N3925

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA NO 4 0F 2006

JOHN VULUPINDI
Appellant

V

JOHN GIDEON
Respondent

Kimbe: Cannings J
2006: 11 May, 22 June

APPEAL

Appeal – whether District Court made decision against the weight of evidence – oral contract to hire truck for election campaign purposes – whether the person entering into contract had authority to do so – principles of agency – actual and ostensible authority.

The respondent sued the appellant in the District Court for unpaid rental of a truck used by the appellant in his election campaign. The District Court found in the respondent's favour. The appellant appealed on the ground that the District Court decision was against the weight of the evidence and he did not authorise anyone to hire the respondent's truck.

Held:

(1)	A person (an agent) who says (or 'holds out') that he or she is acting on behalf of another person (the principal) can enter into a binding agreement on behalf of the principal in two ways:

•	if the agent has the actual authority to do so; or
•	if the agent has ostensible (also known as apparent) authority to do so.

(2)	Ostensible authority exists when the principal holds out (ie acts in a way that creates an impression) that the agent has authority to act on his or her behalf.

(3)	Here, the appellant conferred ostensible authority on a person who held himself out as chairman of one of his election campaign committees, to enter into binding agreements on his behalf. He was bound by the contract the chairman entered into on his behalf.

(4)	The District Court made no error of law and the appeal was dismissed.

Cases cited

The following cases are cited in the judgment:

AGC (Pacific) Ltd v Woo International Pty Ltd [1992] PNGLR 100
Egga Pua v Otto Benal Magiten (2005) N2892
Michael Yai Pupu trading as South Pacific Arts v Tourism Development Corporation (2002) N2258
Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The State (No 2) (2003) N2465
Paul Tarato v Sir Tei Abel [1987] PNGLR 403
Peter Kirin and KK Farmers v John Paroda (2004) N2599

APPEAL

This was an appeal from a decision of the District Court upholding a claim for breach of contract.

Counsel

G Linge, for the appellant
J Gideon, the respondent in person

22 June, 2006 

1. CANNINGS J: This is an appeal against a decision of the District Court at Kimbe, constituted by Mr R Gavuri, in which his Worship upheld a claim for damages for breach of contract.

2. The appellant, John Vulupindi, was the successful candidate for the Talasea Open seat in the 2002 general election. The respondent, John Gideon, claimed that he hired his Isuzu truck to the appellant's supporters to use for campaign purposes. The appellant won the election and the respondent approached him for payment, but he refused to pay, saying that he never authorised the hire of the truck. The respondent took the dispute to the District Court.

DISTRICT COURT PROCEEDINGS

3. On 10 March 2005, the respondent filed a complaint in the District Court. There were two defendants: John Vava (the appellant's executive officer) and the appellant.

4. The complaint was that during the 2002 general election John Vava and other supporters of the appellant hired the respondent's Isuzu truck. The respondent paid all running costs of the truck.

5. The respondent claimed K3,000.00 for the running costs and K3,600.00 for hire of the truck (calculated at the rate of K200.00 per day for 18 days), a total of K6,600.00.

6. The complaint was tried before the District Court on 9 August 2005. No oral evidence was called. It was agreed that the court would make its decision based on affidavit evidence. The respondent (then the complainant) relied on three affidavits. The appellant (then the second defendant) relied on one affidavit. The evidence in the affidavits is summarised in the tables below.

TABLE 1: SUMMARY OF AFFIDAVITS
 TENDERED BY THE RESPONDENT IN DISTRICT COURT

No	Deponent	Content 	
1	John Gideon	States that during the 2002 general election the appellant's committees engaged his vehicle for the purposes of the election campaign, transporting committees and supporters to various locations – he was told that all debts would be settled after the election.	
2	Mathias Gideon	He is the respondent's brother – states that he was the driver of the truck – attached to the appellant's committees – fully committed to the campaign for two months – assisted in driving around supporters – running costs were met by the respondent.	
3	Steven Meta 	States that he was chairman of the John Vulupindi Political Resource Group – in early August 2001 he stayed overnight at the respondent's block at Tamba and they agreed that the respondent would be one of the appellant's area coordinators – he engaged the respondent's truck and told the respondent to keep a record of running expenses – assured him that if the appellant wins the election, he would be paid.	

TABLE 2: SUMMARY OF AFFIDAVITTENDERED BY THE APPELLANT IN DISTRICT COURT

No	Deponent	Content 	
1	Clement Mare 	States that during the 2002 general election he was chairman of the John Vulupindi Election Committee – he can recall use of the respondent's vehicle only on nomination day – he is not aware of the 18 days claimed by the respondent.	

