N7753
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 136 OF 2014(CC1)

BETWEEN
SEKEN KEWA trading as KOPIAM HIRE CARS
Plaintiff

AND
MINISTER FOR COMMUNITY DEVELOPMENT, HONOURABLE LOUJAYA KOUZA, MP
First Defendant

AND
ANNA SOLOMON as the Acting Secretary for
Department for Community Development
Second Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani:  Dingake J
2018:  6th April, 1st & 5th September, 19th October
2019: 7th February, 7th March

CONTRACT – alleged breach of contract by defendant – failure to pay for services rendered – defence relying on alleged breach of Sections 59 and 61 of the Public Finance (Management) Act rendering contract as void on account of uncertainty of price - invoices stipulating price rendered and part payment effected – not persuasive that the contract was void for uncertainty occasioned by not stating the price – defendants liable for unjust enrichment –directions hearing ordered for trial on assessment of damages

Cases Cited:

Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705

Counsel:

Mr. Canute Nidue, for Plaintiff
Mr. R. Uware, for Defendants

7th March, 2019

1.  DINGAKE J:	In this proceeding, the plaintiff claims the amount of K819,000.00 and other associated relief from the Third Defendant for breach of contract and or unjust enrichment.

2.  The material background facts are that the plaintiff and the former Secretary for the Department of Community Development, Mr. Joseph Klapat, executed a Special Services Contract for the provision of hired car services to the Department of Community Development.

3.   The evidence filed of record establishes that the plaintiff pursuant to the agreement, kept its part of the bargain and hired a number of vehicles to the Department and submitted invoices totalling K855,000.00 of which K36,000.00 was paid but the balance of K819,000.00 remains outstanding and the defendant refuses or declines to pay same on a number of grounds, including that when Mr. Klapat signed the Contract on the 1st of September, 2012, he was suspended; that the contract is void and unenforceable on account of alleged breach of Sections 59 and 61 of the Public Finance (Management) Act and that the contract is void on account of uncertainty of the price.

4.   In my considered opinion nothing much turns on any grounds alleging illegality given that the cause of action is located in unjust enrichment. It is common cause that the contract was void and or illegal on the basis that Sections 59 and 61 of the Public Finance (Management) Act were not complied with. In the circumstances, even if there is merit in the argument that Mr. Klapat suffered from legal disability, on account of suspension, and could not execute a binding legal agreement, the net effect would be the same as a contract entered into in violation of Section 59 and 61 of the Public Finance (Management) Act; as the result would still be a void and unenforceable contract. The plaintiff concedes that the contract was void on account of violations of Sections 59 and 61 referred to above.

5.   In the circumstances of this case, where invoices stipulating the price were rendered and part payment effected, I am not at all persuaded that the contract was void for uncertainty occasioned by not stating the price.

6.   In my mind the critical question that falls for determination is whether the plaintiff is entitled to payment for services rendered, based on the principle of unjust enrichment.

7.  In order to succeed the plaintiff, suing on the basis of unjust enrichment, must prove the following:

1)	The defendants have been enriched by the receipt of a benefit.
2)	The defendants had been enriched at the plaintiff’s expense; and;
3)	It would be unjust to allow the defendants to retain the benefit.

8.  It was authoritatively held in the case of Fly River Provincial Government v Pioneer Health Services Limited (2003) SC705 that despite the illegality of the contract for breach of Sections 59 and 61 of the Public Finance (Management) Act, the plaintiff should still be paid for services if it is established that the plaintiff was unaware of the contravention and was an innocent party. This authority would apply even if the illegality in this case was occasioned by an uncertain price in the contract, as claimed in this case, or by the suspension that resulted in legal disability to execute a valid contract.

9.   In this case, the defendants argue that the plaintiff was not an innocent party as he knew of the illegality complained of. In my opinion there is no cogent and credible evidence that he knew of any illegality. It seems to me that knowledge that Mr. Klapat was being investigated on allegations of fraud does not amount to the required knowledge. In the result, I find that the plaintiff was in the circumstances of this case an innocent party.

10.   I am satisfied that the defendants have been enriched by receipt of the benefit, at the expense of the plaintiff, and that such enrichment, without a corresponding obligation to pay, would be unjust.

11.  In the result, it is ordered that:

a)	The defendants are held liable for payment of services rendered to them by the plaintiff in terms of the contract entered on the 1st of September, 2012.
b)	Damages are to be assessed at a trial to be held in due course.
c)	This matter is enrolled for directions hearing on the 15th March, 2019, to determine the date of trial on assessment of damages.
d)	There is no orders as to costs.

___________________________________________________________
Nidue & Associates Lawyers:  Lawyers for the Plaintiff   
Office of the Solicitor General:  Lawyers for the Defendant