[1997] PNGLR 266

PAPUA NEW GUINEA

[national court of justice]

IPA SEKE

v

COLLINS & LEAHY PTY LIMITED

goroka: sawong j
29 August 1997

Gaming and wagering - Contract of chance - Sale of raffle tickets - Methods of draw not disclosed in ticket - Implied term that first prize goes to holder of first drawn ticket - Breach of contract wherein first prize going to second ticket drawn. 

Contract - Implied terms - General principles - Contract silent on essential part - Fair term to be applied - Standard of reasonable man - Time for implication when contract made - Contract of chance silent as to method of draw - Implied term that first prize to first drawn ticket.

Facts

Plaintiff bought raffle tickets. It being understood by him that the first lucky draw would win the raffle. There was no announcement by owners of the raffle as to the procedure for the draw. His ticket was drawn first, but he was given the second place. The second drawee was given the winning prize. He now sues for breach of contract.

Held

1.	A term of contract may be implied if the express terms of the contract are silent with regard to an essential matter, if it is a fair term, which a reasonable person would think must be implied so as to make the agreement work.

2.	Where a raffle or receipt was issued to a purchaser of goods from a shop for the conduct of a raffle, in the absence of any express term in the contract of "chance" arising from and at the time of issuing of a raffle ticket, there should be an implied term that the first ticket drawn should receive first prize.

3.	In the circumstances, where the procedures of the draw were made on the day of the draw by the organisers, such a procedure was invalid and void.

4.	In the circumstances, where, following an announcement of procedure of the draw prior to the draw, the second ticket drawn in a raffle was given a first prize, there was a breach of the implied term of the contract.

Papua New Guinea case cited

Kimbe International Primary School v Narpal [1987] PNGLR 442.

Counsel

K Wagoro, for the plaintiff.
A M Pryke, for the defendant.

29 August 1997

Sawong J. This was a trial in which the plaintiff sought the following declaratory orders:

1.	That a Kijang Utility truck lucky draw drawn by the defendant on 26 October 1996, in favour of Yambi Seke not fair and not in line with the terms of contract of entry to the lucky drawn and as such, it was null and void.

2.	An order that plaintiff be declared the lucky draw winner. 

Both parties have filed affidavit evidence in support of each other’s position. Both parties have also filed written submissions. None of the deponents have been cross-examined. I have been able to read and consider carefully the whole of the evidence and the respective submissions that have been filed. There is really no dispute as to the facts.

The plaintiff says that on or about September 1996, he became aware of a lucky draw being conducted by the defendant. The first prize was to be a Kijang Utility. 

The significant and relevant parts of his evidence are in paragraph 4, 6 and 7 of his affidavit. The essence of his evidence is that, he entered into a contract with the defendants. He bought tickets worth K10 or more from the defendant. Upon being given receipts, he wrote his name on those receipts and place them in a box provided for that purpose. He understood at that point in time that, the holder of the first receipt drawn would receive the first prize namely, the motor vehicle. It was not made known to him at that material point when the contract was entered the order of the draw. He was not told that the management of the defendant would announce the procedure or the order of the draw on the day of the draw. It was also not made known to him at the material and relevant time that the holder of the first ticket drawn would receive the second prize. The holder of the second ticket drawn would receive the first prize. On the day of the draw, a receipt bearing the plaintiff’s name was drawn first. Instead of him being awarded the first prize, that is the motor vehicle; he was given the second prize. The holder of the second receipt drawn receives the first prize.

He therefore complains that the drawing of the tickets and the awarding of the prizes in the manner and order as done by the employees of the defendant on the day of the draw were in breach of the implied term of the contract that he entered into with the defendant. He therefore says that as the defendant was in breach of the implied term of the contract, the draw should be declared null and void. He should be declared the winner, as he was the holder of a receipt, which was drawn first, and therefore ought to have received the motor vehicle as the first prize.

It is not disputed that the Plaintiff went to the defendant’s shop and bought goods worth K10 or more. He was given receipts, which form the basis for a contract for the game of chances.

