Alfrenzo Construction Ltd v Esoto [2010] WSSC 72 (11 June 2010)

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ALFRENZO CONSTRUCTION LIMITED
a duly incorporated company having its head office at Vaitele
Plaintiff

[1] The plaintiff is a company carrying on business as a builder. Its correct name is Alfrenzo (not Alfranzo) Construction Limited and the pleadings have been so amended by consent. It was contracted to refurbish the SamoaTel Postal Store inside the Post Office building at Matafele ("the Head Contract") and it engaged the defendant to undertake all the electrical work required via "the Contract".

[2] The defendant is an electrician by trade and was previously used by the plaintiff. The contract documents comprise a tender letter dated 11 June 2007 whereby the defendant quoted a price of $80,000 for the job and the plaintiffs reply dated 7 June 2007 (which date cannot be correct and the plaintiff clarified in his evidence should be 17 June 2007) which inter alia accepts the defendants tender. The fact that the parties could not produce a signed copy of the latter correspondence is immaterial as I am satisfied these documents formed the terms and conditions of their contract. The defendant initially quoted $97,000 but I am also satisfied the agreed reduced price for the contract works was $80,000. I am equally satisfied the scope of the contract works is defined by Drawing E01 outlining the lighting requirements produced as Exhibit "D-1" for the defendant and Drawing E02 showing the location of the air-conditioning and power outlets produced as Exhibit "D-2" for the defendant. The commencement date of the Contract was according to the plaintiffs letter of 17 June (but dated 07 June) the 11 June 2007 with possession scheduled for 25 June 2007. I had a little difficulty following this as the plaintiffs acceptance of the defendants offer was by letter dated 17 June and a contract cannot begin before an offer is accepted. I will take it however that possession of the site was given over on or about 25 June 2007.

[3] The plaintiffs evidence through its only witness, its Managing Director Mr Farrell Craig was that in the first month of the Contract, mostly demolition work was carried out by his employees. After that the electrical works and work of the other sub-contractors began. A site meeting took place on 20 June 2007 involving the defendant and other sub-contractors but the actual electrical contract works did not begin until some time later. The plaintiff insisted the defendant never signed the contract document which is contrary to the defendants evidence but as stated earlier this is immaterial as I am satisfied the two letters of 11 June and 17 June (but dated 07 June) represent the Contract terms and conditions.

[4] The plaintiff said that after the defendant entered onto the site and began his work, problems were encountered with SamoaTel and the Head Contract. It was not clear from Craigs evidence what the nature of the problems were but one of them appeared to be the late supply of materials scheduled to arrive on 29 August 2007 but delayed through no fault of the plaintiff because of the late arrival of the relevant vessel from overseas. One such material in the shipment was the 'drop' or 'recessed ceiling' referred to in the Electrical Drawing "D-1".

[5] On 31st August 2007 the defendant issued a progress payment claim in the sum of $35,000.00 which was approved and paid out by the plaintiff on 24 September 2007. Craig said the defendant had not completed work to this value but to assist the defendant with cashflow and purchase of materials, he approved the payment. He also wrote to the defendant on 1 October 2007 by letter given to the defendants foreman on site apologizing for the delayed arrival of materials and asking for resumption of the work. He was surprised however to be told on the afternoon of that day without any prior notice that the defendants workmen had quit the site. He confronted the defendant but was not satisfied with the defendants explanations. The following day 2 October 2007 he wrote to the Project Manager of SamoaTel advising of the defendants actions and questioning certain advices said to have been provided by the Project Manager to the defendant which appeared to have played a part in the defendants walk out. He also wrote to the defendant the same day expressing his disappointment and explaining the reasons for the delayed arrival of materials. He also asked the defendant to reconsider his decision as the matter would be taken further by him. The defendant did not respond and a replacement contractor was then sought.

[6] The plaintiffs witness said that it received an offer from a replacement contractor dated 3 September 2007 to complete the works in two weeks for the sum of $60,000. This date too cannot be correct since the defendants walkout only occurred on 1 October 2007 and the correct date for this correspondence must therefore be 3 October 2007. Everyone seems to have a problem with dates in this case. Craig accepted this offer by letter dated 8 October 2007 which noted that some work had already been carried out by the previous contractor. The replacement contract was carried out and the replacement contractor in due course duly paid for its services.

[7] There was an objection by defence counsel to admissibility of the replacement contractors tender letter dated 3 September 2007 as the replacement contractor was not called as a witness and it was therefore hearsay evidence. This objection I have considered but I overrule as the document was addressed to and received by the plaintiffs managing director who can therefore testify as to its contents and because the document is very much part of the res gestae or the whole story of the case. In any event the approach to admissibility of hearsay evidence is far more relaxed under modern law and the tendency is to admit it if it is reliable and relevant and considerations that formerly applied to admissibility now go to the veracity and weight to be attributed to the document or the evidence in question: see Voight v Taala (unreported ) 04 June 2010.

