informed Rushton Ltd:
   

"We offer our services for the position of Quantity Surveyors based upon the following conditions:-

1. Basis of engagement shall be in accordance with the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services.
   
2. The current construction cost of $2,000,000.00 inclusive of VAT but exclusive of fittings furniture and equipments.

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

Our fees are thus:

(a)	Cost Planning Section A item	9,600.00
(b)	Bills of Quantities Section A item 5	30,000.00
(c)	Post contract services Section A item 6.05 with Particular reference to item 6.05.11 and exclusive of items 6.05.03,05,07	14,000.00
TOTAL INCLUSIVE OF VAT		$53,600.00

(3) Our hourly charges for the 'above' miscellaneous work would be $70.00 for qualified staff and $ 15.00 for other staff, exclusive of VAT.

5. The Respondents after negotiations forwarded to Rushton Ltd their revised fees by their letter of 16th March 1998;
   

Subsequent to our telephone conversation on 12th March 1998 we confirm our revised fees as this:

a) Cost Planning Section A item	9,600.00
b Bills of Quantities Section A item 5	21,400.00
Post contract services Section A item 6.05
with particular reference to item 6.05.11 and
exclusive of items 6.05.03,05,07	14,000.00
TOTAL INCLUSIVE OF VAT	$45,000.00

Condition stated in our previous letter dated 13th February, 1998, still apply.

We also confirm that William Associates Limited and not the contractor shall measure value the works for valuations and variation purposes.

Enclosed here- with our revised quantity surveying fees cash flow.

6. It appears that after this letter the Respondent had commenced work and was periodically submitting its claims for fees according to its revised quantity surveying fees cash flow. The following claims were made by the Respondent from the Petitioners:
   

(a) by letter dated 6th April, 1998 –

Interim fees account No.2 amounting to $11,058.19

(b) by letter dated 27th April 1998 –

Interim fees account No.3 amounting to $7,097.31

The following amounts remain outstanding:

No.1	3,300.00
No.2	11,058.19
	$14,358.19

7. On 7th May 1998 Rushton Ltd- wrote to the Respondent and informed:
   

"We had a long meeting last night on the above subject with the client who has requested us as Project Managers to revisit your fees schedule with you to a more" lighter cash flow, so to speak, as they sort out the Total funding of the Project.

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

We believe this is an acceptable solution to both sides and if this is so with you, we shall now authorise a cheque payment of $8,050.00 (vat inclusive) to cover the March Fee and half of April. At the end of this month you get another cheque of $10,050 (Vat inclusive) clearing all your accounts to May and as from end of June and thereafter to April, 1999, your monthly fees payable to you shall be along the cash flow above.

At the end of the day, you shall get the bulk of your fees upfront, you get your total $45,000 fees, the client is happy, the project goes well and everything is smiling. No one is placed in a worse of situation as a Team and we all get our fair share in due time. We will be writing to the other Consultants for similar cash flow revision.

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

8. The learned Counsel for the Petitioners' submitted to court that the letters of the Respondent dated 13 February1998 (referred to above) and the letter of 16th March 1998 (referred to above) are only offers for services for the position of Quantity Surveyors and the contract for the services was consummated by the acceptance of the offer by the Petitioners by their letter dated 7th May 1998 (referred to above). Therefore he submitted that the letters 13th February 1998 and 16th March 1998 do not form part of the contract of services but the conditions included in the letter of acceptance dated 7th May 1998 form part of the contract. For this reason he submitted that the reference "the basis of engagement shall be in accordance with the Australian Institute of Quantity Surveyors Condition of Engagement (effective from 1st January 1983) individual services" in the letters of 13th February 1998 and 16th March 1998 do not apply to this contract.
   
9. This is not the position that was taken by the Petitioners in the High Court. In the High Court at the Pre-Trial Conference the following facts were admitted:
   

ADMITTED FACTS

10. On or about 16th March1998 the CMF through its servants, agents/or employees engaged the services of the Plaintiff as Quantity Surveyors in respect of the World Harvest Centre Project at Kinoya, Nasinu.

11. On or about the same date the Plaintiff and the CMF agreed on the fees payable in respect of services to be performed by the Plaintiff based on the Australian Institute of Quantity Surveyors Conditions or Engagement dated 1st January 1983.

12. That the Plaintiffs terms of Engagement are set out in its following letters:

1. Letter by Williams Associates Limited to Edward Rushton Fiji Limited dated the 13th February 1998 setting out his professional fees in the sum of $53,600.00 (Fifty three thousand six hundred dollars).
   
