Teem (trading as Tropical Electronix) v Attorney General iro Kiribati National Audit Office [2024] KIHC 15; Civil Appeal 6 of 2023 (20 June 2024)

IN THE HIGH COURT OF KIRIBATI

HIGH COURT CIVIL APPEAL 6 of 2023

BETWEEN:
RONALD TEEM T/A TROPICAL ELECTRONIX
Appellant

AND:
ATTORNEY GENERAL IRO KIRIBATI NATIONAL AUDIT OFFICE
Respondent

Date of hearing: 27 MAY 2024
Date of Judgement: 20 JUNE 2024

Appearances: Ms. Taaira Timeon for the Appellant
Mr. Mikaere Kakiarerei for the Respondent

J U D G M E N T

Introduction

1. The appeal is against the decision of the magistrate courts in BetCiv 35/ 22, delivered on 6 March 2023.
   
2. For a brief background of the case, the appellant and respondent entered a sale agreement in December 2019. The appellant was engaged to supply five laptops to the respondent. The appellant received the total price of the laptops for AUD$4950. When the respondent did not receive the laptops, they took out court proceedings to recover their money back. The magistrate court ruled that there was a breach of contract and ordered the respondent to return the money.

Appeal Grounds

3. The appellant appealed on the following grounds:
   1. The decision was against the weight of the evidence, and
   2. The court erred in law by failing to apply correctly the doctrine of frustration of contract.

Grounds and analysis

4. The parties did not enter into any written contract. The agreement was made orally. The appellant claimed he had fulfilled his contractual obligation by sending the price of the five laptops to the supplier. His position is that the laptops had been packed and reached the courier service provider, but they had not arrived from the United States because of the lockdown during COVID-19. This information was conveyed sometime around April 2020, but the appellant gave assurance that he would work on the situation.
   
5. In July 2020, seven months after the oral agreement was made, the respondents noticed that goods ordered from overseas had started to arrive in Kiribati. They emailed the appellant to remind him about their laptops. The appellant responded that he had not received an update on the five laptops from his supplier. In September 2020, the respondent took the appellant to court for breach of contract. The appellant's defence was that the continuous storage fee for the laptops led to their auction, thereby frustrating the contract. However, the magistrate court did not accept this defence and ruled that the appellant had breached the agreement, ordering him to return the full price he received from the respondent.
   
6. Before the magistrate court, the appellant relied on two cases as follows;
   

-The case of Davis Contractors Limited v Farehaam UDC [1956] UKHL 3; [1956] AC 696 defines the principle of frustration. Counsel for the appellant raised this case in support of their submission. The relevant part is quoted below:

“Frustration occurs whenever the law recognizes that without the default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from which was undertaken by the contract.”

-The other case is Taylor v Cardwell 31 LJ (QB) 164, referred to in our own Kiribati case of Etuati Corrie v Captain Cook Hotel Limited [2010] KIHC; Civil Case 208 of 2010. The high court in Etuati recognized that the contract was frustrated when the generator broke down, which prevented the defendant from performing its contractual application to supply electricity to the plaintiff.

7. The cases mentioned above were also raised before this court by the appellant to support their appeal.
   
8. The respondent repeated the same argument they made before the magistrate court that frustration was not applicable. Still, a breach of the contract occurred when the appellant failed to provide the five laptops. They further submitted that the appellant only used frustration as an excuse. They said the appellant had told several lies to them regarding the status of the five laptops, and they could not provide the necessary documents to prove that they had purchased the laptops, nor could they provide the tracking number with the DHL when they said the laptops had been sent to this service provider.
   
9. It is clear from the court minutes that the decision of the magistrate court on the issue of frustration was based on two reasons;
   
   1. the appellant had failed to show they had done all they could to perform their obligations in the contract and that it was beyond their control because of the closure of borders that happened during the Covid-19 pandemic and
   2. the magistrate court accepted the evidence that during COVID-19, imported goods started to reach Kiribati again after delivery was paused for a while when the borders were closed.
      
10. As a trier of fact, the magistrate court is entitled to reach this decision after considering all evidence. I see no reason to change this decision because I also believe the reasons given by the magistrate court align with the principles of frustration defined in the first supporting case authority referred to above. In coming to that conclusion, the magistrate court believed frustration was not applicable; therefore, the contract was not frustrated.
    
11. The minutes of the proceedings below show no evidence that the performance of a contract has become impossible. There was no evidence to show that the appellant had tried to prevent the laptops from being auctioned, that they could not stop the storage fee, or that they had taken all reasonable steps to avoid or mitigate the risk. This is the appellant's obligation in order to succeed in the doctrine of frustration.
    
12. The other ground relates to the decision made against the weight of the evidence. This argument was based on the fact that there was unchallenged evidence of the appellant that he had paid the full price of the laptops to his overseas supplier, meaning he had fulfilled his contractual obligations. I'm afraid I have to disagree with this argument because paying the full price of the goods is only the beginning or part of the appellant’s obligation. When he sent the money, he was obligated to ensure the goods reached the respondent. He had failed to prove this before the magistrate court; therefore, it is fitting that the magistrate court found him in breach of their agreement.
    

Outcome

13. Given the above reasons, the appeal is dismissed with cost to the respondent to be agreed or taxed.
    

Order accordingly.

THE HON.TETIRO SEMILOTA MAATE MOANIBA
CHIEF JUSTICE