There is also no dispute that the draw was drawn on 26 October 1996. Immediately before the draw was made, the defendant’s senior employees, decided unilaterally on the procedure for the draw. There is no dispute that one of Mr Seke’s receipts was drawn first.

At this juncture, it is appropriate to note that the defendant has filed several affidavits. I do not consider all of them to be relevant. I consider the evidence of Jack Andrew, Kevin McKernan and Greg Edmunds to be relevant. 

Jack Andrew, Kevin McKernan, Greg Edmunds confirm that the defendant conducted a promotional lucky draw. The terms of this was set out in posters and those were prominently displayed in the defendant’s shops. Essentially, the terms of the raffle was that it was open to any member of the public who bought goods from the defendant’s shops to the value of K10 or more. The customer was required to write his name and address on the back of the receipt and put the receipt in a box provided for that purpose. The first prize was to be a Toyota Kijang Utility. 

On the day of the drawing, the representatives of the defendant decided unilaterally the procedures for the draws. It was decided that the first ticket drawn would receive a refrigerator. The second ticket drawn would receive the first prize, a Toyota Kijang Utility Motor Vehicle.

This procedure was then publicly announced to the members of the public who were present to witness the drawing of the receipts.

It was not express in terms of the agreement that the person whose name was on a receipt and which was drawn first would receive the first prize. There was no form or order of the draw made known to the purchaser including the plaintiff at the time the receipts were issued.

Before going into the submissions that have been made, I think it is necessary to set out the law as I understand it, in relation to implied terms in contracts and its application to the present case. I think a useful starting point is a passage by King AJ, as he then was, in Kimbe International Primary School v Narpal [1987] PNGRL 442. 

The facts of that case are quite similar to the facts of the present case. The facts of that case is fairly short and is as follows.

The dispute in that case arose between the parties arose out of a lottery or raffle conducted by the school. A permit to hold the raffle was granted by the Department of West New Britain to the school under the Gaming Act (Ch No. 270). Mr Narpal bought five tickets for K10 each. When he paid the money and received the tickets, nothing was said about the way the prizes would be allocated or drawn. The printed tickets bore no information about the way the prizes would be allocated. The permit did not require the draw to be conducted in any particular way. When the raffle was drawn, one of Narpal’s tickets was the first one drawn. He was not given or awarded the first prize, but was awarded one of the other prizes. He took the school to the District Court claiming, amongst other things a breach of an implied term of the contract. The District Court ruled in his favour. The school appealed against the decision to the National Court. The National Court dismissed the appeal. King AJ said at 444

A term may be implied in a commercial or business contract to make it conform with the usual custom of trade or business when the parties have not expressly agreed otherwise. But this was not a business contract and that branch of the law cannot apply.

The remaining way in which a term may be implied if the express terms of the agreement are silent as to an obviously essential matter is if it is a fair term, which a reasonable person would think must be implied so as to make the contract work. In deciding whether the term is to be implied, the court looks at the alleged term and asks: would a reasonable person, if called upon to consider whether this term should be implied, say "of course it should".

The only significant fact of difference between the present case and that case is that in the case referred to above, the raffle was conducted after a permit or the relevant authority had given approval. In the present case, there is no evidence that such an authority or permit was given by the relevant government authority to conduct the raffle, under the provisions of the Gaming Act (Ch No. 220). Neither counsel had addressed this issue. Consequently, I say nothing further on this aspect.

Applying the principles, which I have stated above, I ask myself, would a reasonable person say that the parties were leaving the draw to be worked out later or say, that the first ticket drawn was to be the winner? I am of the view that the first possibility cannot be regarded as reasonable because it involves delay and uncertainty.

However, if a reasonable person considered whether the term Mr Seke says is to be implied into the contract should be implied, I think that person would say "of course" or "of course, unless some other method was made clear to the ticket buyer."

In my view, either of those two answers means that the way the draw was made and the prize attached thereto awarded was wrong. Obviously the raffle had to be drawn in some way and no special way was made clear when Mr Seke bought his tickets. 

