Pupu v Tourism Development Corporation [2002] PGLawRp 36; [2002 PNGLR 201 (28 June 2002)

NATIONAL COURT OF JUSTICE

MICHAEL YAI PUPU
trading under the name and style of
SOUTH PACIFIC ARTS

V

TOURISM DEVELOPMENT CORPORATION

Waigani: Gavara-Nanu J
15, 19 March; 31 May; 28 June 2002

AGENCY – Principal and agent – Actual and ostensible authority of an agent – Agent acting in the course of his duties – Principal bound by the contract made by the agent – Agent acting within the scope of his authority.

underlying law – Principal and agent – Common law doctrine of 'ratification' – Applicability and appropriateness of the doctrine – Constitution, Schedule 2.2(1) – Circumstances in which the doctrine may be applied – Requirements constituting the doctrine – By its adoption, the doctrine is part of the underlying law.

CONTRACT – Goods Act, 1951- ss.3(1) and 5 (1) – Contract of sale of goods implied from the conduct of the parties.

practice and procedure – Inordinate delay by the plaintiff to bring proceedings to trial – Such delay is a justification for the reduction in the interest ordered – Illegality of contract specially pleaded O 8 rr 14 and 20

Facts

The plaintiff sued the defendant for the cost of artifacts he delivered to the defendant pursuant to an alleged contract of purchase. The defendant denied any agreement to purchase the artefacts

Held

1. The existence of a contract of sale of goods can be determined from writing between and the conduct of the parties
2. The Defendant is bound by transactions entered into by its agent in the course of his duties and within the scope of his authority;
3. The issue of illegality of contact can only be raised at the trial if specially pleaded.

Papua New Guinea cases cited

Johns v Thomason [1976] PNGLR 15.

Other cases cited

Derham and Another v Amev Life Assurance Company Ltd [1981] 56 FLR 34.

Durant v Roberts [1900] 1QB 629.

Firth v Staines [1897] UKLawRpKQB 86; [1897] 2 QB 70.

Freeman and Lockyer (A firm) v Buckhurst Park Properties Ltd and Another [1964] 2Q.B 480.

Hely Hutchinson v Brayhead Ltd and Another [1981] 1 Q.B.549.

Keighley v Durant [1901] UKLawRpAC 21; [1901] A.C 240.

Ruben and Another v Great Fingall Consolidated and Others [1906] UKLawRpAC 31; [1906] A.C 489.

Stewart v Kennedy (1890) 15 App.Cases 75.

Counsel

A Manase, for the plaintiff.
M Kua, for the respondent.

28 June 2002

Gavara-nanu J. The plaintiff issued these proceedings on 14th October, 1992, claiming K156,409.50 against the defendant for the cost of the artifacts the plaintiff delivered to the defendant in July, 1991.

The plaintiff claims that, pursuant to the contract made between him and the defendant on or about 18 March 1991, the plaintiff agreed to sell the artifacts to the defendant and the defendant agreed to buy the artifacts from the plaintiff, and the plaintiff as the result, on or about 10th July 1991, delivered the artifacts to a shed, nominated by the defendant in downtown Port Moresby, (hereinafter referred to as 'the shed' ).

When the artifacts were delivered to the defendant, the defendant was invoiced for each of the artifacts and it was the understanding of the plaintiff that the defendant would pay him for the artifacts later.

The plaintiff has produced the numbers of all the invoices that were issued to the defendant for the artifacts. Those invoice numbers appear in paragraph 4 of the Statement of Claim. Apart from the prices of the artifacts, the invoices show the dates on which they were issued, the types of artifacts for which the invoices were issued and the parts of the country from which the artifacts were purchased.

