Government v Atoa [1957] WSLawRp 1; [1950-1959] WSLR 84 (2 May 1957)

[1950-1959] WSLR 84

HIGH COURT OF WESTERN SAMOA

GOVERNMENT

V

DOUGLAS ATOA

HIGH COURT. Apia.
1957. 12, 13, April; 2, May.
FULL COURT: MARSACK C.J.; ROTHWELL J.

Contract - action to set aside sale of chattels - claim for possession and for damages for detention - contract for sale sought to be avoided on grounds parties not ad idem; mistake; and ineffective approval of sale by Government official - sale set aside - unjust to order possession - discretion of Court - assessment of value of chattels - Public Revenues Ordinance 1948, section 122.

This was an action to set aside the sale of a stone-crusher and engine from the plaintiff to the defendant, claiming possession and damages for detention of the chattels on the grounds that the parties were never ad idem as to the chattels to pass; that the contract for sale was vitiated by mistake; and that the sale was at law invalid in that the consent of the High Commissioner to the transaction as required by section 122 of the Public Revenues Ordinance 1948 was not obtained.

On the evidence the Court found that the defendant had approached officials of Government with a view to hiring or purchasing a stone-crushing machine and that following negotiations and inspections, the defendant had made an offer for a specified crusher and a specified engine together with any parts that were available; and that the officials of Government fully understood which plant was included in the defendant's offer, and had delivered all those to the defendant. The Court further found that the sale of the crusher, engine and parts for the sum offered by the defendant, and accepted, was approved by the Treasurer of Government purportedly acting in conformity with a delegation of the High Commissioner's authority.

Held: (1) That the parties were ad idem and there was no mistake as to the subject matter of the contract.

(2) That the High Commissioner had no power to delegate his authority under section 122(2) of the Public Revenues Ordinance 1948, and as he did not himself approve the sale of the chattels to the defendant, there was no legal validity in the transaction and the sale must be set aside.

Omnibus Conveyance Company Limited v. Liverpool Tramways and Omnibus Company Limited (1882) 26 SOL. JC. 580 referred to.

(3) That no order for possession would be made as in the circumstances it would be manifestly unjust to do so.

Nash v. Barnes [1921] NZGazLawRp 153; [1922] N.Z.L.R. 303, 307 followed.

(4) That the defendant had throughout acted in good faith in a transaction which, though set aside, was not on the merits but on a technical point, and accordingly no costs would be allowed against the defendant.

Attorney-General for Ceylon v. Silva [1953] A.C. 461 followed.

Judgment for plaintiff.

Wilson, Attorney-General, for plaintiff.
Metcalfe, for defendant.

Cur. adv. vult.

FULL COURT: This is an action by the Government of Western Samoa against Douglas Atoa, a contractor of Fagali'i, to set aside the purported sale of a stone-crusher and engine from the plaintiff to the defendant made on the 11th April 1956. The plaintiff asks for possession of the stone-crusher or £1,000 its value, and of the engine or £500 its value, together with £50 damages for detention in each case. The plaintiff's claim is based primarily upon a contention that the parties were never ad idem as to the chattels which were to pass on the sale, and that the contract was vitiated by mistake as to the subject matter of the contract. The plaintiff sets up, as a further ground for avoiding the contract, the contention that no stores the property of the plaintiff may be sold by private treaty save with the consent and under the direction of the High Commissioner; and that such consent was not in fact obtained to the transaction before the Court.

