Morrison v Attorney General [2016] SBHC 184; HCSI-CC 63 of 2016 (19 October 2016)

IN THE HIGH COURT
OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN: LENTY MORRISON, TRADING AS - Claimant

LENBROS CONSTRUCTION

AND: ATTORNEY GENERAL - 1^st Defendant

(for Ministry of Culture and Tourism)

Date of Hearing: 10 October 2016

Date of Judgment: 19 October 2016

Mr. R. Dive for claimant
Mrs. P. Taki for Attorney General

Application for balance of moneys due and owing under a service contract

Brown J:

By a Claim (Category B) a sum of $190,338.86 is sought from the Ministry of Culture and Tourism for the balance of a contract and variation for work done and material supplied for the Festival of Pacific Arts in 2012. The claimant says that the original agreement (Service Contract) with the Ministry of Culture and Tourism was for
$219,263-25 and later a further sum of $ 300,475.00 was agreed by the Administration Director of the National Organizing Committee of Solomon Islands Festival of Pacific Arts by way of scope of works “to join this existing VB stand to the Grandstand at Lawson Tama”.

In the claimants statement in support, Mr. Lenty Morrison, the proprietor of Lenbros Construction, says he undertook construction of an open grandstand at Lawson Tama for the Festival, after signing the contract with the Director of Administration, Mr. Charles Matanani. He says he was promised a copy of the contract but was never given one.

He says the agreed price for the construction was $ 219,263-25. In addition, a variation was awarded to tie in the existing grandstand to the new work, in the sum of
$ 300,475.00. The total amount of the contract and variation was $ 519,738-225.

He acknowledges receipt of two payments, $ 138,750 on the 24 December 2012 and
$ 190,649-39 on the 1 November 2012. It seems it was an accepted practice to withhold 7.5% of any contract sum for tax payable by the contractor so these sums were net of the tax withheld.
On that basis the claimant expected to receive $ 480,758-88 not the sum of the two payments, $ 327,399-39 that he received.

There was then, a contract plea for $219,263-25 unsupported by any document (for he was never given a Copy of the contract) and a claim for the variation awarded based on the Administration Director Minute to the Permanent Secretary Department of Ministry of Culture and Tourism dated 16 July 2012 with additional scope of works/net Amount of tender (Labour and Materials) by the tenderer, Lenbros Construction attached, in these terms.
“Please realize that a variation for the above work was costed but then the Artistic Director further requested that the grandstand be extended so that it joins the existing VB stand. Attached is the total variation cost and that the earlier one be disregarded”.

This additional scope of works quotation and the covering Minute are not contractual documents but a quotation to do the work, passed on to the relevant approving authority, the Ministry of Culture and Tourism for its delegated officer, the Permanent Secretary.

A payment Certificate form signed by the Chief Quantity Surveyor and the Chairman, Administration certifying inspecting of the work and requesting payment of $ 371,755-59 to be made to the contractor, was dated 21 April 2015.
As well, a draft payment certificate (unsigned) in the variation amount of $ 300,475-00 was exhibited.

The defence filed admitted the agreement in the initial amount of $ 219,263-25 and the fact of the variation for the additional sum of $ 300,475 but denied the variation was done in accordance with the formal requirement of variation.

The defence further admits payment for the contract sum and a portion of the variation sum but does not admit liability to pay the balance as the variation did not comply with the formal requirements under Financial Regulations.

In support the Ministry, by the Attorney-General, filed a Statement by Mr. Andrew Nihopara, who unfortunately, while stating his known facts were true failed to state in what capacity or on whose authority he purported to make the statement.
Annexed to the document were various forms and the contract dated 16 May 2012 which appears to be the original contract between Lenbros Construction and the Ministry. The contract has not been denied. It appears to bear Mr. Morrison’s signature and initials on the various pages. It states the construction cost for the grandstand to be $ 206,107-45.

Since Mr. Morrison is bound by his agreement, in spite of his recollection of the contract price being more, I find the initial contract was for $ 206,107-45.

Mr. Dive for the claimant sought to rely on the manner in which payment had been made, but the 1^st payment pursuant to the contract was for $ 190,649-39 on the 1 November 2012. If I take the tax from $206,107-45 at the accepted scale of 7.5% I am left with $ 190,649-39, the very sum paid by the Ministry to the contractor. The fact that the defence filed admits the contract sum in an amount of
$ 219,263-225 cannot be permitted to exclude the amount agreed in the written contract, for the Defence document is mistaken on that issue. I need say no more about that, for a Defence should be predicated by the documentary evidence of its client rather than admit assertions of the other party.

The payment Certificate form, referred to earlier, while reciting the contract sum of
$ 219,263-5 is erroneous, apparently relying on the Contractors assertions for the form cannot presume to alter the contract signed by the Permanent Secretary and the contractor. Consequently the first part of the claim relation to the written agreement has been met by the Department by payment.

The second part, the claimed variation does not have any Service Contract document in support but the claimant relies upon an implied contract for the additional work, authorized by the responsible authority, the Department.

