Suidani v Attorney General [2016] SBHC 49; HCSI-CC 214 of 2012 (28 April 2016)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction
(Maina J)

Civil Case No. 214 of 2012

BETWEEN:

DANIEL SUIDANI
Claimant

AND:

ATTORNEY GENERAL
(Representing the Malaita Provincial Government)
Defendant

Date of Ruling: 28th April 2016

Ramo L. for Claimant
Kii E. for Defendant

JUDGMENT

Maina J:

This is a Category B Claim by the plaintiff for breaches of contract. He claims and seeks orders for damage, breach of contract limited to SBD$100,000.00 together with interest and orders for cost to be on indemnity basis.

The Defendant denies these claims saying the contract was terminated under the terms of the contract.

Brief Background

On or about 14^th March 2012 the Claimant and Defendant signed an Agreement for the Claimant to construct an access road to Aligegeo Slaughter house in Auki, Malaita Province.

Under the Contract Agreement the work was divided into five (5) stages and starts with Mobilization to Demobilization.

The total contract price was SBD$192,000.00 payable to the Claimant on completion of each stage in the respective sums of $60,480.00, $34,560.00, $34,560.00, $25,920.00 and $17,280.00. The stages payment is after the deduction of 10% retention.
The Claimant completed the stage 1 - mobilization and payment was made to him. On the undertaking of stage 2 the Claimant encountered or was not able to get the necessary machines to do the required work and following the discussions between the parties; a variation in the contract was made. The parties on or about March 2012 agreed for the Claimant to use manual labour. It proceeded but the output with the manual labour was not good and the parties on 10^th May 2012 further agreed for the Claimant to terminate or ceased the manual labour works and engage machines to carry out the work.

For somehow the Defendant engaged a third party and completed the required works in the contract by gravelling and compaction works on 26^th and 27^th May 2012.

And on 6^th June 2012 the defendant by the letter to the Claimant terminated the contract on the reason that the funds forming part of the contract price had been exhausted.

The Claimant under the contract had received payments of stages 1 and 2. And rest of the fund for the project was paid to the third party for the completion of the required in the project.

Facts not disputed

The contract signed by the Claimant and Defendant does not contain a provision for time limit for the completion of the work. And there is also no specification of equipment or manual labour to be used in the work.

The issue

The matter concerns the lawfulness of the termination of the contract and the issue is:

Whether the reasons of exhausted of the fund is a ground to terminate the contract under Clause C (1) and (2) of the contract?

Counsel Ramo for the Claimant in the submission states that the agreement provides a provision for the term the termination of the contract and is in Clause C (1) and (2).
She made reference to the clause. But the ground as stated by the Defendant in his letter on 4^th June 2012 to the Claimant for the termination of the contract was that the fund has been exhausted, a ground or reason that does not fall within the terms of the contract.

The Defendant denies the claim and Counsel Kii for the Defendant in the submission stated the termination of the agreement was not unlawful in that:

1. The contract was terminated because the Claimant was not able to carry out the work as he had no required machines to do the work.
   
2. It was done or the Defendant has right to terminate the contract as stipulated under the agreement Clause C (1) and (2).
   
3. The Claimant and Defendant had agreed to engage a third party out the work with its machines because the Claimant was not able to get the required machines to carry out the work.
   

There were variations of the agreement made through the discussions by the Claimant and officials of the Defendant as the work did not progress as expected due on part of the Claimant. The variation involved an engagement of manual labour which was later terminated because of the poor output with the work. And the Claimant was to engage the machines to complete the work.

Brief outlines of the facts and actions of the parties

1. The Claimant and Defendant signed an agreement on or about 14^th March 2012;
   
2. Mobilization stage was completed and payment was made to Claimant on 28^th, 31^st March 2012 and 10^th May 2012;
   
3. By the meeting of the parties on 10^th May 2012 it was noted and due to the poor output of the manual labour work, the manual labour by agreed variation was ceased and the Claimant to engage the machines to do the work;
   
4. Defendant engaged a third party and completed the required works in the contract on 26^th and 27^th May 2012;
   
5. The technical officers of the Defendant on or about 31st May 2012 met and agreed to terminate the contract for the termination of the contract with the Claimant.
   
6. And on 4^th June 2012 the defendant terminated the contract on the ground that the funds forming part of the contract price had been exhausted.
   