The Court finds the following facts. Defendant Atoa entered into an agreement with a building contractor named Pearson to supply the latter with a substantial and regular quantity of crushed metal. The defendant realised that his own machinery and equipment would be inadequate to enable him to fulfil the terms of his agreement with Pearson. He approached the Financial Secretary, Mr L.M. Cook, as to the possibility of hiring or buying a Government crusher, and Mr Cook referred the defendant to the Acting Director of Works, Mr Hendriksen. Mr Hendriksen was approached by the defendant early in February 1956 as to an opportunity of hiring a stone-crusher from the Public Works Department. He informed the defendant that he had been in Samoa so short a time that he knew very little about the position regarding stone-crushers, but that in any event the approval of the Financial Secretary would have to be obtained to any hiring of Government plant. Mr Hendriksen further stated that he would recommend, in case a hiring were arranged, that the Government should have the right to purchase 50% of the output and to this the defendant agreed. Sometime later Mr Bignell, a building supervisor employed by the Public Works Department, was instructed by the Acting Director of Works to show the defendant some old crusher parts in the Public Works yards at Sogi and at Vaimoa respectively. At Sogi there were the remains of two old crushers which had been written off, in accordance with the provisions of the Ordinance, after inspection by a Board of Survey. These crusher parts were lying in a heap of what was described by several witnesses as "junk". Nearby and virtually forming part of the same junk heap was a McLaren engine which for some indefinite period, probably 2 to 3 years or more, had been standing out in the open exposed to the weather with no other protection than that of a piece of rotten canvas. At the Vaimoa yard there was a bare crusher block on four wheels, with no bearings or shafting, and in a derelict state. This was what remained of a Hadfield crusher which had been abandoned about 7 years previously and left standing in the open in the same areas as that used for a heap of scrap metal. No crusher in working order was available for hire.

Defendant was greatly disappointed to find no crushing plant which offered reasonable possibilities of being put in running order. The remains of the two plants at Sogi were obviously totally unserviceable. Defendant though there was a very slim chance of the Hadfield plant being restored to an operative condition, and obtained an opinion from a Mr Miedecke who strongly advised the defendant to have nothing to do with it. Defendant's need for crushing plant was however so great that he decided to take a chance on the purchase of the Hadfield crusher and engine. He was not prepared to pay a large sum for this machinery, realising that substantial expense would inevitably be incurred in the search for and manufacture of spare parts; and if his efforts to have the plant put in running order were unsuccessful, the money so expended would represent a total loss. At the suggestion of Mr Lee, Chief Clerk of the Public Works Department, he made an offer o £10 for what was, in effect, the wreckage of the Hadfield crusher together with the McLaren engine. Although this engine had never been used by the Public Works Department for that purpose it had been specially designed for use with the Hadfield crusher.

With one reservation the Court accepts as substantially accurate to a report made by Mr Lee to the Financial Secretary on the 30th April 1956. The relevant portion of this report reads as follows:-

"Some time back Mr Atoa expressed a desire to purchase if possible a crusher from the Government for the purpose of manufacturing crushed metal for general sale.

He spoke to myself, Mr Hendriksen and I believe to the Financial Secretary, but at the time as we were in the process of preparing three crushers for Savai'i, he was told that the purchase of one of the machines which was in an operable condition would not be possible. He was informed, however, that the Hadfield crusher had been out o operation for almost seven years and had several parts missing, but if he liked to take a chance on getting the parts from the manufacturer, he should make an offer for it to Treasury.

I enquired from Mr Bentley as to the whereabouts of the missing parts and he said he did not know. Mr Atoa inspected the crusher first with Mr Bignell and then with Mr Bentley and decided to take a risk and purchase same. At the time, this seemed a risky procedure as the model is an extremely old one and the missing parts could prove unprocurable. I suggested he offer Treasury £10 for what was available".

In forwarding Mr Lee's report, the Acting Director of Works, Mr Hendriksen appends some comments including the following:-

"At the time of Atoa's initial inspection there was a genuine belief on all sides that the remains of the crusher were worth no more than scrap value."

The one reservation related to the omission from the report of any reference to the engine. Though this is not specifically mentioned in Mr Lee's report, he makes it clear in his evidence that he understood that the engine, which was in the Sogi yard, was to accompany the crusher as part of the sale. With the crusher, also, were to go any parts that were available. Mr Cook, who holds the dual post of Treasurer and Financial Secretary and is sometimes referred to in the evidence under one title and sometimes under the other, also testified in Court that he understood an engine was part of the crusher and went with it.