[8] The plaintiff originally claimed from the defendant the sum of $14,000 in damages for breach of contract. A claim which was rejected by the defendants solicitor by letter dated 4 April 2008. The plaintiff subsequently increased its claim to $40,500 and as outlined in its counsels letter dated 3 October 2008 being the amount now claimed, is broken down as follows:

"(a)	payment to owner over and above the agreed contract price before the owner would accept a replacement electrician	$15,000.00
(b)	(i) loss of production of 10 working days lost on staff pay whilst replacement electrician is recruited and accepted @$850 per day x 10 working days	8,500.00
	(ii) expenses and time in negotiating with the replacement contractor	5,000.00
	(iii) damage to company reputation/loss of profit	12,000.00
		$40,500.00"

[9] The plaintiffs case is the defendant was in breach of their contract in failing to complete the contract works and it also disputes the amount of work alleged to have been carried out by the defendant. Thus for example on "D-2", the defendant said it had installed all those switches marked in orange whereas the plaintiffs Managing Director said only the 4 circled in red had been installed; and where the defendant said they removed most of the original wires and fittings, the plaintiff said that was part of the demolition work which the plaintiffs workers attended to removing. The plaintiff also disputes the defendants assertion that he had completed more than 60% of the contract works when his crew walked off the site.

[10] Craig disputed what the defendant maintained that the defendants work was slowed down by the plaintiffs delays and the slow progress of the work of the plaintiff. He said that the defendants boys were not continuously on site unlike his project manager who was always there. He conceded however that the suspended ceiling was not completed when the defendant left and that accordingly the lights for that area had not been installed. However he accepted the employment of his project manager was terminated around mid-September and that he then took over his duties and responsibilities. He also denied that at this time he was negotiating with the replacement contractor to take over and I find no substance in that suggestion. He further denied he had asked the defendant to do additional work in the internet area located to the right side and separate from the Contract areas. Craig maintained this was not part of the contract work and the defendant did work there of his own motion.

[11] The defendant confirmed in his evidence his original quote of $97,000 was reduced to $80,000 at the plaintiffs request. This became the agreed contract sum and the Contract area was that highlighted in yellow by him on "D-1" and "D-2" excluding the internet area to the right. Those plans were identical to site plans kept by the plaintiffs project manager and were marked in the same fashion by Mr Craig for the plaintiff except for the orange markings on the documents exhibited which represented the work done by him as at the walkout date. He also said that Craig told him that if he could complete the work in eleven weeks he would be given the chance to quote on the internet area works.

[12] Notwithstanding what the defendant says, there is no evidence supporting the conclusion that the 11 week period was a specific term of the Contract. The plaintiffs witness also strongly denied it and there is no reference to such term in the Contract documents but I accept this promise was as a matter of fact held out to the defendant. This was confirmed by the evidence of the plaintiffs then Project Manager but the promise was in my view more an incentive or invitation to treat in respect of a separate contract or arrangement to execute works in the internet area. As it turned out these works were done in any event as a variation of the original contract.

[13] In mid-June 2007 the defendant said he started the contract works and as the job was a renovation, the first task was to remove all the old wiring and fittings. He noticed some had been removed already but his crew removed what was left which was most of it. And it is to be noted at this juncture that notwithstanding Craigs evidence to the contrary, it was a specific term of the Contract for the defendant to attend to removal of all old wiring and fittings: see defendants letter of offer dated 11 June 2007 accepted by the plaintiffs letter wrongly dated 7 June 2007 instead of 17 June 2007 but which states –

"We have accepted your price all in accordance with your quotation dated 11 June 2007."

[14] The defendant then set about cutting into and chipping away at the concrete walls in order to be able to run the replacement conduits and cables. This work he said took a great deal of time as these things normally do in a renovation and he went about installing conduits, flux boxes and new cabling as required by the site plans. According to the defendant they completed all the work they were contracted to do except for installation of the lights in the drop-ceiling area and that was because of the delay in the arrival of the drop-ceiling. His evidence was that every day his boys would visit the site to see if the drop-ceiling had been installed with no success. They completed what they could and after several visits he told his crew not to bother any more. He also noted the plaintiffs Project Manager had been dismissed and nothing seemed to be happening on the SamoaTel site. He denied being advised by Craig of the reasons for the shipping delay and said he was told of this by the SamoaTel Project Manager and there being no further progress on the site he pulled his crew.

[15] His further evidence was that extra work was carried out inside the internet area but on instructions from Mr Craig. The outside lights of that area were part of the original contract works – see Exhibit "D-1" as highlighted in yellow, but the inside area was not. He regarded these extras as a variation to the Contract and has therefore counter claimed for $1839.89 for the work.