The plaintiff claims that, the defendant had wrongly failed or refused to pay K 156, 409.50, for the artefacts

The evidence

The plaintiff gave evidence, apart from the affidavit, he swore on 17th March 2000, which was tendered as Exhibit 'A.' He also called Mr Gideon Odawa, who also gave evidence but most of Mr. Odawa's evidence is in the affidavit he swore on 20 April 2000. Mr. Odawa is the manager of the plaintiff's artifacts business known as the 'South Pacific Arts.' The third witness for the plaintiff was Ms Roseanne Kia, a former employee of the defendant. She also gave evidence, but most of her evidence is also in the affidavit she swore on 20 April, 2000. The affidavits by Mr. Odawa and Ms Kia were also tendered in evidence as Exhibits 'B' and 'C."

The plaintiff said the artifacts were purchased from various parts of the country by Mr. Odawa through his business agents. The artifacts were then brought to Port Moresby where they were initially stored in the plaintiff's own warehouse at Gordons. This is corroborated by Mr. Odawa.

In 1991, he was going to wind up his artifacts business and that led to the negotiations between him and the defendant for the defendant to purchase the business.

Following the discussions and negotiations between the plaintiff and the officials of the defendant, Ms Kia was directed by Mr Stalin Jawa, a senior manager in the defendant to go to the plaintiff's warehouse and do a stock take of all the plaintiff's artifacts. As the result of that direction, Ms Kia did the stock take of the plaintiff's artifacts and priced them with the assistance of Mr. Odawa. According to Mr. Odawa, the prices of the artifacts were discounted by 30% at the direction of the plaintiff, because of the understanding that the defendant was going to buy them. Mr. Odawa worked out the prices of each of the artifacts and Ms Kia noted those prices in the invoices. Mr. Odawa and Ms Kia corroborated each other on this. The plaintiff confirmed that he directed Mr. Odawa to give 30 % discount to the defendant on all the artifacts.

Ms Kia was employed by the defendant from 1985 to 1993 as the Hand Craft Officer. She confirmed that, sometime in 1991, she went to the plaintiff's warehouse at Gordons at the direction of Mr. Jawa, and did a stock take of the plaintiff's artifacts, because the defendant was interested in buying the artifacts. The stock take took about two weeks. She said, she became aware of the defendant's interest in the artifacts, during the negotiations between the defendant and the plaintiff. She said, that was when she was introduced to the plaintiff by Mr. Jawa.

Ms Kia also confirmed that, the artifacts were subsequently transferred to the shed, where they were displayed in the Village Arts shop and later sold on behalf of the defendant, under her supervision to the local buyers, dealers and tourists coming in from boats. She denied that the artifacts were taken to the shed for storage. She said, defendant's senior managers including Mr. Jawa were fully aware of the artifacts being transferred to the Village Arts shop in the shed. According to Ms Kia, the money collected from the sale of the artifacts were received and kept by the defendant, the plaintiff did not receive any of the proceeds. Ms Kia also said that, some of the artifacts were taken to Cook Islands later in 1991, during the South Pacific Arts Festival and sold there. She attended that festival as part of her work and as far as she knew, all the stocks she took to that festival were sold out.

Ms Kia said, Mr. Jawa's direction to her to do the stock take of the artifacts and then to transfer the artifacts to the shed was in a letter. Mr Monte Gore, another former employee of the defendant, assisted her to do the stock take. Mr Gore is now deceased.

The plaintiff deposed in his affidavit that, the artifacts were delivered to the shed at the request of Mr Greg Nongas who was then employed by the defendant. He said, he and Mr Odawa helped in the setting up of the Village Arts shop in the shed.

The plaintiff said, the agreement with the defendant was partly in writing and partly verbal and the part in writing was by a letter from Mr. Jawa, dated 15th August, 1991, to the plaintiff. In that letter, Mr. Jawa informed the plaintiff that the defendant was interested in his artifacts as previously discussed in the defendant's office. In paragraph 2 of the letter, Mr. Jawa told the plaintiff that, he was going to discuss the matter further with the Managing Director and the General Manager of the defendant, then in the following week they would telephone the plaintiff and confirm the date of their next meeting.