There are also two inspection reports on this project by AM Engineering Company, one report is undated and is annexed to the sworn statement of Mr. Donald Anga, senior works Malaita Provincial Government which states that the contractor should be informed by letter that he was not performing as expected. The other AM Engineering Company dated 30^th May 2012 and annexed to sworn statement of the Claimant and filed on 30^th July 2014 that confirmed a third party was engaged and done the remaining stages before the termination of the contract.

For the former report there is no evidence to suggest that an advice or warning was given to the Claimant and later shows that Defendant engaged a third party between the periods of 10^th May 2012 and when the third completed the work i.e. 26^th and 27^th May 2012. And payment for the project was paid to the third party.

From the parties’ meetings and discussions there were actions or remedies to the problem encountered by the Claimant on his obligation under the contract. Parties by the variations had taken actions on the concerns of the Defendant.

But Counsel for the Defendant argued that this action of continual difficulty by the Claimant in bringing the machines to complete the work created a situation that prompt the Defendant to exhaust the fund and the situation falls within the requirement to terminate the contract under Clause C (1) (2) of the contract.

Termination of the Contract

The contract was for the construction of an access road to a slaughter house and in Part B Clause 1 of the contract states that the contractor agrees to provide the labour, materials, equipment, and small tools and everything necessary to execute and complete the work.
And for the termination of the contract, Clause C (1) (2) states:

“The employer reserves the right to:

1. Determine the contract should the contractor failed to proceed with due diligence and the contractor shall remain liable for any lost or damage sustained by the employer as a result of the such failure,
   
2. Determine the contractor should the contractor fail to comply with the agreed work programme or to complete the work with the time allowed.
   

This contract between the Claimant and Defendant was terminated on ground or reason that the fund had been exhausted. This is stated in the Defendant’s termination of contract letter of 4^th June 2012 to the Claimant. The termination letter did not reflect well or suggest that contractor had breach the contract or matters relates to Clause C (1) (2) of the contract.

With this sort, the common law is clear on this as referred to by Counsel Ramo for the Claimant that a right to terminate an agreement will arise where there is a contractual stipulation conferring the right or there is a breach or repudiation giving rise to the right.

In the case White Carter [1961] UKHL 5; [1961] 3 ALL ER 1178, the court of sessions dismissed the action when the Plaintiff appealed to the House of Lords. And Lord Reid said:

“If one party to a contract repudiates it in the sense of making it clear to the other party that he refuses or will refuse to carry out his part of the contract, the other party, the innocent party, has an option. He may accept that repudiation and sue for damages for breach of contract, whether or not the time for the performance has come, or he may, if he chooses, disregard or refuse to accept it and then the contract remains in full effect”

The above outlines the actions to take if you think a party has failed to perform his obligation under the contract.

For the termination of the contract by the Defendant there is no evidence that suggest any repudiation of the contract on part of the Claimant and or as noted with variation to the contract.
And it is not that Claimant as alleged to be defaulting party acts in a manner inconsistent with his obligation or he shows an intention not to perform those obligations. What seemed to be the concern had been addressed by way of the variation. Otherwise need to be checked before any action.

The Defendant by its letter of 4^th June 2012 clearly stated the reason as the funds forming part of the contract price had been exhausted. That letter did not make any reference to the contract nor did state the alleged continual difficulty by the Claimant in bringing the machines to complete the work or Claimant had failed to perform to his obligation under the contract.

In the contract, there is no time limit provision or clauses for the completion of the work. As such the time limit to be given to either party will be reasonable time depending or to be determine on the nature and requirements of the work. With the Claimant’s case, the action of the Defendant did not suggest that a reasonable time or notice was given to the Claimant.

The termination is outside the term of neither the contract nor a contractual stipulation conferring the right or there is a breach or repudiation giving rise to the right.

It is also noted that the payment for that stage 2 has been paid to the Claimant and that would suggest that the Claimant had completed that stage. And it is also noted the pavement on stage 3 was done by the third party when the arrangement was for the Claimant to acquire the needed machines for the task.

The documents and evidences with the court show that the Defendant terminated the contract on the ground or reason that the fund for the project had been exhausted or finished. It is not on the reasons as stipulated under Clause C (1) (2) of the contract or a repudiated breach and therefore the termination was unlawful.

ORDER

1. The termination of the contract is unlawful.
2. The Defendant to pay the Claimant his entitlement for stages 4 and 5 less retention of all the stages - Total SBD$43,300.00
3. No interest is awarded
4. Cost to the Claimant on indemnity basis.
   

THE COURT

Justice Leonard R Maina
Puisne Judge