2. Letter of the 16th March 1998 by Williams Associates Limited to Edward Rushton Fiji Limited revising its professional fees to the sum of $45,000.00 (Forty five thousand dollars)
   

100. Australian Institute of Quantity Surveyors Conditions of Engagement (1st January 1983)
     

13. In any event the submission of the Counsel for the Petitioner that the contract for the services was consummated by the acceptance of the offer by the Petitioners by their letter dated 7th May 1998 has no basis as the Respondent immediately after communicating with the Petitioners by their letter of 16th March 1998 has commenced work and for their services submitted three claims for fees before the purported letter of acceptance (7th May 1998). In the letter of 7th May 1998 it has been specifically stated: "we shall now authorise a cheque payment of $8,050.00 (vat inclusive) to cover the March fee and half of April. At the end of this month you get another cheque of $10,050 (Vat inclusive) clearing all your accounts to May. It shows that the contract had been entered into very much before the 7th of May i.e. by 16th March 1998.

14. It is in evidence that there was no formal contract signed between the Petitioners and the Respondent but the letter of 16 March 1998 contains the terms of contract. This letter states that conditions stated in our previous letter dated 13th February 1998 still apply. The 13th February letter provides: Basis of engagement shall be in accordance with the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services.

15. The Respondent when quoting the fees in the letter 16th March 1998 has given the break down as follows:

(a) Cost Planning Section Item 4	9,600.00
(b) Bill of Quantities Section A Item 5	21,400.00
(c) Post contract services Section A Item 6.05 with particular reference to item 6.05.11 and exclusive of items 6.05,03,07	14,000.00
Total Inclusive of Vat	$ 45,000.00

16. All the above items of fees have referred to the Section and the clauses of the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services, in calculation of the fees. Hence the submission of the learned Counsel for the Petitioners that the conditions of contract do not include the conditions of engagement provided in the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services is untenable.

17. The next submission of the Counsel for the Petitioners' is that the contract for services dated the 16th of March 1998 is a fixed contract and it was expressly agreed that the fees charged $ 45,000.00 would be fixed on the construction costs of $2,000,000.00 (Two Million Dollars) and therefore the Respondent is not entitled to any additional fees based on the increase of the Construction cost.

18. It is in evidence that the Bill of Quantities were prepared based on the Architectural drawings before the contract for construction was awarded. This is to ascertain the cost of construction to award tenders to the builders. As Counsel for the Petitioners' submitted this fee is a fixed fee agreed at $45,000.00 to a construction cost of $2,000,000.00. This fee is for the services rendered for the preparation of the Bill of Quantities before the award of the contract for construction.

19. The Petitioners submitted that the parties are estopped from retracting what is contained in the letters. In Moorgate Mercantile Co. Ltd Twitching (1976) Q. B 255 at pp.241-242 Denning MR:

"Estoppel is not a rule of evidence. It is not a cause of action. It is a principle of justice and of equity. It comes to this: when a man, by his words or conduct, has led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so."

In Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, Dixon J:

"The principle upon which estoppels in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations."

20. The principle of estoppel prevents a party from unjust departure from what they have agreed. The agreement in this contract is not only in relation to the contract fees but also in relation to the terms of engagement. As discussed above, according to the applicable contract, condition of engagement is the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services.

This condition of engagement in Section A Clause 8. Provides:

"CONDITIONS APPLICABLE TO FEE SCALES"

8.01	The Cost of the Work includes the followings-
8.01.01	Where a tender for the work is accepted, the amount of the tender,
8.01.04	In all other cases, the agreed estimated cost of the works at the date of completion of the Bills of Quantities.
8.06	Amendments and Alternative Tenders
8.06.02	Where, after the Bills of Quantities have been prepared, the Quantity Surveyor prepares amendments to the Bills additional fees will be charged on the amount of both measured additions and omissions in accordance with Scale of Fees Clause 6.01.

21. It could be seen from the above that the fees chargeable at the completion of the Bills of Quantities is either on the amount of tender awarded or on the agreed estimated cost of the work as provided for under Clause8.01. As I have observed above the Bills of Quantities are prepared before the tender is awarded. Therefore for the preparation of the Bills of Quantities as agreed the Respondent is entitled to $ 45,000.00 calculated on the construction costs of $2,000,000.00. But Clause 8.06.02 provides for amendments after the Bills of Quantity have been prepared. The agreed sum is for the preparation of the Bills of Quantity but when there are amendments to the Bills of Quantities already prepared the Respondent is confronted with an additional task. In these circumstances the said clause provides for additional fees for the additional work done calculated on the cost involved for such addition and omission.

22. The submission of the Petitioner that the Court of Appeal's finding that the contract for services dated the 16th of March 1998 was subject to variations in the construction costs is erroneous and is untenable for the above reasons. Hence his first ground of appeal fails.

Second Ground of Appeal

23. The Petitioners submitted that the sum claimed by the Respondent $77,081.15 was based on a completely new account rendered to the Petitioners after completion of the building. It appears that the Petitioners have failed to understand the implications of an alteration or amendments in the building plan after a Bill of Quantity has been prepared. Similarly if the costs of materials are increased amendment has to be made to the Bill of Quantity. The Respondent has to recalculate the cost required for the amendment or alteration done and the impact of the cost escalation of materials on the construction cost and alter the Bill of Quantity. Does it not involve additional work other than the work agreed?

