N3750

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 34 OF 2005

BETWEEN:

PAUL KAUPA
Plaintiff

AND:

NATIONAL CAPITAL DISTRICT COMMISSION
Defendant

Waigani: Manuhu, J
2007: 6 November,
2009:19 August,

TORT – Equity – Quantum meriut –Defendant sought public tender for renovation to Office for Member for Moresby North East – Office space in building owned by Defendant – Proper accounting procedures not followed – Plaintiff carried renovation work in good faith – Defendant aware of and accepted renovation work carried out – Plaintiff entitled to damages.

Cases cited:

Papua New Guinea Cases

Delphi Corporate Investigations Limited v Bernard Kipit & National Capital District Commission (2003) N2480,

Overseas cases

Craven Ellis v Cannons Ltd [1936] 2 KB 403; [1936] 2 All ER 1066. 

Counsel:

J. Simbala, for the Plaintiff
G. Kaore, for the Defendant

19 August, 2009

1. MANUHU J.: This is a claim brought pursuant to the equitable principle of quantum meriut. The plaintiff is claiming the sum of K109,172.80 being the value of renovation work done to an office space in a building owned by the Defendant to accommodate the Member for Moresby North East.

2. On or about August 2002, the defendant invited local firms to tender for a building contract. A number of firms submitted their bids and the plaintiff was the successful bidder. The plaintiff was then given the scope of works outlining the specific nature of work required. 

3. Documentary evidence shows that the scope of works was contained in the letter head of the defendant. The defendant’s name, the appropriate division, postal address and contact details are found on the cover page of the document. It is not disputed that the building to be renovated by the plaintiff was owned by the defendant. There is no dispute that the plaintiff carried out and completed maintenance work as requested. 

4. When the plaintiff submitted his claim, the defendant refused to pay on the basis that there was no proper approval and that there was non-compliance with applicable financial procedures. It is secondly argued that the defendant could not be vicariously liable for the agreement between the plaintiff and the member for Moresby North East Electorate. 

5. These arguments raise factual and legal issues. The first issue is whether a claim in equity is maintainable despite breach of financial procedures. That is a question of law. The second issue is whether renovation work was done at the request of the defendant or the Member for Moresby North East. That is a question of fact. Vicarious liability would be an issue only if it is found that renovation work was requested by the Member for Moresby North East. 

6. The Magistrates Manual of Papua New Guinea (Hill & Powles, Law Book Co., (2001) p. 270) defines quantum meriut, thus:

"Quantum meriut means ‘as much as the thing is worth’. It is an award of compensation that may be used where fairness requires it. Strictly speaking, quantum merit does not arise out of a contract. It arises where a party provides goods or services to another party, believing there is an agreement, and the other party accepts them. When the first party seeks to be compensated for goods and services, there is no contract to rely upon and therefore no breach. However, in circumstances where fairness requires, a court will compensate the party in an equal amount to that by which the other party was enriched by the goods or services." 

7. Thus, a claim based on equity is not dependent on contract. It is, therefore, not necessary to prove existence and breach of a binding contract. Even a voided contract is not a bar to a claim in equity for a party who has supplied goods or rendered service in good faith. 

8. The principle of quantum meriut is already part of the underlying law. In the case of Delphi Corporate Investigations Limited v Bernard Kipit & National Capital District Commission (2003) N2480, Gavara-Nanu, J. referred to the case of Craven Ellis v Cannons Ltd [1936] 2 KB 403; [1936] 2 All ER 1066, and relevantly summarized the decision of the Court of Appeal, thus:

"The Court of Appeal held that the agreement was void because the persons purporting to act as directors had no authority to bind the company. The claim therefore had to fail. However, since the services were rendered to the company and the company had benefited from those services, the alternative claim on quantum meriut could succeed." 

9. Accordingly, the argument on lack of compliance with proper financial procedures, while understandable, is in equity ineffective as a defence against a claim by a bona fide service provider. A plaintiff, who is a bona fide provider of goods or services, which is a detriment to him and a benefit to a defendant, cannot go without a remedy. 

10. In this case, compliance or lack of it was largely within the managerial powers and control of the defendant. The onus was on the defendant, as a public body dealing with rate payers’ funds, to comply with proper accounting procedures and subject the defendant to those procedures. The plaintiff was only responding to what the defendant asked of him, from when tenders were called to when work was completed. Upon engagement, the plaintiff carried out the work honestly believing that payment awaits him at the end of the day. 

11. It was the defendant which negligently or deliberately failed to ensure compliance with proper accounting procedures. It is unfair, therefore, to demand compliance against the plaintiff who was only providing service on request and provided such service in good faith. The argument on lack of compliance is, therefore, rejected.

12. In relation to the second issue, the building in question was owned by the defendant. The defendant called for tenders and subsequently came up with the scope of work to be done to the subject premises. Documentary evidence show that the defendant requested for the renovation work and, as such, would pay for it. I am further satisfied that the defendant was aware of what the plaintiff was doing to its building. There is no evidence of complaint in relation to the quality of work done by the plaintiff. 

13. I am also satisfied on the evidence that there was an arrangement in place for the defendant to provide an office space to accommodate the Member for Moresby North East and the defendant would be responsible for its maintenance for the simple reason that it owned the building. It was, therefore, the defendant’s responsibility to settle the plaintiffs invoices for renovation done to its building in order to accommodate the office of the Member for Moresby North East. 

14. Accordingly, the issue of vicarious liability does not arise.

15. In all the circumstances, I find for the plaintiff in the sum K109,172.80 plus 8 per cent interest to be calculated from date of filing of claim, and cost, which, if not agreed, shall be taxed.

Orders accordingly

_________________________________________

Harvey Nii Lawyers: Lawyer for the Plaintiff
George Kaore Lawyers: Lawyer for the Defendant