DC334

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE NO 3050 OF 2004

BETWEEN

Jeno Aeno 
of Oxford First Aid Supply
Complainant

V

Headmaster, Kila Kila Secondary High School
First Defendant

Board of Management, Kila Kila Secondary High School
Second Defendant

The Independent State of Papua New Guinea
Third Defendant

Port Moresby: Bidar, Pm
2005: 5th & 24th May.

Civil Claim - Claim for Debt and damages – School supplies ordered from Australia – Headmaster and Board refusal of delivery and payment for the service – Order placed with complainant not sanctioned by Headmaster and Board – Failure to comply with requirements of Public Finance and Management Act – ss.32,33

Cases Cited
Rainbow Holdings Pty Ltd –v- Central Province Forest Industries [1983] PNGLR 34.
Vita Food Products Inc. –v- Pty Ltd Provisional Liquidator Unus Shipping Co. Ltd [1939] AC. 277. 

DECISION

24th May, 2005.

BIDAR PM: On 19th July 2004 complainant filed summons upon complaint against the defendant claiming among other things loss of income and damages.

The complainant is a supplier of school materials. It alleged to have received an order for supply of school materials, particularly science equipment from the first and second defendant. When the materials arrived from Australia and complainant gave notice to first and second defendants of delivery of materials, the said defendants refused to accept delivery, simply on the basis that they placed no orders with the complainant for supply of such materials and equipment.

The first and second defendant deny placement of any orders with the complainant. Mrs. Elizabeth Pascoe, head of science studies at Kila Kila Secondary School placed order for supply of science materials without expressed authority from first and second defendant. Mrs. Pascoe was instructed by the first defendant to obtain three quotes so as to comply with the requirements of Public Finance and Management Act. She was even referred to the school bursar to assist her obtain three quotes. 

It seems Mrs. Pascoe saw fit not to obey lawful instructions and placed order for science materials without obtaining two other quotes. She acted ultra vires.

The relevant issue is whether or not Mrs. Pascoe action is in placing order with complainant for supply of science materials bind the first and second defendants in a contractual relationship to which the complainant has a cause of action against them.

To resolve this issue it is necessary to go back to the evidence. It is not disputed that an order form was filled and signed by Mrs. Pascoe and sent to the complainant. Paragraph 2 of Mr. Jeno Aeno, Managing Director’s affidavit states that on 10th February 2004 Mrs. Pascoe placed an order which totalled to K4,702.16.

On the other hand, the first defendant, Mr. Patrick Keama denies in his affidavit ever placing an order with the complainant. All purchases and orders require endorsement by Headmaster and stamps of approval at paragraph 2 of his affidavit, he deposed that for orders and purchases of K5,000.00 and above and for overseas orders, the approval and endorsement of Kila Kila Secondary School board is required.

The evidence is clear that no approval either by Mr. Keangu the Principal of the school Board was given in this case. Mrs. Pascoe for reasons only known to her disregarded instructions from the School Principal and acted on her own and placed the orders with the complainant, and now expects the school to pay for her stupidity. In all the circumstances her actions do not bind the first and second defendants. In any event, she had no ostensible authority and the complainant cannot rely on such. Mrs. Pascoe clearly acted against clear instructions given to her by the first defendant. The first defendant being the head of an educational institution, which is a public institution is required to comply with statutory requirement, in this case (the Public Finance and Management Act and the Financial Manual. There are authorities on this point, see Rainbow Holdings Pty Ltd –v- Central Province Forest Industries Pty Ltd (Provisional Liquidator Appointed) [1983] PNGLR 34.

Two competing common law principles which his Honour Bredmayer J. said.

"Courts have vested interest in enforcing contracts entered into by competent parties, without fraud, duress misrepresentation and the like."

In restating a quote by Lord Wright in a passage cited by Mr. McDermott from Vita Food Products Inc. -v- Unus Shipping Co. Ltd [1939], A.C. 277. His honour said, "the Courts should as a matter of public policy refuse to nullify a bargain save on serious and sufficient grounds."

On the other hand, if there has been a serious illegality, the Courts have a vested interest in seeing that the law is enforced and that people do not profit from their illegal conduct.

In this case the law ie, Public Finance and Management Act and Financial Manual were not complied with.

Further more this was a contract for sale of goods, under s. 6(1) of Goods Act 1951 a contract for sale of goods of a value of K20.00 or more is not enforceable by action unless the buyer accepts part of the goods sold and actually receives them or gives something in earnest to bind the contract. Under s.20 (1)(a) Goods Act the goods remained at the complainant’s risk until they are sold to the defendants, and in this case, because defendants have not ordered the goods, they cannot be forced to accept them. They remained largely with the complainant. In any event, the complainant still has the goods and can sell the goods to another school to mitigate its costs.

Based on the foregoing reasons, Court has vested interest to ensure that the laws are complied with. In this case, the purported bargain between the complainant and Mrs. Elizabeth, Pascoe cannot bind the defendants. Court finds in favour of the defendants and orders that the proceedings be dismissed with costs to the defendant.

In Person: Complainant
Solicitor General: Defendant