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Mountain Oil Ltd v Tokaju Engineering Services Ltd [2017] PGNC 430; N8546 (28 August 2017)

N8546

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 131 OF 2016

BETWEEN:
MOUNTAIN OIL LIMITED
First Plaintiff

AND:
GIGIRA DEVELOPMENT
CORPORATION LIMITED
Second Plaintiff

AND:
TOKAJU ENGINEERING
SERVICES LIMITED
Defendant

Waigani: Hartshorn J.
2016: 21^st September,
2017: 28^th August

DAMAGES – trial - breach of oral contract between plaintiffs and defendant – defendant’s shareholder denies an oral contract exists – defendants accountant had ostensible or implied authority as his conduct has committed defendant to a contractual relationship with plaintiffs - Judgment is entered for the plaintiffs against the defendant

Cases Cited:

AGC (Pacific) Ltd v. Woo International Pty Ltd [1992] PNGLR 100

Counsel:

Mr. D. Bidar, for the Plaintiffs

Mr. D. Kop, for the Defendant

28^th August, 2017

1. HARTSHORN J: The two plaintiff companies claim damages in the sum of K760,498.36 for unpaid invoices for the supply of diesel fuel to the defendant company.

2. Mountain Oil Limited (MOL) and Gigira Development Corporation Ltd (GDC) claim that they have an oral contract with Tokaju Engineering Services Ltd (TES) to supply it with diesel fuel. GDC is the major shareholder of MOL. TES denies the oral contract. The only shareholder and director of TES is Mr. Tuguyawini Libe Parindali. Mr. Parindali deposes in his evidence that he is also a shareholder of GDC but is not aware or cannot recall entering into the alleged oral contract with MOL and GDC and is not aware or cannot recall sending or authorising purchase orders from TES to MOL and GDC.

3. Mr. Parindali is aware though that “.... my company does from time to time and when the need arise(s) order fuel supplies from the plaintiff company on a need (sic) basis .....”

4. The evidence of Mr. Paul Kemga, the Finance manager of MOL and GDC is of the oral agreement, that Mr. Parindali is aware of the oral agreement, and has a long-standing relationship with the plaintiff companies due to dealings with them and other companies involved in business emanating from the PNG LNG Project in the Hides, Nogoli and Komo areas of Hela Province.

5. Significantly, in the evidence of Mr. Kemga, there are copies of email correspondence between Mr. Job Kawane, who describes himself as ‘Accountant’ for TES and whose email address is jkawane@tokajupng.com and Messrs Morris Siso and John Piawiya of GDC.

6. This email correspondence is evidence of a business relationship between MOL/GDC and TES in which Mr. Kawane on behalf of TES requests and obtains the monthly diesel fuel price from GDC. A purchase order is then issued from TES to MOL for diesel fuel, the fuel is obtained and then GDC issues an invoice for the fuel supplied, to TES. In one specific email dated 6^th September 2013, although GDC obtains fuel from OSL (Oil Search Ltd) on a COD (cash on delivery) basis, and presumably pays Oil Search Ltd on that basis, GDC considered TES as “exceptional due to our geo locations.” Mr. Siso then states that TES has 10 invoices outstanding, three of 60 days and over, four of 30 days and over and three of below 30 days.

7. Given Mr. Parindali’s evidence of him not being aware or of recalling having authorized the issuing of purchase orders, one would have thought that there would be rebuttal evidence to the effect that Mr. Kawane was not authorised to act as he has and in issuing purchase orders from TES as he has. There is no such evidence.

8. In the absence of such evidence, I am satisfied that Mr. Kawane had implied or ostensible authority and that the persons from MOL/GDC acting in good faith were entitled to rely upon Mr. Kawane having the authority to commit and bind TES in regard to the ordering of diesel fuel. I refer in this regard to the principles referred to in AGC (Pacific) Ltd v. Woo International Pty Ltd [1992] PNGLR 100.

9. After considering the pleadings, evidence and submissions and that there is evidence of a business relationship between MOL/GDC and TES pursuant to which on numerous occasions TES has issued purchase orders to MOL for the supply of diesel fuel, the fuel has been supplied and then GDC issues an invoice, that TES has made part payment of K123,327.33 to GDC, that there is no evidence that TES protested to MOL/GDC that it did not owe the amounts claimed in the invoices sent to it by GDC or that it did not receive the subject diesel fuel, that there is no rebuttal evidence concerning the email correspondence between Mr. Kawane and employees of GDC or concerning the authority of Mr. Kawane, and that Mr. Parindali is aware that TES ordered fuel from GDC from time to time and it is unlikely that GDC would have issued the invoices if it had not supplied the diesel fuel, I am satisfied that the plaintiffs have made out their case on the balance of probabilities.

Orders

10. The Court orders that:

a) Judgment is entered for the plaintiffs against the defendant in the sum of K760,498.36 together with interest at 8% per annum on K760,498.36 from 1^st February 2014 and on any amount owing until payment of the judgment sum in full;

b) The defendant shall pay the plaintiffs’ costs of and incidental to the proceeding;

c)Time is abridged.
_____________________________________________________________
O’Briens: Lawyers for the Plaintiffs
Daniel Kop Lawyers: Lawyers for the Defendant