Parker v Punja's Ltd [2006] WSCA 3 (26 April 2006)

IN THE COURT OF APPEAL OF SAMOA
HELD AT APIA

BETWEEN

JUSTIN PARKER
of Fugalei, Businessman.
Appellant/Plaintiff

AND

PUNJA’S LIMITED
a duly incorporated company having its registered offices
and carrying out business in Samoa and Fiji.
Respondent/Defendant

Coram: The Honourable Justice Ellis
The Honourable Justice Gallen
The Honourable Justice Salmon

Hearing: 20 April 2006

Counsel: Mr. R S To’ailoa for the Appellant
Mr. S Leung Wai for the Respondent

Judgment: 26 April 2006

JUDGMENT OF THE COURT

[1]. This is an appeal against a decision in the Supreme Court dismissing the appellant’s claim for damages for breach of a building contract, and ordering the return of a bond for $9000 to the respondent.

[2] In this Court the respondent moved to strike out the appeal on the grounds that the appellant had failed to pay security for costs. It transpired that no order for payment of security had been made, so the application was not pursued and is dismissed.

[3] In a written agreement dated 29 November 2002 the appellant agreed to build a warehouse for the respondent on land leased by the appellant from a relative. The respondent agreed to take a long term lease of the warehouse. In the agreement the appellant is called the landlord and clause 6 provides:

'THAT the Landlord shall use his best endeavours to complete the construction of the building by the 1st day of April 2003.'

Time is clearly not of the essence.

[4] The agreement also provided for a 'bond' of $9000 to be paid to the appellant by the respondent. It was duly paid. It represented 2 months rent of the new warehouse.

[5] The appellant needed bank finance to proceed with the building. This was not approved until 9 April 2003 and construction only started on 20 April 2003.

[6] The appellant said in evidence that in March the respondent agreed to extend the time for completion to 31 May 2003. The person he dealt with was Mr. Narayan the respondent’s manager in Samoa. The appellant also dealt with Mr Prasad the respondent’s export manager. Following a conversation with Mr. Prasad on 10 April Mr. Prasad e-mailed the appellant in these words:

'Dear Justin

'Good Morning!

'How are you and the family!

'I have received a lot of pressure from my 'management that you did not honour your 'commitment. They expected the building to be 'ready for us to move in by 1st of April but till to 'date nothing has been done.

'Now my directors are not happy with the contract 'and they feel that they are not secured doing 'business with you.

'We have also advised our existing Landlord and now 'we are standing no where. My management has 'decided to cancel the contract due to delay done 'from your end.

'Looking forward for your comment.

'Kind Regards,

'Avinesh'

[7] Further conversations resulted in the respondent confirming it would agree to an extension to

31 May 2003. This was confirmed by a letter from Mr. Narayan dated 20 May 2003.

'20 May 2003

Mr Justin Parker

Fugalei

Dear Sir

Re: Warehouse

We note with concern the delays in completion of the warehouse.

Under the Agreement of 29 November 2002 you undertook to complete the buildings before 1 April 2003. This was not complied with. It was then agree that the completion date be extended to 31 May 2003. Your Failure to complete the building as agreed to is a fundamental breach of the agreement.

Our company is unable to expand its commercial operations because of the delays and therefore its business has suffered as a consequence.

We put you on notice that if the warehouse is not completed by 31 May 2003, and ready for us to move in the agreement is terminated with effect on that date.

We as a company trying to compete in a very competitive market just can not operate under these condition and we trust you can understand our position.

Yours faithfully

Sanjesh A Narayan

Manager'

[8] The appellant claimed that it was also agreed that should the building not be completed by 31 May 2003 the appellant would pay $3900 per month for the rentals paid by the respondent for the warehouses it was then occupying. We are left unsure whether this was for the rent paid by the respondent or only that in respect of its two warehouses. This was denied by the respondent and the Chief Justice found against the appellant’s contention.

[9] The appellant relied on a letter he wrote to the respondent on 23 May 2003 in these terms:

'J Parker Investments

PO Box 395

Apia

Samoa

23rd May 2003,

Punjas Samoa

PO Box 6353

Taufusi

Samoa

Re: Fundamental breach of agreement

Dear Sanjesh Narayan

It is with great disappointment that I reply to such letter. We Avinesh Prasad and myself had an agreement that if there were any delays I would be financially liable to pay your lease where you are currently located which is $3900 per month. Therefore in mathematical terms it would be $130 tala per day after the 31 May 2003. You have continuously endeavoured to withdraw from our contract by negotiating another premise while my contract is valid. I have been working under weather conditions beyond my control as you would better understand then Punjas Fiji but still I agree to pay the late completion charge caused by rain and floods. I would be happy to get a weather report since the contractors started to better equip your knowledge. Just as I understand your stance you must also understand that I am trying my absolute best to minimize any delays.