Defendant's offer was communicated to the Treasurer (by telephone) by the Chief Clerk, Mr Lee. The Treasurer replied "if it's O.K. by Mr Hendriksen it's O.K. by me." Without breaking the telephone connection, Mr Lee went to Mr Hendriksen's office, reported the conversation with Mr Cook, and obtained Mr Hendriksen's concurrence. This was reported by Mr Lee to Mr Cook who thereupon signified his approval to the transaction.

As soon as the defendant's offer had been accepted and the purchase price of £10 paid, delivery was given to him by the responsible officers of the Public Works Department of the subject matter of the contract, namely, the remains of the Hadfield crusher, and the McLaren engine. Defendant immediately put in train extensive inquiries in different places in the vicinity of Apia with a view to finding any of the missing parts of the crusher which might have been thrown on other dumps, and to possession of which he was entitled under the contract. In this way he located the eccentric shaft in the dump at Pilot Point, the flywheel under a pile of old bridge steel at Vaimea, a toggle plate and two bearing halves on the rubbish dump at Mulinu'u. He took possession of these parts with the full concurrence of the officers of the Public Works Department. Not only did the plaintiff's officers deliver to the defendant, without question, the whole of the machinery and available parts which the defendant contends were included in the contract of sale, but they also furnished Public Works transport to convey these to Fagali'i. The balance of the parts needed for the crusher were made for the defendant by the Public Works Department, on the basis that the defendant would pay the charges normally made for work of this character. The sum so paid by the defendant to the Department was £318.10.7.

Summarising very briefly these findings of fact:

1. The offer of £10 made by the defendant was for a specified piece of crusher machinery and a specified engine to wit, the Hadfield crusher from the yard at Vairoa and the McLaren engine from the yard at Sogi; together with any parts that were available.

2. Both the defendant, and the officers of the department authorised to negotiate with the defendant, understood which plant was included in the defendant's offer, and there was consequently no mistake as to the subject matter of the contract.

3. The sale of the parts of the Hadfield crusher in the Vaimoa yard plus any other available parts, and of the McLaren engine from the Sogi yard, for the sum of £10 was approved by the Treasurer acting in conformity with a delegation of the High Commissioner's authority.

On these findings of fact it is clear that the plaintiff cannot succeed on the ground that the contract was vitiated by mistake as to subject matter. The Court is satisfied that the defendant, and the officers of the Public Works Department appointed to deal with the defendant, were completely ad idem as to the subject matter of the contract. Defendant specified the Hadfield crusher and the McLaren engine which had been pointed out to him by the officers of the Department, together with any of the missing parts for either which could be found in the possession of the Public Works Department in Western Samoa. There was never any question as to what chattels should be handed over to the defendant. The plaintiff's servants handed over the specified chattels, which were accepted by the defendant. Search was made for any of the missing parts and the cost of search was borne by the defendant. These missing parts which were found were also handed over to the defendant pursuant to the agreement. The purchase price was paid and accepted; the subject matter of the contract was delivered and accepted; and that concluded the transaction. The contract thus became an executed contract completed by performance on both sides.

There remains for consideration the plaintiff's second contention, namely, that the contract was invalid in that the consent of the High Commissioner had not been obtained as provided in section 122(2) of the Public Revenue Ordinance 1948. This subsection reads as follows:-

"Sales" (of stores the property of the Government) "by private treaty may be effected with the consent of the High Commissioner and subject to his direction."

It is common ground that the consent of the High Commissioner personally was not obtained to the sale to the defendant. Defendant however relies on the approval of the Treasurer, and a delegation of authority from the High Commissioner made on the 24^th August, 1951. This delegation by the High Commissioner followed a recommendation by the Treasurer based upon a report from the Director of Works drawing attention to many defects and irregularities in the system then obtaining of selling Public Works stores. The High Commissioner noted the Treasurer's recommendations as "approved" and continued-

"delegation of authority under section 122(2) to Treasurer approved.

G.R.P.

High Commissioner

24/8/51."

The Secretary to the Government thereupon wrote to the Treasurer on the 4th September 1951 stating inter alia:

"The High Commissioner has also approved of the delegation of his authority under section 122(2) of the Public Revenues Ordinance to you in so far as sales of Public Works stores are concerned."

