N4568

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 320 OF 2008

BETWEEN

KEDMEC AUTO REPAIRS LTD
Plaintiff

AND

PNG POWER LTD
Defendant

Lae: Gabi, J
2010: 15th September

CONTRACT – Contract for service – recovery of debt for services rendered to defendant - evidence suggests services rendered to the defendant upon request of defendants employees for and on behalf of defendant – defendant to pay plaintiff outstanding balance with interest

Facts

This is an action for recovery of a debt of K67, 880.52 for services rendered at the defendant's establishments in Lae and Yonki between August 2002 and November 2006. The defendant admitted K34, 845.66, which has been used to off set the claim by the defendant against the plaintiff for unpaid electricity bills of K31, 931.25. The balance outstanding of K33, 034.85 is disputed by the defendant on the basis that it did not authorize the request for services and that the services were never rendered. The plaintiff argues that two employees of the defendant, requested the services and that it provided the services requested.

Held:

1.	The plaintiff provided the services and the amount owing is K33, 034.86.
2.	The defendant is to pay the plaintiff the outstanding balance of K33, 034.86;
3.	The defendant is to pay interest at the rate of 8% on the sum of K33, 034.86 from the date of filing of the writ of summons to the date of judgment;
4.	The defendant is to pay the costs of the proceeding on party-party basis. 

Cases Cited:
Papua New Guinea cases

Nil

Overseas Cases

The Queen vs. Cowper (1890) QBD 533

Counsel

S. Tedor, for the plaintiff
P. Poriei, for the defendant

DECISION

15th September, 2010

1. GABI, J: Introduction: This is an action for recovery of a debt of K67, 880.52 for services rendered at the defendant's establishments in Lae and Yonki between August 2002 and November 2006. The defendant admitted K34, 845.66, which has been used to off set the claim by the defendant against the plaintiff for unpaid electricity bills of K31, 931.25. The balance outstanding of K33, 034.85 is disputed by the defendant on the basis that it did not authorize the request for services and that the services were never rendered. The plaintiff argues that Sama Asugum and Alphonse Sipura, employees of the defendant, requested the services and that it provided the services requested.

2. The issues before the Court are:

1.	Whether the defendant engaged or authorized the engagement of the plaintiff?
2.	Whether the plaintiff rendered the services?
3.	If so, what is the amount owing to the plaintiff?

The Evidence 

3. The trial proceeded by way of affidavit evidence and oral testimonies. The following affidavits were filed: (i) 2 affidavits of Sailas Taidang dated 31st March 2009 (Exhibit "P1") and 23rd June 2009 (Exhibit "P2") respectively; (ii) affidavit of Fabian Mala dated 3rd May 2010 (Exhibit "D1"); and (iii) affidavit of Stanley Wasi dated 3rd May 2010 (Exhibit "D2").

Facts

4. The plaintiff had a long business association with the defendant which began in 1999 and ended after this claim was filed in March 2008. Between 10th September 2000 and 5th November 2006, the plaintiff provided services in the form of motor vehicle repairs, maintenance and other incidental and related services to the defendant. It is alleged that these services were requested by Sama Asugum and Alphonse Sipura, employees of the defendant, for the service and maintenance of the defendant's vehicles at its Lae and Yonki establishments. It is also alleged that the plaintiff provided the services requested. The plaintiff claimed K67, 880.52 but the defendant admitted K34, 845.66 being the total of 18 invoices thereby leaving a balance of K33, 034.86. The amount of K34, 845.66 was used to off set the defendant's claim of K31, 931.25 for unpaid electricity against the plaintiff and the balance of K2, 914.41 was paid to the plaintiff's Lawyers, Sialis Tedor & Associates. The trial is to recover the balance of K33, 034.86.

Engagement of services

5. Mr. Sailas Taidang, the Managing Director of the plaintiff, sets out the procedure used by the defendant to engage its services up to November 2006 (see Exhibit "P1"). He said the plaintiff had been doing business with the defendant since 1999. He said services were requested by any one of the following methods: (i) the issue of a Purchase Order or a Purchase Requisition to service a vehicle; (ii) the issue of a Vehicle Defect Report or Vehicle Service/Repair Schedule with details of specific repairs to be done; (iii) in urgent cases, Alphonse Sipura, an authorized officer of the defendant in Lae, would make a verbal or oral order for service on the spot without documentation; (iv) on completion of the job, the defendant would take delivery of the vehicle after inspection and testing of the vehicle. If the problem persisted the defendant would return the vehicle for further repairs; and (v) the plaintiff would send an invoice to the defendant for payment in relation to the specific order. He said this was the procedure the parties used for the repair and maintenance of the defendant's fleets at Lae and Yonki and was never disputed until the termination in 2007 of Sama Asugum and Alphonse Sipura, who were the officers principally responsible for requesting the plaintiff's services as well as payment of the invoices. He said prior to the termination of Sama Asugum and Alphonse Sipura in 2007 he was assured by both men that the invoices would be paid and similar assurances of settlement were received from Alex Oa, the Lae Billing Supervisor, Jack Ioela, Supervisor of Accounts Section and the OIC of Accounts Section at Headquarters in Port Moresby, Dorothy Kamblijambi. He said in October 2007 he was informed by Dorothy Kamblijambi that the invoices were being audited and the only time he was told that the invoices were not accepted by the defendant was when the defendant filed its defence to the claim. 