The defendant's first witness was Dr Simet, the Managing Director of the defendant. Dr Simet's evidence was not completed because the plaintiff's counsel objected to him giving further evidence, when he started to give evidence about the complaints he received from some of the Sepik carvers who had disputed the ownership of the artifacts. The objection was taken because the defendant never took issue on the ownership of the artifacts from the start of the proceedings, neither was it pleaded in its defence. Dr Simet's evidence attempted to assert that the plaintiff was not the owner of the artifacts. The objection was upheld, after which, the defendant's counsel decided not to adduce further evidence from Dr Simet. It is to be noted that it was the decision of the defendant's counsel to stop Dr Simet from giving further evidence.

The defendant's second witness was Mr Greg Nongas. He is no longer employed by the defendant but is an unattached officer of the defendant and is still on the defendant's pay roll. In 1992, he was the Assistant Marketing and Promotions Manager for the defendant, but before that, he was the Cultural Extension Officer Level 2.

He denied that there was an agreement between the plaintiff and the defendant for the defendant to buy the artifacts from the plaintiff. He was Mr Jawa's subordinate. He described Ms Kia's position when employed by the defendant as the Cultural Officer – Marketing. He said, he was involved in establishing the Village Arts shop in the shed, and later in the display and the sale of the artifacts to the buyers on behalf of the defendant. He said, he learnt that the artifacts were owned by the plaintiff, when the artifacts were in the shed. But he confirmed going to the plaintiff's warehouse in Gordons to see the artifacts, before they were transferred to the shed.

Mr. Nongas agreed that he would not have known if Mr Jawa had negotiated for the purchase of the artifacts from the plaintiff and to have them delivered to the shed. He confirmed that the monies received from the sale of the artifacts were received and kept by the defendant.

The third witness for the defendant was Mr. Jawa. He was shown the letter, which is ANNEXURE MPY '1' to the plaintiff's affidavit. This is the letter the plaintiff relied on as forming part of the contract between him and the defendant for the sale of his artifacts to the defendant. He said, that letter was merely to inform the plaintiff of the defendant's interest in the artifacts. He said, after that letter, which he admitted writing, the Cultural Extension Division of the defendant had an awareness discussion with the plaintiff to establish the Village Arts shop. The other reason for the discussion, was for the defendant's officials to look at the plaintiff's artifacts for the Village Arts shop, because the plaintiff was winding up and the defendant was interested in them. He nonetheless, denied that there was an agreement for the defendant to buy the artifacts from the plaintiff. He agreed that he introduced Ms Kia to the plaintiff, during his negotiations with the plaintiff and directed Ms Kia to do the stock take of all the artifacts in the plaintiff's warehouse which the defendant wanted to buy. He was aware of Ms Kia and Mr. Gore later going to the plaintiff's warehouse and doing the stock take, following his direction to Ms Kia, but denied any knowledge about the artifacts been transferred to the shed. He said all these happened in about July of 1991, when they were looking for new artifacts for the Village Arts shop.

When pressed under cross-examination as to why he did not stop Ms Kia and Mr Gore from continuing to do the stock take of the artifacts for about two weeks, he said, the stock take was done only for purposes of information for another officer in the defendant. He said, no report was made to him on the stock take.

Submissions

(i) Submissions by the plaintiff

Mr Manase submitted for the plaintiff that the agreement for the sale of the artifacts in 1991, between the plaintiff and the defendant was made after intense negotiations between the defendant's officers and the plaintiff. He also submitted that, Mr Jawa's letter to the plaintiff was part of the agreement. This he argued is implicit in the conduct of the parties. It was further submitted that, Mr Jawa's evidence makes it clear that the defendant had agreed to buy the artifacts from the plaintiff.

Mr. Manase emphasized the point that the agreement between the parties for the defendant to buy the artifacts was because the South Pacific Arts was winding up, and for that reason also, Mr. Jawa's letter to the plaintiff was preceded and followed by the discussions between the plaintiff and the defendant, which resulted in Mr. Jawa directing Ms Kia and Mr. Gore to do the stock take of the artifacts. That was then followed by the artifacts been transferred to the shed, and eventually sold for the defendant. He argued that, these circumstances constituted the contract for sale of the artifacts to the defendant, pursuant to ss 3 (1) and 5 (1) of the Goods Act 1951.