The contention of the Attorney-General is that; though the High Commissioner did in fact purport to delegate his authority under section 122(2) to the Treasurer, in law he had no power to do so; that the approval by the Treasurer, acting by virtue of such delegation, is in fact ineffective, and that the legal result is that the contract is void for lack of the High Commissioner's consent.

To decide this question it is necessary to consider the structure and the effect of the Public Revenues Ordinance 1948 and the various relevant sections of that Ordinance. The authority for the making of the Ordinance is contained in the Samoa Amendment Act 1947, section 8(1) which reads:

"Subject to the provisions of the principal Act and its amendments (including this Act) the Legislative Assembly may make laws (to be known as Ordinances) for the peace order and good government of Western Samoa."

It is clear that an Ordinance made in pursuance of this power (including the Ordinance with which we are now dealing) has the force of a statute. Any powers and duties provided by the Ordinance therefore are statutory powers and duties, and are liable to the same restrictions as if they had been contained in an Act of Parliament.

The cardinal principle of law with regard to powers and duties specifically conferred upon any person is that they cannot be delegated; c.f. Halsbury's Laws of England, 3 Edition Volume 1 page 169 paragraph 396:-

"Delegatus non potest delegare is the maxim which lays down the general rule that an agent cannot delegate his powers or duties to another, in whole or in part, without the express authority of the principal, or authority derived from statute."

Where the powers or duties have a statutory origin this rule is to be strictly observed. See the judgment of Chitty J. in Omnibus Conveyance Company Limited v. Liverpool Tramways and Omnibus Company Limited (1882) 26 SOL. JC. 580:

"Where powers and duties were conferred by Act of Parliament affecting the rights and interests of the public, these powers and duties could be exercised only by the persons or bodies on whom they are specially conferred. They could not be delegated nor transferred."

A study of the Ordinance itself confirms the view that the High Commissioner has no power to delegate the powers conferred on him by section 122(2). In certain cases he is given an express power to delegate: section 101 provides a penalty for failure to answer any lawful question asked "by the High Commissioner or other person authorised to act in his behalf." Section 103 provides fines to be recovered "upon the information of any person appointed by the High Commissioner in that behalf either generally or in any particular case". Section 134 provides for approval of requisitions by "the High Commissioner or any officer appointed by the High Commissioner for that purpose".

The inference is inescapable that when no power to delegate is expressly given to the High Commissioner, no such power exists. Moreover, even if a power to delegate did exist, the Court is of opinion that it could be made to apply only to particular cases and could not amount to a total substitution of the discretion of the Treasurer or other person for that of the High Commissioner in all cases occurring over a period of years.

The administration of the Ordinance generally is in the hands of the Treasurer: section 3(1). By section 3(2) this provision is extended to stores. The Treasurer is accordingly charged with the performance of all duties required in the administration of the Ordinance, except where it is provided otherwise. A sale of stores would thus, in accordance with the Ordinance, be arranged by the Treasurer; but his actions in this respect are subject to restrictions, by way of safeguard, under section 122. The first is under subsection (1) which provides for sales by auction after due notice. The second is under subsection (2), by which in sales by private treaty the action of the Treasurer, as the officer charged with the administration of the Ordinance, is subject to the approval and the direction of the High Commissioner. It would clearly be violating the wording and the obvious intention of the Ordinance if the Treasurer were to be charged with the duty of approving his own action.

The Court is of opinion that the High Commissioner has no power to delegate his authority under section 122(2). But if he had, the one person to whom he could not delegate would be the Treasurer. Section 5 of the Ordinance reads:-

"The Treasurer in the discharge of his duties under this Ordinance shall be responsible to the High Commissioner:

Provided that in the discharge of his duties the Treasurer shall have none of the powers which expressly or by implication are conferred upon the High Commissioner by this Ordinance."

In the opinion of the Court that section is a total prohibition of any delegation to the Treasurer by the High Commissioner of any powers which are specifically vested in the High Commissioner by the Ordinance.