6. Francis Mala sets out the defendant's internal procedure for engagement of services in his affidavit (see Exhibit "D1"). He said when a business group or a department within the defendant needs services from a supplier, a Purchase Requisition is raised by the Manager of that business group or department and sent to the Manager Supply and Stores. The Manager Supply and Stores then raise a Purchase Order and send it to the supplier. A copy of the Purchase Order is forwarded to the business group or department that requested the service. The supplier after receiving the Purchase Order provides the service and sends its invoice to the Accounts Section for payment. The Accounts Section then confirms the amount claimed with the Purchase Order and process payment, which is normally made by cheque. He said Alphonse Sipura, who signed the documents for engagement of services or gave oral approval for services, did not follow the procedure and did not have the authority to do so. He said the only document which binds the defendant is a Purchase Order.

7. Stanley Wasi disputes the procedure outlined by Sailas Taidang (see Exhibit "D2"). He said the defendant only issues Purchase Order or Purchase Requisition to generate a service account in their computer system, namely, the Oracle Accounting Software and not through Vehicle Defect Report or verbal orders. He said verbal orders are not allowed under any circumstance because they are prone to abuse by staff and service providers. As to Sailas Taidang's evidence that some work were requested verbally due to the urgency of the work, he said local Purchase Order and Purchase Requisition are available at all branches including Lae and can be easily submitted at any time for urgent repair work as well.

8. I find that the standard procedure used by the defendant to request services was not followed in some instances. Was the engagement unauthorized? 

9. The defendant's case is that Alphonse Sipura, who was the defendant's transport officer based in Lae, had no authority to order or request the plaintiff to provide services to the defendant and that no services were in fact rendered. 

10. Counsel for the defendant submitted that as invoices or annexures A2, A5, A15, A18, A21, A24, A28, A31, B5, C18, C21, C35, C42, C45, C47, C50, C53, C56 and C59 were not signed, it meant that the defendant never requested the services and services were never rendered by the plaintiff. He argued that signatures on documents authenticate the particulars on the documents and in the absence of an authorized signature the documents are deemed to be invalid (see The Queen vs. Cowper (1890) QBD 533). Secondly, he argued that as copies of Purchase Orders are not produced the disputed invoices are not genuine. Finally, he submitted that the documents that were used to request services were Vehicle Service/Repair Schedule or Vehicle Defect Report, which are internal documents for use by the defendant and are not used to request external service. As such, the plaintiff did not provide the services nor was it engaged at all. If, however, it was engaged then such engagement was not authorized. 

11. The defendant admitted and paid 18 invoices totaling K34, 845.66. It disputes 25 invoices amounting to K33, 034.86. The documents used to order or request services were Vehicle Service/Repair Schedule or Vehicle Defect Report and they were not signed. According to defence witness Stanley Wasi the 18 invoices were admitted and paid because they were supported or accompanied by Purchase Orders. The 25 disputed invoices cannot be admitted and paid because there are no Purchase Orders, which are always sent or provided to the supplier. 

12. No Purchase Order was produced in evidence by the parties. Counsel for the defendant submitted that the onus is on the plaintiff to produce the Purchase Orders to prove its claim. The plaintiff's argument is that in some cases Purchase Orders or Purchase Requisition were provided to it but in other cases, particularly in minor jobs such as vehicle service or urgent repairs, services were ordered or requested through Vehicle Service/Repair Schedule or Vehicle Defect Report and such documents were usually filled out by Alphonse Sipura. I find that Vehicle Service/Repair Schedule or Vehicle Defect Report was used by the defendant to order or request services from the plaintiff amounting to K34, 845.66 which were admitted and paid. I further find that despite the unorthodox or unconventional method used by the defendant to place its orders, services were provided and payment duly made without any problem until Messrs Alphonse Sipura and Sama Agusum were terminated and the writ of summons filed. 

13. Secondly, there is evidence from Sailas Taidang that prior to the filing of the writ assurances were given by employees of the defendant that the invoices would be paid. The employees were: (i) Alphonse Sipura, Lae Transport Officer; (ii) Sama Agusum, Lae Branch Manager; (iii) Alex Oa, Lae Billing Officer; and (iv) Jack Ioela, Supervisor, Accounts Section, Port Moresby. This evidence is not contested. 

14. Despite the use of wrong documents to request services, there is no evidence before me to show that the services provided by the plaintiff were not authorized. The evidence before me is that the services were requested by Alphonse Sipura, who was the defendant's transport officer in Lae. I find that Alphonse Sipura had the authority as the transport officer to request the services from the plaintiff. The documents used were the defendant's own documents written out by Alphonse Sipura. There is no evidence before me to suggest that the documents were written out by anyone other than Alphonse Sipura. The plaintiff acted on the unsigned order forms.

Whether the plaintiff rendered the services and the amount owing to it

15. The evidence before me which is not disputed by the defendant is that services were rendered. The defendant called no evidence to dispute it. Alphonse Sipura, Sama Agusum and Alex Oa, the Lae based employees of the defendant, would have been the appropriate persons to give evidence on whether the plaintiff rendered the services. They were not called. I find that the plaintiff provided the services and the amount owing is K33, 034.86.

16. For all the above reasons, I make the following orders:

2. The defendant is to pay the plaintiff the outstanding balance of 
K33, 034.86;

3. The defendant is to pay interest at the rate of 8% on the sum of 
K33, 034.86 from the date of filing of the writ of summons to the date of judgment;

4. The defendant is to pay the costs of the proceeding on party-party basis. 

____________________________
Sialis Tedor & Associates Lawyers: Lawyer for the Plaintiff
P Poriei: Lawyer for the Defendant