In their respective submission, both counsel have submitted that this case is one based on contract. I accept that as correct. The transaction whereby Mr Seke paid for the goods, which entitled him to a receipt and which gave him the chance of winning a prize or prizes was a contract "of chances" or a wager of K10 or more against the prizes to be won if the receipts were drawn out.

Counsel for the plaintiff has submitted that there was no express term of the contract as to who should get the first prize, or what the order of the draw would be. There was however, a clear implication that the first prize would be the vehicle. He submitted that in the absence of such an expressed term, the Court must look at the intention of the parties. He submits that in the present case, the plaintiff entered into the contract on the basis that the first ticket drawn would be declared the winner of the motor vehicle. 

He submits that in the facts of the present case, there being no express term of an essential term of the contract, the Court must infer that the intention of the parties was that the first ticket drawn would claim the first prize.

The defendant has conceded that the order of draw was not an express term of the contract at the material time that is at the time the contract was made. Counsel for the Defendant has cited a line of foreign authorities in support of his contention that custom has been recognised as a basis to imply terms into a contract, where an essential term of a contract is silent.

The defendant’s main argument as I understood was this. It was submitted that the plaintiff contends that it is the custom in such competitions that the ticket drawn first does not necessarily gets the main prize. Since there was no express term as to order of the draw, and the prizes to be won, a term should be implied into the contract in accordance with that custom.

Mr Pryke contends that there is no evidence at all by the plaintiff to support his claim or his contention that it is the custom of this type of competition that the first receipt or raffle drawn should receive the first prize. He submits that the evidence from the defendants witness establishes the contrary.

He argued that in this type of competition, the organisers always make the rules. As such it was open to the organisers to change or create new rules as the circumstances permit.

I consider this submission to be baseless. The reason is quite simple. There was contract between the plaintiff and the defendant. One of the essential terms of the contract, namely the order of the draw and the prizes to be attached thereto was not stated nor agreed upon at the time the contract was made. I do not consider it necessary to consider customs. In my view, the principles are not applicable in the circumstances of this case.

Mr Pryke has made other submissions, which are essentially based on his principal submission. I have considered those submissions. I consider that his submissions are quite irrelevant and not applicable. The management of the defendant, shortly before the draw was made, decided how the draw was to be made and in what order and what prizes was to be attached thereto.

I consider that the issue on which the case rests is whether the relevant term was to be implied into the contract when it was made, for instance when the ticket/receipt was bought or given. In my view, it is sufficient that the holder of the first ticket drawn was given the second prize, constitutes evidence of the breach of the implied term.

Mr Pryke has submitted that the evidence of other witness, such as Gregory Edmunds, Arua Owen and others, that they had seen other raffle tickets drawn as this one was drawn, established that the method used by the defendant was not unusual. In my view, however, that is irrelevant to the question of what the terms of contract were when made. If the defendant had made the method of drawing known at the time of purchase, that would have been the end of the matter. That was not the case here.

In the present case, the contract and the terms of the contract were made when the goods were bought and the receipt was given. That was the material and relevant period. It was not a term of the contract either expressed or by implication that the defendant would create new terms after the contract was entered into.

I find that in doing so, the defendant was in breach of the terms of the contract. Consequently, it must bear the consequences of the breach by it.

For the reasons I have given, I make the following orders:

1.	That the draw made by the defendant on 26 October 1996 in favour of one Yambi Sike be declared null and void and awarding him the said motor vehicle, a Toyota Kijang Utility.

2.	I declare that the plaintiffs receipt being drawn first, he be declared the winner of the first prize, namely a Toyota Kijang Utility.

3.	I order that the defendant deliver up to the plaintiff either the said Toyota Kijang Utility or a vehicle similar to it fourteen (14) days.

4.	That the defendant pays the plaintiff’s costs, such costs are to be agreed, if not to be taxed.

Lawyers for the plaintiff: Kot & Co.
Lawyers for the defendant: Pryke & Co.