7. The respondent represented himself. The appellant was represented by Mr G Linge.

8. His Worship Mr Gavuri handed down judgment on 12 September 2005. He found that the version of events given in the respondent's three affidavits was correct, ie:

•	Steven Meta was chairman of the John Vulupindi Political Resource Group and agreed with the respondent to hire his truck and use it for election campaign purposes;

•	Steven Meta assured the respondent that if the appellant won the election he (the appellant) would settle the amount due;

•	the appellant won the Talasea Open seat but failed to pay.

9. His Worship considered that the main issue was whether there was a binding contract, which had been breached. He resolved that issue in favour of the respondent:

The law of contract relating to a promissory condition is an essential term of this contract, the breach of which entitles the innocent party to repudiate the contract and or sue for damages. Here the statement made between John Gideon and Chairman for Political Party Group for John Vulupindi was agreed to and would be binding only if Mr John Vulupindi would win. But because John Vulupindi won the general election the result was a binding contract, the breach of which the complainant can claim damages from the defendant.

The doctrine of entire contracts is that if a person has expressly agreed to do an entire work for a specified sum of money, usually incomplete performance by him amounts to no performance. Thus in this case the complainant has employed his brother and his truck in this general election campaign and had completed the agreement.

The principle that in an entire contract, nothing can be claimed unless the claimant has performed all the conditions of the contract. In this case because this agreement has had fully affected, the complainant therefore entitles for damages. [sic]

10. His Worship thus considered that there was a contract formed between the appellant and the respondent and payment of money under the contract was conditional on the appellant winning the election. He won the election therefore he was bound to pay the amount agreed, which was K200.00 for truck hire per day plus running costs.

11. As to the quantum of damages, his Worship found that the respondent had not kept proper records of the running costs. So he awarded nothing under that head of damage. As to hire charges, his Worship was satisfied that only ten days hire could be proven so he awarded the sum of 10 days x K200.00 per day = K2,000.00. He awarded K2.00 for court costs, making the total judgment sum K2,002.00.

APPEAL TO NATIONAL COURT

12. The notice of appeal relies on two grounds:

1	The learned Magistrate erred in law and fact when there was no evidence to show that the respondent was entitled to the K2,000.00 ordered.

2	The order by the learned Magistrate was against the weight of the evidence.

MAJOR ISSUES

13. The grounds of appeal are rather vague but Mr Linge's oral submissions crystallised the issues sufficiently and they can fairly be stated in this way:

•	Was Steven Meta acting with the lawful authority of the appellant, with the capacity to enter into a contract on behalf of the appellant?

•	Was there evidence to support the claim for a hire rate of K200.00 per day? 

14. The appellant does not dispute the findings of fact made by the District Court – that Steven Meta made certain promises and entered into an agreement with the respondent. However, he takes issue with the District Court's treatment of the legal issues.

APPELLANT'S SUBMISSIONS

15. Mr Linge argued that there was no evidence in the District Court to show that Steven Meta had any actual or ostensible authority to enter into binding contracts on behalf of the appellant. It was Steven Meta acting for himself or perhaps on behalf of his committee who entered into the contract. There was no evidence to link Steven Meta to the appellant, eg by some sort of agency relationship. There was no evidence to show that the appellant knew anything about the arrangement between Steven Meta and the respondent. There was no privity of contract between the appellant and the respondent.

16. As to the claim for K200.00 per day, there was a dearth of evidence on that matter also, Mr Linge submitted.

RESPONDENT'S SUBMISSIONS

17. Mr Gideon submitted that his Worship had made no errors in his decision. It was clear that Steven Meta had the authority to bind the appellant as he, Steven, was the chairman of a body that was committed to seeing the appellant elected to Parliament. Steven Meta was the head of the organisation and he clearly had the authority to act on behalf of the appellant.

FIRST ISSUE: WAS STEVEN META ACTING WITH THE LAWFUL AUTHORITY OF THE APPELLANT?

18. This requires consideration of the law of agency. The basic principle is that a person (an agent) who says (or 'holds out') that he or she is acting on behalf of another person (the principal) can enter into a binding agreement on behalf of the principal in two ways:

•	if the agent has actual authority to do so; and/or

•	if the agent has ostensible (also known as apparent) authority to do so.

19. Ostensible authority exists when the principal holds out (ie acts in a way that creates an impression) that the agent has authority to act on his or her behalf. If the principal allows a situation to develop whereby a third party would reasonably think that the agent has the principal's authority to act on his or her behalf, the agent can bind the principal even if, in fact, the principal did not authorise the agent to enter into binding agreements. This is also regarded as an application of the law of estoppel. The principal is, because of his or her conduct (ie allowing a situation to develop), estopped (ie prevented) from denying that the agent has authority to act on his or her behalf.