It was further argued that, in the normal course of business, the defendant could not just walk into the plaintiff's warehouse and spend two weeks doing stock take of the plaintiff's artifacts. Here, the defendant did, because the defendant had agreed to buy the artifacts. The counsel argued that the plaintiff would not have allowed the stock take had there been no such agreement. Further more, the fact that the invoices were issued to the defendant by the plaintiff for the artifacts, is clear evidence that the artifacts were to be sold or sold to the defendant.

The other aspect of the case, which the counsel pressed, was that, the defendant's managers knew that Ms Kia and Mr Gore took about two weeks to do the stock take of the artifacts, but did not stop them because the defendant was going to buy the artifacts. The counsel argued that, this was therefore more than a mere interest by the defendant on the artifacts. The counsel urged the Court to deduce from the conducts of the defendant that, it did agree to buy the artifacts. It was further submitted that, the defendant had accepted the artifacts because they were never returned to the plaintiff and had received and kept all the proceeds from the sale of the artifacts.

The counsel submitted that the contract between the parties can thus be implied from their conducts, pursuant to s 5 (1) (b) of the Goods Act, 1951.

(ii) Submissions by the defendant

Mr. Kua for the defendant, agreed with the submissions by the plaintiff's counsel on the application of s 5 (1) (b) of the Goods Act, 1951, in that, the contract between the parties can be implied from the conduct of the parties. He also submitted that the defendant did not dispute the transfer or delivery of the artifacts to the defendant. It was however submitted that the Public Finance Management Act was breached in the sale or agreement for the sale of the artifacts because the amount involved was in excess of K100,000.00, for which public tenders should have been called. It was also submitted that, there was no Certificate of Expediency, therefore, any such contract was illegal. The counsel said he could not take it any further than these requirements under the Public Finance Management Act. As his final submission, Mr Kua argued that, if the argument on the application of the Public Finance Management Act, was rejected then, the amount claimed by the plaintiff should be reduced to allow for the depreciated value of the artifacts. The counsel did not make any submissions on the cross-claim by the defendant.

Plaintiff's reply

In his brief reply, Mr. Manase submitted that, the Public Finance Management Act has not been pleaded by the defendant in its defence, therefore it should not be raised at this stage, as that is barred by Order 8 rr 14 and 20, of the National Court Rules. He argued that the defendant is bound by its defence.

Reasons for decision

Contract of sale

In my opinion, there is overwhelming evidence upon which this Court can find that, the parties had agreed to sell and buy the artifacts. Mr Jawa's letter to the defendant and the subsequent conducts of the parties, make this clear. Such finding accords with ss 3 (1) and 5 (1)(a) and (b) of the Goods Act, 1951.

These provisions are under Division 1 of PART II of the Act. PART II deals with SALE OF GOODS and Division 1 deals with the Formation of Contract.

Section 3(1) provides:-

"3. Sale and agreement to sell.

(1) A contract of sale of goods is a contract where the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price."

Section 5 (1) provides:-

"5. Making of contract of sale.

(1) Subject to this and any other Act a contract of sale—

(a) may be made—

(i) in writing, with or without seal; or

(ii) by word of mouth; or

(iii) partly in writing and partly by word of mouth; or

(b) may be implied from the conduct of the parties.

The defendant through its counsel has conceded that there was sale or agreement for the sale of the artifacts from the plaintiff to the defendant. Therefore, the only dispute as far as the defendant is concerned is the legality of that sale or the agreement for sale, because, according to the defendant, the sale or the agreement for sale was in breach of the Public Finance Management Act. This argument must fail, because, the defendant did not plead illegality. As I indicated to the counsel, the issue of illegality should have been specifically pleaded in the defence, as required by Order 8 rr 14 and 20 of the National Court Rules. The defendant cannot raise it now. That being the only defence raised by the defendant, I find that the defendant has no defence to the plaintiff's claim.