It was contended by Mr Metcalfe that even if the approval of the Treasurer is held to be ineffective, the Ordinance does not say how or when the consent and direction of the High Commissioner should be given, and that the personal consent of the High Commissioner can be inferred from his conduct after he became aware of the sale or purported sale of the chattels. This contention is however not upheld by the evidence, which shows that the first action of the High Commissioner upon being advised of the transaction was to query its validity.

The Court therefore finds that the High Commissioner had no power to delegate his authority under section 122(2), and that he did not himself give approval to the sale of the chattels in question to the defendant. Such approval is a condition precedent to the validity of a contract for the private sale of Public Works Department stores. Expressio unius est exclusio alterius; and the provision that such sales may be made with that approval imports the legal invalidity of any sales made without it.

There will accordingly be an order setting aside the sale of the stone-crusher and engine from the Government of Western Samoa to the defendant Atoa. It does not however, follow that the plaintiff is entitled to an order for possession of the chattel in question. The law to be applied in cases of this character, whether in England or in New Zealand, is explained with clarity and care by the late Sir John Salmond in Nash v. Barnes [1921] NZGazLawRp 153; [1922] N.Z.L.R. 303 at page 307:

"It appears, therefore, that in England there has never existed and does not now exist any absolute and unqualified right in the owner of a chattel to recover the specific possession of it. To obtain such relief the owner must appeal to the discretionary authority of the Court. Such a state of the law is reasonable and proper, inasmuch as the compulsory return of a chattel to the true owner might in many cases be unjust to the defendant. Having ignorantly and in good faith obtained possession of a chattel belonging to another person, he may by the expenditure of his own labour or money have increased its value to such an extent that in justice he should be allowed to retain it and to compensate the true owner by paying its assessed value as at its original value when the true owner was first deprived of it. Moreover, the absence of any absolute right of restitution avoids the necessity of solving these numerous riddles which arise as to the continued identity and ownership of chattels that have undergone a process of alteration or admixture in the hands of some person other than the owner."

The Courts in their equitable jurisdiction have always acted in accordance with the principles set out by Sir John Salmond and have not hesitated to make such an order as in the opinion of the Court will do justice between the parties. The High Court of Western Samoa is enjoined also to act in accordance with these principles; Samoa Act 1921 section 74(2):

"74. (2) Subject to the provisions of this Act and of rules of Court, the practice and procedure of the High Court in the exercise of its civil and criminal jurisdiction shall be such as the Court thinks in each case to be most consistent with natural justice and convenience."

In the opinion of the Court it would be manifestly unjust to order that the crusher and engine as they are now should be handed to the plaintiff, and no such order will be made. The Court proposes to follow the course that was adopted in Nash v. Barnes (supra) and the reasoning of the learned Judge in that case (page 309):

"Applying this principle to the present case, I am satisfied, in view of the added value conferred upon the property in question by the defendant's expenditure, that a judgment for specific restitution would be unjust, and that such relief must be refused accordingly."

Plaintiff will be entitled to judgment for the value of the chattels as they existed at the time of the sale. The Court has therefore to assess the value of the crusher and the engine as they stood in the Public Works yards on the 11th April 1956. The question of the value is one of some difficulty. It would not, in the opinion of the Court, be proper to assess the present value of the chattels concerned and deduct what has been spent on them since the purchase by the defendant. In any event no effort has been made to satisfy the Court what those present values are. Mr Collier, Civil Engineer, called for the plaintiff, gave a valuation of £1,144 for the crusher and £481 for the engine; but it appears that these figures were reached by a purely arithmetical calculation of the original cost less 40% depreciation in the case of the crusher and 50% in the case of the engine. Mr Collier stated quite frankly to the Court that he had not made a valuation based upon an inspection of the machinery, and that in any event did not have the knowledge necessary to enable him to do so. Mr Cook the Treasurer fixes a book value of the crusher at £763 and the engine at £385, based upon original costs less depreciation for 8 years at 7½%. John Bentley, an officer of the Public Works Department in charge of equipment, estimates the present value of the crusher at over £1,000 and of the engine at £400 to £500; but although it appears that Mr Bentley has a sound mechanical knowledge there is no evidence that he has taken part in the buying or selling of such machinery or that he is qualified to make an accurate valuation off it. Moreover it must be stressed that all these "valuations" are of the machinery as it now stands when there has been spent on it a sum which the defendant states to be £1,517.15.1, of which amount it is not possible to say how much is directly attributable to putting the plant into running order and how much to its installation at Fagali'i. The Court is concerned to fix the value as at the time of sale, a very difficult task.