[16] In addition the defendant counter claims for the sum of $20,000 as he said that when they walked out, more than 60% of the contract works had been performed. This Counter Claim is based on a 60% claim for the contract sum less the progress claim but plus the agreed 10% retention. In this regard it is relevant to note that the contract sum was for labour and materials and that as per the defendants evidence, the unused materials (being the lights for the drop-ceiling area) that were ordered for the job were subsequently sold by him to the replacement contractor for $19,000. A sum which the defendant in his evidence said covered any loss he may have suffered as a result of this matter and a sum he was prepared to forgo claiming as he knew Craig well, but now wishes to counter claim as a response to the plaintiffs claim.

[17] The defendants evidence is supported by his brother Esoto Esoto who worked for him and who supervised the SamoaTel job. He identified the relevant drawings and said that when they left, the only work outstanding were the drop-ceiling fixtures. He also confirmed they carried out work in the internet area on the instructions of the plaintiffs supervisor (presumably this being a reference to the plaintiffs Project Manger) and further confirmed the work the defendant says they did in respect of the original contract area. In cross examination he said he dealt mostly with the plaintiffs Project Manager because Mr Craig was not there most days.

[18] The plaintiffs former Project Manager Mr Wallace Toma was called as a witness for the defendant. I assessed him to be a very credible and sound witness. He confirmed the defendants evidence in many respects. He said the defendant was given eleven weeks to complete the contract and one week for commissioning. The contract works were denoted on a site plan identical to "D-1" with the contract area marked thereon by the plaintiffs Managing Director. The area excluded the inside internet area. He testified the defendant carried out all the work contracted for including installation of the necessary power distribution boards except in the drop-ceiling area as there was no ceiling and except in respect of the counter switches as there were no counters installed; for the counter area see the bottom of Exhibit "D-2". The drop-ceiling came from overseas and did arrive late. He did not address however why the counters had not been installed.

[19] The defendants crew he said started work in about the sixth week of the Contract after they had prepared the relevant areas and work continued until the 10th week of the Contract when he told them not to come because most of their work had been done but to check periodically in case something was required. He also confirmed the defendant had ordered the balance of the materials to complete the job in the drop-ceiling area being the drop- ceiling lights and fixtures which were expensive and very fragile. These had been sighted by his employer Mr Craig but as the SamoaTel site was not secure, these materials were agreed to be stored at the defendants premises. He left the plaintiffs employ the third week of September 2007 as his contract was not renewed by Mr Craig and in his view, the defendants work by that time was 80% completed. He also confirmed the defendants boys worked in the internet area and that this was extra work.

[20] The preponderance of evidence heavily favours the defendant. It shows he had completed at least 60% of the contracted work and while Mr Toma said it was 80%, I must bear in mind this is a previous employee whose contract was for reasons not explored, not renewed by the plaintiff and who left while the SamoaTel job was still in progress. This suggests he did not part on cordial terms with the plaintiff and his claims may therefore be subject to a little exaggeration. It is also apparent the drop-ceiling covered a large area and the defendants claim of 60% completion accords with the rest of the evidence. I reject the plaintiffs suggestion that the work performed was not even worth the amount of the progress payment made as there was no mention of substandard or inadequate work until things went sour between the parties. The progress payment was made without any complaint from the plaintiff. A man as meticulous as Craig with his letters would no doubt have recorded something in writing had that been the case.

[21] The plaintiff therefore has no evidentiary basis for alleging a breach of contract by the defendant. It seems to me it was the defendant who was hard done by as he had executed his part of the bargain as far as reasonably possible and in a conscientious and work like manner all within the eleven/twelve week parameter set by the plaintiffs Managing Director. The fact that the replacement contractor charged the plaintiff about $40,000 being his quoted price of $60,000 less the $19,000 for purchase of materials to complete the original contract is a matter between the replacement contractor and the plaintiff. It does not assist the plaintiff in this case and in any event, I heard no testimony from the replacement contractor.

[22] The plaintiffs claim has no merit. It should be dismissed with costs to the defendant. Even if I took a contrary view I agree with defence counsels submission that the basis of the plaintiffs alleged losses are nonsensical.

[23] As to the defendants counter claims they must succeed. Firstly as to the sum of $20,000 being the balance of 60% of the contract price. I find however that this loss was defrayed by the defendants sale of the remaining contract materials to the replacement contractor for $19,000. This was acknowledged by the defendant in his evidence and it is to be noted that the defendants original quote was of course for labour and materials. In respect of that therefore I award the defendant the balance remaining of $1,000 in damages.

[24] As to the second counter claim for $1,839.89 for the extra work done this has been established to the courts satisfaction, that succeeds in its entirety. The defendant is also entitled to costs on the Counter Claims.

Supreme Court of Samoa

Alfrenzo Construction Ltd v Esoto [2010] WSSC 72 (11 June 2010)