Agency

There is the other fundamental reason why the defendant is liable for the plaintiff's claim. The case evolves around the principle or law of principal and agent, in that, Mr. Jawa being an agent of the defendant, the defendant is bound by the contractual transactions Mr. Jawa entered into with the plaintiff.

Ms Kia and Mr. Gore had full and express authority from the defendant through Mr. Jawa, to do the stock take of the artifacts and to transfer them to the shed, where the Village Arts shop was set up, and where Ms Kia and Mr Gore supervised the sale of the artifacts to the tourists, dealers and other buyers, on behalf of the defendant.

Mr Jawa denied any knowledge that the artifacts were transferred to the shed, but I find that difficult to believe because the artifacts were eventually sold at the Village Arts shop, which he helped to set up. I think, he has not been truthful in that respect. In any case, this is a non issue because, the plaintiff through its counsel told the Court that, it did not dispute the transfer or delivery of the artifacts to the shed.

I also do not believe Mr. Nonga's evidence that he only learnt at the Village Arts shop that the artifacts belonged to the plaintiff because, he was part of the negotiations with the plaintiff on the sale of the artifacts to the defendant and he admitted seeing the artifacts at the plaintiff's warehouse at Gordons.

Mr Jawa's discussions with the plaintiff which preceded the stock take and the sale of the artifacts at the Village Arts shop, were made in his capacity as a manager, and on behalf of the defendant; and were made in the course of his duties and within the scope of his authority. He had both actual and ostensible authority to enter into such transactions with the plaintiff, which were binding on the defendant. The actual authority is implicit in the conduct of the parties and the circumstances of the case. The observations made by Lord Denning M.R in Hely-Hutchinson v Brayhead Ltd and Another [1968] 1 Q.B 549 at page 483, is an elaboration of this point.
His Lordship said:

"I need not consider at length the law on the authority of an agent, actual, apparent, or ostensible. That has been done in the judgments of this court in Freeman & Lockyer v Buckhurst Part Properties (Mangal) Ltd, ([1964] 2 Q.B 480). It is there shown that actual authority may be express or implied. It is express when it is given by express words, such as when a board of directors pass a resolution which authorizes two of their number to sign cheques. It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorize him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside it."

His Lordship in further elaborating the law, went to say at pages 583 – 584:

"Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority, but also with ostensible authority to do all such things as fall within the usual scope of that office. Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director. But sometimes ostensible authority exceeds actual authority. For instance, when the board appoint a managing director, they may expressly limit his authority by saying he is not to order goods worth more than £500 without the sanction of the board. In that case his actual authority is subject to the £500 limitation, but his ostensible authority includes all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation. He may himself do the "holding-out". Thus, if he orders goods worth £1,000 and signs himself "Managing Director for and on behalf of the company," the company is bound to the other party who does not know of the £500 limitation, see (British Thomson-Houston Co. Ltd v Federated European Bank Ltd., ([1932] 2 K.B.176),which was quoted for this purpose by Pearson L.J. in Freeman & Lockyer. Even if the other party happens himself to be a director of the company, nevertheless the company may be bound by the ostensible authority. Suppose the managing director orders £1,000 worth of goods from a new director who has just joined the company and does not know of the £500 limitation, not having studied the minute book, the company may yet be bound. Lord Simonds in Morris v Kanssen, ([1964] A.C 459), envisaged that sort of case, which was considered by Roskill J. in the present case."

Then his Lordship at page 584 said:

"The judge held that Mr. Richards had ostensible or apparent authority to make the contract, but I think his findings carry with it the necessary inference that he had also actual authority, such authority being implied from the circumstance that the board by their conduct over many months had acquiesced in his acting as their chief executive and committing Brayhead Ltd. to contracts without the necessity of sanction from the board."

(my underlining).