For Mr. Dive says the contract for the variation may be implied by the part payment of the variation works payment of $ 138,750.00 received on the 24 December 2012. The issue, then with respect to the variation is whether a contract may be implied in the circumstances. The basis of the variation was set out in annexure AM6 to Mr. Nihopara’s statement. A Minute from the Administration Director, National Organizing Committee to the Permanent Secretary of the Ministry said:-
“Following the preparations for the opening and closing ceremony, the Artistic Director requested that the VB Grandstand at Lawson Tama was in adequate.

Lenbros Construction was awarded a contract to build the grandstand, however the grandstand did not join the existing VB stand and the Artistic Director decided that the stand must be joined to the VB stand.
Note that the extra work was much bigger than the original contract if $ 219,000. A variation to work completed by the architect and verified by Director of Architect at Ministry of Development – see attachments. I suggest we prepare new contract to pay the contractor the full cost of his work which includes the original contract plus contract plus variation.

By Minute on the 16 July, the Administration Director had attached the total variation cost (and said the earlier one be disregarded). That total variation cost was set out in the Additional scope of works to Open Seats-Lawson Tama stadium and totaled
$ 300,475, as shown by the claimant.

But the recommendation to the Permanent Secretary does not amount to a “Contract”
The claimant was not dealing directly with the Permanent Secretary but with the Supervising Architect, Melanesian Architects-Oceania Agency which wrote to the Permanent Secretary on 16 July 2012, confirming the contractor, Lenbros Construction had successfully completed the original and additional scope of works to the open grandstand, and as supervising architect, deemed practical completion of the works. (AM8) This Practical Completion Certificate was countersigned by the Administration Director, FOPA, Ministry of Culture and Tourism.

On 8 December 2012, the Chairman, Ministerial Tender Board for FOPA wrote to the Managing Director, Lenbros Construction, endorsing the submission to award the contract to Lenbros Construction for an amount of $ 150,000.
The letter was copied to many Government authorities. It further stated that a contract agreement had been prepared to be signed to enable immediate work to start. Of course this letter is well after the event, for the Certificate of Practical Completion had been given in July 2012.

The claimant makes no reference to this document for he relies on the variation to the earlier contract. I find this later letter is an attempt to ameliorate the effect of the earlier variation in the sum of $300,475, if possible. Certainly no fresh contract had been entered into as anticipated by the letter.

Do these various documents, which I have touched upon, show the Ministry has ratified its contract? I accept the ratification of the variation to the contract, for the work was carried out by the contractor. The Ministry has also paid moneys to the contractor although it has sought to attribute payment made in accordance with a fresh contract for $ 150,000 which was never produced in evidence.

I find the 2^nd payment to be consideration for the work done and materials supplied for the extension work carried out in accordance with the variation to the only contract. For to accept the benefit of the work done without payment would be to accept the benefit of the unauthorized act of the agent, the supervising architect, for the work has been done.(Grover V Mathews^[1])

The question remains, whether the material relied upon by the claimant creates a reasonable inference that agency exists between the Principal, the Ministry and the agent, the Supervising Architect, Melanesian Architect-Oceania Agency, and consequently if the supervising architect had ostensible authority to contract with Lenbros. For even if the agent acts outside the limits of his actual authority, but appears to have the ostensible authority, the Principal will be bound.

In this case, on the evidence the agency does exist and the supervising architect has acted within his ostensible authority. For Lenbros had, after the contract, dealt with the supervising architect and necessary certification had been given by the Administration Director, FOPA.

I am not willing to accept the defendant’s argument, that proper process had not been followed in relation to the variation and impliedly no relationship of Principal and agent (with the supervising architect) can arise. For a reasonable man would infer on the material on which I rely, that the agency was in fact, utilised to afford a benefit to the Ministry (by speeding up the approval of works) and thus quite apparent.

In those circumstances, the Ministry is estopped from denying the agents authority, especially where the contractor has acted to his detriment by doing the work. These principles go far back and are enunciated by Lord Ellenborough in Rickering v Bask^[2]

The Ministries conduct in allowing the Supervising architect to hold out as having power to approve variations in this fashion and to certify completion in accordance with contract estops the Ministry from now denying the ostensible authority.[Richardson v Cartwright [1844] EngR 376; (1844) 1 C & K. 328.]

It is hardly necessary to restate these principles. The Claim then is proven to the extent that the moneys due under the contract proper, $ 190,649-39 have been paid. In relation to the amount claimed for the variation sum $ 300,475 withholding tax at 7.5% is to be deducted and withheld from moneys due the claimant. This leaves a balance owing of $ 277,939.37. The Ministry paid $ 138,750.00 on the 24 December 2012.
The remaining sum of $ 139,189.37 shall be awarded by judgment to the claimant. Interest at 5% pursuant to is awarded on the judgment to the day immediately this judgement date.
The claimant shall have his costs to assessed, agreed or taxed.

__________________
BROWN J

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^[1] (1910) 2K.B.401
^[2] [1812] EngR 67; (1812) 15 East 38