Yours absolutely faithfully

Justin Parker'

The respondent did not reply, and the Chief Justice held that the agreement claimed in the letter had not been reached. In reaching this conclusion the Chief Justice carefully reviewed the evidence. Because of the conclusion we have reached it is unnecessary to consider the matter further. From the contents of this letter it appears that the offer of $3,900 covered the respondent’s rent for both its existing warehouses. Before us the appellant submitted the claimed agreement overcame the unreasonably short time to complete agreed to by the respondent.

[9] The warehouse was not completed by 31 May. The respondent purported to rescind the agreement and claimed the return of the bond. Since then the appellant has let the warehouse to another and the respondent has taken other premises.

[10] It is unnecessary to traverse the way the case was put to the Chief Justice or to traverse the arguments addressed to us as we are able to decide the case on a single issue.

[11] As time was not made an essential condition for the agreement the respondent could only make it so by giving notice fixing a reasonable time for completion and dismissing the contractor on a failure to complete by that date: see Halsbury’s Laws of England, 4th edition, Building Contracts volume 4 paragraph 1179.

[12] Before the Chief Justice the question as to whether or not the appellant had used his 'best endeavours' from November until April was not explored. However the appellant called evidence from the builder employed by the appellant who testified the building would take 3 months to build but with rain 4 months. The appellant also called a witness from the Meteorological Services that in April 2003 there were 23 days of rain and in May 2003, 19 days. In follows that viewing the matter in April 2003 the building could not be completed before July and accounting for rain not before August. In follows that the requirement to complete by 31 May 2003 cannot be reasonable. That being so the efforts by the respondent to make time an essential term failed.

[13] Before us Mr. Toailoa’s primary point was just this. He submitted that the Chief Justice erred because:

'when the Plaintiff phoned Mr Prasad in Fiji on the 10th of April seeking an extension of time, the works on the building had not commenced. The Plaintiff was aware that it would take about 3 months to complete the building, therefore there was no way he could complete by 31 May 2003. It was therefore only natural or inevitable for the Plaintiff to raise the issue of the works not being completed by 31 May 2005.'

This does not raise the matter in terms of time being made of the essence, but its substance is the same. It is unfortunate that the Chief Justice was not assisted by counsel in this respect and so he dealt with the delays overall and concluded that completion by 31 May 2003 had become an essential term of the contract.

[14] The reference to Halsbury is to a text dated 1973. We have available Smellie’s Building Contracts and Practice (1979) where at pages 82 and 83 the learned author says:

When time of the essence of contract – Where the contract expressly makes time of the essence of the contract or gives a power to determine the contract in case of non-completion within the stipulated time, then in the absence of any inconsistent provisions, time will be of the essence of the contract and the contractor can recover nothing unless he completes within the time.

The contractor has up to the last moment (midnight) of the day fixed for completion to finish his contract.

Employer’s right to demand completion within reasonable time – In cases where time has not been made of the essence of the contract, or where – although time was originally of the essence of the contract – the time for completion has ceased to be applicable by reason of waiver or otherwise the employer still has a right by notice to fix a reasonable date within which to require completion of the work, and in such case if the contactor does not complete by that date the employer may dismiss him, just as a vendor would be entitled to rescind the contract in case of a contract for the sale of land.

[15] More recent is Carter and Harland’s Contract Law in Australia 3rd edition (1996) where the learned authors deal with termination for delay in paragraphs 1948 through 1964. Generally there is no right to terminate without notice requiring completion within a reasonable time (paragraph 1954). What is a reasonable time is a question of fact.

[16] On the evidence therefore, as at 10 April 2003 the respondent had to give the appellant a reasonable time to complete if it was to make time for completion an essential element of the contract. It did not do so. As a result it was not entitled to terminate the contract. The entry of judgment for the respondent on the appellant’s claim and its counterclaim must be set aside and the case referred back to the Supreme Court for determination.

[17] The appellant is entitled to costs which we fix at $1000 plus disbursement if any to be fixed by the Registrar in agreement cannot be reached.

Honourable Justice Ellis

Honourable Justice Gallen

Honourable Justice Salmon

Solicitors

Toa Law for the Appellant
Leung Wai Law Firm for the Respondent