Pearson L.J. made the same point at page 593:

"For the present purpose it is important to note that actual authority and ostensible authority are not mutually exclusive, and indeed, as Diplock L.J. pointed out, they generally co-exist and coincide. Therefore, the decision of the judge in the present case that there was ostensible authority does not preclude or stand in the way of a decision by this court on the facts found that there was actual authority, and for the reasons which have been given, which I need not seek to repeat, I would hold that there was proof of actual authority in this case."

The defendant had clearly held Mr. Jawa out as having authority to hold discussions with the plaintiff and to do other acts, on its behalf to buy the artifacts. Therefore, the contractual transactions emanating from those discussions and actions, were at least within the scope of Mr Jawa's ostensible authority. The defendant is thus, by principles of equity, estopped from disputing the validity and the binding effect of such transactions on it, see also Ruben and Another v Great Fingall Consolidated and Others [1906] UKLawRpAC 31; [1906] AC 489, and see Derham and Another v Amev Life Assurance Company Ltd [1981] 56 FLR 34 at p.46.

Chesire and Fifoot on – The Law of Contract, 4th Edition at page 526 discusses ostensible authority this way:

" ...As to ostensible authority, the general rule under the law of "holding out" applies; a principal, who acts as to make it appear that he has conferred upon his agent authority to make either a certain contract or certain disposition of goods, is estopped from disputing the validity of the transaction as against a person who dealt for value with the agent in the bona fide belief that the authority had actually been given. It is then irrelevant whether the agent had or did not have the actual authority".

Pearson L.J. discussed the law on agent's ostensible authority in Freeman & Lockyer (A firm) v Buckhurst Park Properties (Mangal) Ltd and Another [1964] 2QB 480, at p.498 in this way:

"In my view the decision of the judge was correct. On the facts as found the plaintiffs were entitled to rely on Kapoor's ostensible authority to give them instructions on behalf of the company because there was a holding out of Kapoor by the company as its agent to conduct its business within the ordinary scope of that business. The expressions "ostensible authority" and "holding out" are somewhat vague. The basis of them, when the situation is analysed, is an estoppel by representation. The agent professes to act on behalf of the company, and he thereby impliedly represents and warrants that he has authority from the company to do so: Firbank's Executors v Humphreys., [(1886) 18 Q.B.D.54 at page 62)]. We are concerned in this case only with the representation, and not with the warranty which in some other case might give to the other contracting party a right of action for damages for breach of warranty. In this case the company has known of and acquiesced in the agent professing to act on its behalf, and thereby impliedly representing that he has the company's authority to do so. The company is considered to have made the representation, or caused it to be made or at any rate to be responsible for it. Accordingly, as against the other contracting party, who has altered his position in reliance on the representation, the company is estopped from denying the truth of the representation."

In this case, the plaintiff in relying upon the representations made to him by Mr. Jawa and other employees of the defendant. They invoiced the defendant for the artifacts on discounted prices, then transferred the artifacts to the shed nominated by the defendant, where they were eventually sold for the defendant.

In the circumstances, the plaintiff was even entitled to assume that the defendant had agreed to buy his artifacts based on the representations made by Mr. Jawa. There is another reason - the fact the defendant had sat back and said nothing to stop the stock take which took about two weeks to complete and then the subsequent transfer of the artifacts to the shed where they were sold for the defendant, means that by its silence and inaction, the defendant had acquiesced in the transactions.

Even assuming that Mr. Jawa had no authority at all to enter into such negotiations and contractual transactions with the plaintiff, the fact that the artifacts were later transferred to the shed with the full knowledge of the defendant, then subsequently sold by the defendant who then received and kept the proceeds from those sales, is in my opinion, a clear evidence or proof that the defendant had by such subsequent adoptive acts, ratified the negotiations and transactions between its employees or agents and the plaintiff. The defendant is therefore bound by such transactions.

Ratification is a common law doctrine. It which was adopted in this jurisdiction by Frost CJ in Johns v Thomason [1976] PNGLR 15, where his Honour held that the doctrine is applicable and appropriate, pursuant to Schedule 2.2(1) of the Constitution, in circumstances whereby, an act which, at the time it was entered into or done by an agent, lacked the authority, express or implied, of a principal. The subsequent conduct of the principal became ratified, either by clear adoptive acts or by acquiescence.