24. It is in evidence that the Respondent had to amend the Bills of Quantities on several occasions after the construction work commenced and when it was in progress. Fees calculation for this additional work is provided in the Australian Institute of Quantity Surveyors Conditions of Engagement (effective from 1st January 1983) individual services; Section A Clause 8.06

8.06.02 provides: where, after Bills of Quantities have been prepared, the Quantity Surveyor prepares amendments to the Bills additional fee will be charged on the amount of both measured addition and omissions in accordance with Scale of Fee Clause 6.01.

25. The witness Mr.Joape Tiko in his evidence explains this position:

Q: Yesterday a question arose in relation to a series of lists attached to your account which had headed at the top of each list the words" ...and Add" – for the purposes of understanding how those things work can I give you an example please for the purpose of your work as a quantity surveyor hypothetically speaking you must need to price a blank a wall 5m long, right?

A: Yes.

Q: Now in the course and having priced that you take into account things like blocks, framing, plaster board and all that sotr of things to come to the value of a 5 m long wall, right?

A: Yes

Q: In the Course of the construction, variation arises whereby the builder is instructed to insert in that wall a door of 2 meters width - the cost of the door would include things I take it such as the frame, the hardware, the door panel itself, is that right?

A: Yes

Q: Now in order to properly price the variation you add those numbers up and come to a figure but you need, don't you, to take out the original calculations the costs of two 2 metres of that 5 metres wall?

A: Yes

Q: So in terms of your work there are then two items to take into account, can we just assume for the sake of this hypothetical exercise the cost of the door to buy and install is $200 and if you take out the cost of the original construction of the two metres of the 5 metre wall let say that is $ 100 the total of the variation is the sum of those two figures, is that right?

A: That is correct

Q So $300, is that right?

A: Yes.

(Emphasis supplied)

26. From the above demonstration one could see that the variation in the Bill of Quantities could arise by alterations to the building and by escalation of material costs. The additional fees is quoted by the Respondents based on these additional work performed after the initial preparation of the Bills of Quantity.

27. If there is no requirement to alter the Bill of Quantities after it has been initially prepared the fees fixed for the preparation will be on the estimated cost of construction of the building at that time and there cannot be any additional charges even if the cost of construction subsequently escalates.

28. In this instant case there is evidence that there were alterations after the preparation of the initial Bill of Quantities while the construction was in progress. As such the Respondent was obliged under the contract to make these amendments to the Bills of Quantities. For this additional work the Respondent is entitled for a fee other than that was agreed for the preparation of the initial Bill of Quantity.

29. The learned High Court Judge correctly observed:

"[68] The Defendants' case was that whilst the Plaintiff's work was subject to the AIQS Conditions of Engagement dated 1 January 1983,it was set at $45,000 (as reduced by them from the $60,000 figure quoted in the Plaintiffs letter of 13 February 1998) and that although the construction cost went from $2 million to over $5 million "the variation in the construction cost did not vary the contract of service that was entered into between the parties" set at $45,000 for a $2 million project. The problem with this submission is what does one do when the cost of the project exceeded at least double and a half the initial amount? Should the Defendants retain the benefits of a clear exploitation of the Plaintiff? Further, this submission does not deal with clause 8.06.02 of the AIQS conditions of Engagement which, as the Plaintiff has correctly submitted "binds the defendants and includes the payment of excess fees where the Surveyor prepares amendments to the Bills"

30. The Court of Appeal quoted the above passage of the High Court Judge's Judgement with approval and observed, Mr Fa's Submission that clause 8.06.02 could not apply after the building was constructed cannot be correct. Clause 6 of the AIQS Scale of Fees provides for "post Contract Services". Amendment to the bills of Quantities cannot be finalised until the building is completed. It is only at that time could the final costs, including the quantity surveyors fee be determined.

31. For the reasons stated above this Court is of the view that there is no error on facts or in law in the finding of the Learned Court of Appeal Judges on this issue. The second ground of appeal also fails.

32. The questions raised by the Petitioners have no merit, as such they have not met the threshold requirement provided in Section 7(3) of the Supreme Court Act No 14 of 1998 read with Section 8 of the Administration of Justice Decree 2009, which provides that the Supreme Court must not grant Special Leave to appeal unless the case raises a far reaching question of law a matter of great general or public important; or a matter that is otherwise of substantial general interest to the administration to the civil justice; Daily Telegraph Newspaper Company Limited v McLaugbin [1904] UKLawRpAC 45; [1904] AC 776;Bulu v Housing Authority [2005]FJSC 1.

33. The application for Special Leave to appeal out of time is dismissed with costs assessed in a sum of $ 3,000.

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Hon. Justice Suresh Chandra
Judge of the Supreme Court

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Hon. Justice Sriskandarajah Sundaram
Judge of the Supreme Court

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Hon Madam Justice Chandra Ekanayake
Judge of the Supreme Court