20. These are principles of common law and equity that have been adopted and applied as part of the underlying law of Papua New Guinea in a number of decisions of the National Court, eg Paul Tarato v Sir Tei Abel [1987] PNGLR 403, Bredmeyer J; AGC (Pacific) Ltd v Woo International Pty Ltd [1992] PNGLR 100, Sakora AJ; Michael Yai Pupu trading as South Pacific Arts v Tourism Development Corporation (2002) N2258, Gavara-Nanu J; Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The State (No 2) (2003) N2465, Kandakasi J; Peter Kirin and KK Farmers v John Paroda (2004) N2599, Kandakasi J.

21. These principles are applicable to the present case. Steven Meta was chairman of a political group called the "John Vulupindi Political Resource Group". He was holding out that he was authorised to act on behalf of the appellant, John Vulupindi, for the purposes of the election campaign. The appellant allowed that situation to develop. (That is a reasonable inference to draw from the evidence in the District Court.) Steven Meta was the appellant's agent. When Steven Meta told the respondent, John Gideon, that he would hire his truck for the appellant's campaign and that he would ensure the respondent was paid if the appellant won the election, Steven Meta was acting within the scope of his ostensible authority to enter into an agreement on behalf of the appellant. The agreement is therefore binding on the appellant even if the appellant did not expressly authorise the agreement and even if he did not know about it. The appellant is estopped by his conduct from denying that Steven Meta had authority to act on his behalf.

22. Thus, Steven Meta acted with the lawful authority of the appellant. He had the capacity to enter into a contract on behalf of the appellant. A contract existed between the appellant and the respondent. The District Court did not err in reaching that conclusion. Nor did it err by finding that the contract was breached. The first ground of appeal is dismissed.

SECOND ISSUE: WAS THERE EVIDENCE TO SUPPORT THE CLAIM FOR A HIRE RATE OF K200.00 PER DAY?

23. Mr Linge made a valid point on this ground of appeal: there was little evidence to say that the amount agreed for hire of the truck was K200.00 per day. None of the affidavits before the District Court mentioned the K200.00 per day figure. However, there was ample evidence that an agreement had been entered into and that under it the appellant would be responsible for the running costs of the vehicle and a daily hire charge. The learned Magistrate took all of those things into account and actually denied a substantial part of the respondent's claim due to lack of evidence. His Worship was, however, satisfied that the sum of K200.00 per day was a reasonable figure and that the truck had been used for ten days.

24. I am satisfied that there was enough evidence to support those findings and that the amount of K2,000.00 damages was reasonable in the circumstances. I dismiss the second ground of appeal.

THIRD ISSUE: WHAT REMEDIES, IF ANY, SHOULD BE GRANTED BY THE NATIONAL COURT?

25. As both grounds of appeal have been dismissed I can see no good reason to set aside or vary the orders of the District Court. There has been no miscarriage of justice. The appeal will therefore be dismissed.

COSTS

26. I will award costs of this appeal to the respondent. The National Court has the power to make an order for a specific sum of costs. It is not necessary for the costs to be taxed (Egga Pua v Otto Benal Magiten (2005) N2892, Cannings J). The respondent is self-represented. I will fix the costs at K200.00 and order that that sum be paid within 30 days.

REMARKS

27. There are some salutary lessons to be learned from this case for anybody contesting an election. During the campaign period a candidate tends to make a lot of promises. And the candidate's supporters also make promises on behalf of the candidate. This case shows that under the law of agency a candidate can be liable for promises made by his or her supporters and in particular by the head of their campaign committee, even if the candidate does not know that their campaign head has made a promise on their behalf.

28. Candidates should be careful who they appoint as their campaign committee heads. They should know who is campaigning for them. They should have a clear decision-making structure. If someone is campaigning without the actual authority of the candidate – ie going off on a frolic of their own – the candidate will need to step in and let everyone know that that person is unauthorised. This will reduce the risk of them being liable for what the other person promises on their behalf. It will bring honesty and transparency into the election process and relieve uncertainty in the minds of the voters. It will help all those involved in the administration of elections to promote, as required by Section 50(1)(d) of the Constitution, elections that are "genuine, periodic and free".

JUDGMENT

29. I will direct entry of judgment in the following terms:

(1)	The appeal is dismissed.

(2)	The decision of the District Court of 12 September 2005 in DC No 220/2005 at Kimbe is affirmed.

(3)	The appellant shall pay K200.00 in costs to the respondent within 30 days after today.

Appeal dismissed.
_____________________

Linge & Associates: Lawyers for the Appellant
Lawyers for the respondent: Self-represented