I find that the doctrine as discussed and applied in Johns v Thomason (supra) would be appropriate and applicable in the circumstances of this case, and I respectfully adopt his Honour's remarks on the point.

The remarks by Frost C.J in Johns v Thomason (supra) were based on the statement of the doctrine in Halsbury's Laws of England, 4th Ed.,Vol. 1 at para.756.

I also, respectfully, cite in concurrence, a number of English authorities, where the principle or doctrine was discussed and adopted; for instance, the House of Lords decision, in Stewart v Kennedy (1890) 15 App. Cases 75, where Lord Watson at page 99 said:

"...Ratification by a court of law may, in my opinion, signify that the court is to examine the transaction submitted to it, and to decide according to its discretion whether the terms of the transaction are such that the parties ought or ought not to be bound by the agreement which they have made; or it may mean that the court is to give its formal approval, without reference to the terms of the transaction, on being satisfied that due provision has been made for protecting and securing the legal interests of third parties which would be prejudicially affected if no such provision were made."

In Firth v Staines [1890] 2 QB 70 at page 78, Wright J., said:

"To constitute a valid ratification, three conditions must be satisfied: first, the agent whose act is sought to be ratified must have purported to act for the principal; secondly, at the time the act was done, the agent must have had a competent principal; and thirdly, at the time of the ratification the principal must be legally capable of doing the act himself".

The Court of Appeal by majority in Durant v Roberts [1900] UKLawRpKQB 45; [1900] 1 Q B, 629, held that the second of the three requirements stated in Firth v Staines (supra) was not essential but that decision was reversed by the House of Lords in Keighley v Durant [1901] UKLawRpAC 21; [1901] A.C 240.

The three requirements stated in Firth v Staines (supra) would have clearly been satisfied in the case before me, in that, Mr. Jawa and Ms Kia and other employees of the defendant, having acted in the normal course of their duties, would have purported to act for the defendant; secondly, the defendant, being a duly incorporated entity, was at all material times competent; and thirdly, the actions binding the defendant were capable of being done by the defendant through its employees as the defendant had expressed interest to buy the artifacts.

I find the doctrine appropriate and applicable in this jurisdiction. Needless to say that, by virtue of its adoption in the jurisdiction, in Johns v Thomason (supra), the doctrine is part of the underlying law, pursuant to Schedule 2.2(1) of the Constitution. Probably, the greater significance of the doctrine lies in the commercial arena, as would have been in this case.

In the circumstances of this case though, it is clear that Mr. Jawa's actions as well as those of other employees, were authorised or deemed to have been authorised by the defendant, the defendant is thus bound by and liable to the plaintiff, for the transactions which emanated from those actions.

The counsel for the defendant submitted that in the event that the Court found in favour of the plaintiff, the damages awarded to the plaintiff should allow for the depreciated value of the artifacts. That submission cannot succeed because, the plaintiff is entitled to the value of the artifacts as at the time they were delivered to the defendant, and the evidence before the Court is that, at the time of their delivery, they were of very good quality.

Nonetheless, the question still remains as to whether the plaintiff is entitled to K156,409.50. This amount is taken from Annexure MPY '3' to the plaintiff's affidavit. This Annexure is the document showing the particulars of the invoices purportedly issued to the defendant including the amounts for those invoices. The document was personally typed and prepared by the plaintiff. In paragraph 14 of the plaintiff's affidavit, the plaintiff deposed that the particulars of the invoices shown in MPY '3' were taken from the hand written invoices issued to the defendant.

The particulars and the amounts shown in Annexure MPY '3' should therefore correspond with those in the hand written invoices which are shown in Annexure MPY '2' to the plaintiff's affidavit. The amount of K 156,409.50, which is the total amount for the invoices shown in Annexure MPY '3', should also agree with the total amount for the hand written invoices in MPY '2'.