Dealing first with the crusher: as has been stated earlier in this judgment, the crusher as it stood in the junk heap at Vaimea was little more than scrap metal, and there was no certainty that any of the parts which were subsequently found on the different dumps would be available. The quotations already given from the report of Mr Hendriksen and Mr Lee and the opinion of Mr Miedecke, added to the fact that the crusher had stood abandoned for 7 years, satisfy the Court that it would be unjust to put any more than a scrap metal value on it. This is accordingly fixed at £10.

The McLaren engine is in a slightly different position. Although it had been virtually abandoned and for two or there years left exposed to the weather with inadequate covering, it would not be accurately described as mere scrap metal. The witness Bently gave evidence that all that he had to do to put the engine into running order was to decarbonise it and make and fit two copper caskets. Mr Arniger, Chief Engineer of M.V. "Matua", who is a recognised authority on diesel engines, testifies that he made a thorough inspection of the engine in situ at Falali'i and that it was subject to a major defect, described in detail in his evidence, which would render it liable to break down at any time. He also states that being left in the Public Works Department yard under the conditions described the engine would deteriorate very substantially in the space of three years; and that he would not presume to make a valuation without stripping the engine. Here again it must be pointed out that the Court is concerned only with the value of the engine at the date of sale. To guide the Court in making an estimate of that value there is very little evidence. The engine had not been inspected by a Board o Survey and condemned, but this fact is not conclusive as to its having some value; the crusher at Vaimea similarly had not been condemned and written off. No effort had been made for probably three years by the Public Works Department to examine the engine and find out if it could serve any useful purpose. It is probable that but for the transaction with the defendant the engine would have continued to deteriorate until it was in fact worthless. The only positive piece of evidence as to the condition of the engine at the time of purchase by Atoa is given by Mr Neil the Assistant Treasurer, who deposed that as a member of a Board of Survey in February 1956 he went to inspect some gear in the Public Works yard at Sogi and saw an old engine lying in a pile of junk. As he knew the Fire Officer was looking for old engines to install pumps for fire-fighting purposes he asked the Fire Officer, Mr Genese, to examine this McLaren engine. Mr Genese made an examination lasting 10 or 15 minutes and then reported that it was not worth taking over. It was further shown in evidence that the Fire Department had bought other engines from Pago Pago for approximately $150 for engine and pump. It was agreed that of this sum $100 would be properly attributable to the engine. The Court is then faced with this position: that the Fire Officer who had bought engines for fire-fighting purposes at the low price of approximately £35 each and need others, was o opinion that the McLaren was not worth taking over at all. It is difficult to reconcile the opinion of Mr Genese with the evidence of Mr Bentley as to the limited amount of work necessary to put the engine into running order. The evidence of Mr Armiger however indicates that though the engine was in working condition at the time of his inspection it is far from being a reliable piece of machinery as it stands.

The Court is thus in the same difficulty as that which faced Salmond J. in Nash v Barnes, in that it must fix a valuation on most inadequate evidence. Taking all the factors into consideration to the best of the Court's ability the Court fixes £125 as a value of the McLaren engine at the time of sale. There will accordingly be judgment for plaintiff for the sum of £125.

The plaintiff has succeeded not on the merits but on the technical point that the delegation of power under section 122(2) of the Public Revenue Ordinance from the High Commissioner to the Treasurer was made without legal authority. Although the contract has been set aside, this sale and purchase was a bona fide transaction and the defendant acted in good faith throughout. Consequently the Court proposes to follow the course adopted by the Privy Council in Attorney-General for Ceylon v Silva [1953] A.C. 461 and allow no costs against the defendant.