Joahens Rent A Car Ltd v Electoral Commission of Papua New Guinea [2021] PGNC 398; N9152 (22 September 2021)

N9152
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 815 OF 2013

BETWEEN
JOAHENS RENT A CAR LIMITED
Plaintiff

AND
ELECTORAL COMMISSION OF PAPUA NEW GUINEA
First Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Makail, J
2021: 29^th July & 22^nd September

LIABILITY– Breach of Contract – Contract for provision of services– Hire car services – Provision of motor vehicle for use to conduct General Election– Non-payment of services rendered – State Liability – Vicarious liability– Liability of Electoral Commission – Electoral Commission – Privity of contract – Electoral Commission sole party to the contract – State not party to the contract – Judgment on liability entered against Electoral Commission

DAMAGES – Damages assessed based on sum in various invoices – Invoices undisputed

Cases Cited:

AGC (Pacific) Limited v. Woo International Pty Ltd [1992] PNGLR 100

Counsel

Messrs D. Levy & J. Kondo, for Plaintiff
No appearance, for First Defendant
Mr. J. Bakaman, for Second Defendant

JUDGMENT

22^nd September, 2021

1. MAKAIL J: This is a trial on liability and assessment of damages for breach of contract for provision of services in what is commonly known as hire car services. The pleadings in the statement of claim do not state if the contract is in writing or oral or both and who entered into the contract on behalf of the defendants. There is a vague reference at paragraph 5 of the Statement of Claim to “the First defendant and its officials hired and used the plaintiff’s vehicles to conduct elections in the Western Highlands Province during the 2007 General Elections”. The total sum claimed is K203,480.00 based on ten invoices rendered to the first defendant for payment between 01^st May 2007 and 30^th September 2007.

2. The first defendant filed a defence on 26^th September 2013. It denied liability on the following grounds:

2.1. It did not enter into any contract for use of the plaintiff’s motor vehicles.

2.2. If it did, it did not authorise the contract and the contract is unenforceable.

2.3. In any event, the cause of action occurred more than six years after the alleged breach and is statute-barred under Section 16(1)(a) of the Frauds and Limitations Act 1988.

3. The second defendant filed a defence on 28^th August 2014. Its defence was a general denial.

4. At trial only the second defendant was represented by counsel from the Solicitor General’s office. No affidavits were tendered by both defendants.

5. It would appear that based on paragraphs 2 and 3 of the affidavit of the Managing Director of the plaintiff Mr Elijah Hon filed 10^th June 2014 it was a part oral and written contract made between him and Mr Kala Rawali the Election Manager of the Western Highlands Province.

6. According to Mr Hon the plaintiff provided three motor vehicles bearing registration numbers HAJ-000, HAI-984 and HAJ-767 to the first defendant to use during the 2007 General Election for a consideration of K600.00 per day per motor vehicle. He submitted a total of ten invoices totalling K204,480.00 for payment. The first defendant breached the contract when it failed to pay the total sum of K204,480.00.

Is the cause of action statute-barred?
7. As there was no appearance on behalf of the first defendant, there were no submissions made to support this defence. Thus, it shall be disregarded. However, if it were to be considered, it has not been made out because while the first invoice in the sum of K20,460.00 was issued on 26^th June 2007 no payment was received until 6^th October 2010 when Mr Rawali wrote to the Director Finance of the first defendant Mr Rex Av to settle the debt but received no response. I refer to the letter by Mr Rawali to Mr Av dated 6^th October 2010. The breach occurred on 6^th October 2010 and the time limitation of six years ran from that date until 6^th October 2016. The writ of summons was filed on 25^th July 2013. It was filed within time and the defence of the action being statute-barred is without merit and dismissed.

Did the first defendant not enter into any contract for use of the plaintiff’s motor vehicles?

8. The evidence is uncontroverted. Based on the affidavit of Mr Hon filed 10^th June 2014, I am satisfied that the plaintiff and the first defendant entered into a partly oral and written contract for use of the plaintiff’s motor vehicles. The contract was entered into by Mr Hon on behalf of the plaintiff and Mr Rawali on behalf of the first defendant. The second defendant is not privy to the contract. The Electoral Commission is a sole party to the contract. The plaintiff provided three motor vehicles bearing registration numbers HAJ-000, HAI-984 and HAJ-767 to the first defendant to use during the 2007 General Election for a consideration of K600.00 per day per motor vehicle. Mr Hon submitted a total of ten invoices totalling K204,480.00 for payment. The first defendant breached the contract when it failed to pay the total sum of K204,480.00.

If first defendant did, it did not authorise the contract and is the contract unenforceable?

9. Counsel for the plaintiff submitted that the contract is enforceable because Mr Rawali as the Election Manager of the first defendant had ostensible authority to enter into the contract on behalf of the first defendant. Thus, the first defendant is bound by his conduct and liable for damages arising from the breach.

10. Counsel for the second defendant pointed out that there is no evidence that the plaintiff complied with Section 47C & D of the Public Finances Management Act 1995 and Section 2A(2) of the Claims By and Against the State Act 1996 which provides for the requirement to provide an Integrated Local Purchase Order and Claim (“ILPOC”) and Authority to Pre-Commit Expenditure (“APCE”). The absence of this evidence rendered the contract illegal and unenforceable.

11. In the alternative, counsel submitted that if the plaintiff is eligible for damages to be assessed on quantum meruit, due to corruption where there is reportedly a high turnover of cases involving claimants against the State and its entities bypassing the statutory requirements under these legislations to unjustly enrich themselves, no damages should be awarded to the plaintiff.

12. The submission by the second defendant about corruption is of considerable importance but must be supported by evidence. At this stage, there is no evidence that the plaintiff procured the contract by fraud or deliberately by-passed the statutory requirements for an ILPOC and APCE under the respective relevant legislations.

13. On the other hand, the evidence by Mr Hon established that Mr Rawali approached him and informed him that he needed motor vehicles to use to conduct the General Elections in 2007. At no time was Mr Hon informed nor aware that he must obtain an ILPOC and APCE prior to lending his motor vehicles to Mr Rawali and his team to use. In any case, it has not been submitted by counsel for the second defendant that these statutory requirements were by necessary statutory amendments, applicable to a cause of action such as this, prior to these amendments. I doubt these amendments have any application to claims made prior to them coming into operation. I am further satisfied that Mr Rawali as the Election Manager had apparent or ostensible authority to enter into the contract on behalf of the first defendant and the first defendant is bound by the contract: see AGC (Pacific) Limited v. Woo International Pty Ltd [1992] PNGLR 100.

Damages

14. In terms of damages, damages will be assessed based on sum it claimed in the various invoices. Each sum claimed is undisputed. The total sum claimed is K204,480.00. I award this sum.
Conclusion and Order

15. In the result, contrary to the defence submission that the contract is illegal and unenforceable, I am satisfied that there is a valid and enforceable contract between the plaintiff and the first defendant. I am further satisfied that the first defendant breached the contract when it failed to pay the total sum of K204,480.00 to the plaintiff for the use of the plaintiff’s motor vehicles.

16. There shall be a judgment on liability against the first defendant with damages to be assessed at K204,480.00. As the second defendant is not privy to the contract, it is not liable and the action against it is dismissed. For clarity sake, the first defendant shall pay the sum of K204,480.00 to the plaintiff forthwith. Finally, the first defendant will pay the plaintiff’s costs of the proceeding, to be taxed, if not agreed.

Judgment and orders accordingly.
________________________________________________________________
Manase & Company Lawyers: Lawyers for Plaintiff
Parua Lawyers: Lawyers for First Defendant
Solicitor General: Lawyers for Second Defendant