The Annexure MPY '2' has invoices for July and August 1991. Only three invoices for July, have dates on them, namely 10th, 11th and 13th. For the invoices for August 1991, again, only three have dates on them, namely 12th, 13th and 26th.

In paragraph 3 of the Statement of Claim, the plaintiff claims K156,409.00, for the cost of the artifacts delivered to the defendant in July 1991. Then in paragraph 5, the plaintiff says, that in pursuance of a contract between him and the defendant, the plaintiff on or about 10 July, 1991, delivered the artifacts to the defendant and the defendant received and accepted the artifacts.

As noted, the Annexure MPY '2' of the plaintiff's affidavit is comprised of the invoices for July and August, 1991. I do not have problems with the invoices and the amounts for July, 1991, because I think they have been sufficiently pleaded in paragraph 3 of the Statement of Claim. As to the invoices and the amounts for August, 1991, the plaintiff has not pleaded them. Even the particulars and the amounts provided in paragraph 4 of the Statement of Claim do not tally with the amounts appearing in the invoices for August, 1991, in Annexure MPY '2'. These are major discrepancies. The plaintiff has the onus to prove its claim on the balance of probabilities. Given these discrepancies, and the fact that the invoices and the amounts for August 1991, not having been pleaded, I find that the plaintiff has not proved his claim in respect of the amounts for August 1991. He therefore cannot claim for the amounts invoiced for August 1991.

As to the amounts for the invoices issued for July 1991, despite the figures not agreeing with the particulars provided in paragraph 4 of the Statement of Claim, I am satisfied that they have been sufficiently pleaded under paragraph 3 of the Statement of Claim and have been proved on the balance of probabilities, the plaintiff is therefore entitled to claim for those amounts which according to the last invoice, altogether amount to K 84,773.00. I award this amount to the plaintiff.

Interest

The plaintiff issued these proceedings on 14 October 1992. There has in my opinion been an inordinate delay by the plaintiff in having these proceedings tried. The plaintiff also has in my opinion failed to mitigate his damages. For these reasons, I will award interest at 4 % per annum on the principal amount. The interest will be calculated from the date of the writ to the date of the judgement, which is today, 28 June 2002. This is a period of 9 years 8 months 2 weeks.

Calculation of interest at 4 %

- Interest for 9 years is 4 % of K 84,773.00 x 9 years
: 4 % of K 84,773.00 = K 3,390.92 x 9 years = K 30,518.28
- Interest for 8 months = 4 % of K 84,773.00 -:- 12 months x 8 months : K 3,390.92 -:- K 282.57666 x 8 months = K 2,260.61

- Interest for 2 weeks = 4 % of K 84,772.00 -:- 12 months -:- 4 weeks x 2
: K 3,390.92 -:- 12 = K 282.57666 -:- 4 = K 70,644165 x 2 = K 141.29
The total interest is K 30,518.28 + K 2,260.61 + K 141.29 = K 32,920.18.

Therefore the total amount the defendant will pay to the plaintiff including interest, is K 117,693.18.

Cross – claim

The defendant cross-claimed for K 12,000.00, with interest at 8 % and costs. This cross-claim is for the defendant's claim that it kept and took care of the artifacts in the warehouse (shed). The defendant claimed that the plaintiff delivered the artifacts to its warehouse without its knowledge and approval. But the defendant has admitted during the trial through its counsel that, it was aware of the artifacts been delivered to the warehouse.
Indeed, the evidence before the Court, clearly show that the artifacts were delivered with the full knowledge of the defendant.

During the trial, it also became very clear that the defendant did not really dispute the plaintiff's ownership over the artifacts. All the other issues raised by the defendant in its cross-claim have also been negated by the plaintiff. It follows that, I must dismiss the defendant's cross-claim.

The defendant's cross-claim is dismissed.
The defendant will pay the plaintiff's costs.

Lawyer for the plaintiff: Pato Lawyers.
Lawyers for the defendant: Solicitor General.