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Kiku Plumbing Pty Ltd v Enga Provincial Government [1993] PNGLR 439 (24 September 1993)

PNG Law Reports 1993

[1993] PNGLR 439 - Kiku Plumbing Pty Ltd v Enga Provincial Government 

[1993] PNGLR 439

N1180

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

KIKU PLUMBING PTY LTD

V

ENGA PROVINCIAL GOVERNMENT

Mount Hagen

Woods J

6 August 1993

10 August 1993

24 September 1993

CONTRACT - Purported contract - Minute of mutual understanding not a legally binding contract - Claim in quantum meruit - Partly completed works - Stockpiling of materials on site.

Facts

The plaintiff signed a purported agreement, namely Minute of Mutual Understanding of Work Agreement, with the defendant and undertook minor works in the Laiagam District of Enga Province pursuant to that agreement. The plaintiff claims that the works required to be performed were satisfactorily completed and seeks moneys owing.

Held

1.       There is no legally binding contract between the parties.

2.       The plaintiff can only claim on a quantum meruit.

3.       Thus the plaintiff can only claim for maintenance and gravelling work actually done, totally K13,365 plus interest. No judgment is awarded on the claim in respect of work not done, namely, installation of culverts.

Counsel

P Kopunye, for the plaintiff.

P Potane, for the defendant.

24 September 1993

WOODS J: The plaintiff is claiming for monies owing on certain agreements for minor works to be performed on roads in the Laiagam District of the Enga Province. The claim relates to three work agreements entered into in August 1991. The plaintiff is claiming that the works required to be performed were satisfactorily completed and that the defendant has failed to pay the amounts agreed in the agreements. The works agreements have been tendered in evidence.

Whilst this claim would appear to be a claim in contract, a perusal of the works agreements referred to show that they are not contracts in the strict sense. They are each referred to as a Minute of Mutual Understanding of Work Agreement for the works as specified. This is because it is an agreement with a government and, to avoid the complexities of having formal contracts prepared in the form and manner required to bind governments, the Works Department has adopted an easier practice for minor works agreements to be done by mutual agreement. I am sure that, generally, this procedure works well. However, here it does not seem to have done so. I am, therefore, looking at the claim as mutual agreements to perform some work, and I must look at all the evidence to assess whether the work agreed to be done has been done. Thus, I am looking at the claims on a quantum meruit basis. The defendant is not denying there were some agreements and, anyway, judgment has been signed by default against the defendant. However, it is still necessary to assess the amounts owing under the agreements on the basis of the stage reached in the performance of the agreements.

The plaintiff claims on three agreements.

The first is for gravelling and general maintenance on the road from Paitega to Torenam, for a total of K10,000. The second is for some gravelling, for an amount of K5,000. The third is for laying some culverts at Yamalep and Puwa rivers and the subsidiary works required. This agreement refers to the supply of materials as well. The total for this agreement is K45,077.84.

Judgment was entered by default some time ago, and the matter came before me for an assessment of the damages.

Mr Tony Kiku, the proprietor and manager of the plaintiff company, deposed that he negotiated the agreements and duly performed the work required, except that the work of laying the culverts was not completed because he was told that the government had run out of money and, therefore, he should not complete the works. However, he did state that he had purchased all the materials for the laying of the culverts and had them delivered to the site.

Thus, in his very evidence the manager of the plaintiff company is agreeing that the works to be done under the agreements were not completed. This in itself casts grave doubts on the efficacy of the document headed Certificate of Practical Completion No 4960. This, therefore, can only support that it is, in the end, only a claim for quantum meruit, although the references to the work agreements or minutes of mutual understanding give the basis on which the claim can be assessed.

The first claim was with reference to Agreement No 1834. It is for K10,000 for gravel maintenance and regravelling for the Paitege to Torename Maramuni turn-off. There does not seem to be any argument about this work. The defendant acknowledges that there was about one and a half kilometres of road gravelling done. This would include the subject of claim 4959 for further road sheeting. The supporting documentation for the extra agreement is a bit vague. The agreement itself seems to have been changed and the progress payment claim was incomplete. The defendant suggests that it seems to include part of the subject of Agreement No 1834. I am a bit confused myself and, as there is no disputing the claim for K10,000, I feel that there may also be some validity in the further claim for the further sheeting in 4959 claim which seems to have been reduced to K3,356.

Claim No 4960 is the major claim in dispute here. This agreement was to lay culverts. In the words of the agreement, the installation of culverts at Yamalep and Puwa rivers. The total estimate of this agreement is K47,077.84. The plaintiff company is claiming the whole amount even though it admits that, because of some suggestion that the government had run out of funds and, therefore, the Company was told not to complete the work, it did not install the culverts. In effect, it did not do the work referred to in the agreement.

If there was a legally binding contract, then such advise would not make any difference unless it was incorporated in some properly drawn variation of contract.

Alternatively, was this a basis for the frustration of the contract? However, I have already found that there was no proper contract legally binding the parties and that this matter could only be considered on the mutual understanding to do some work, namely on the basis of any work done.

Even on a proper, valid contract, the law is quite clear that, if a party to the contract does only part of the work, he cannot claim under the contract but may be able to claim on a quantum meruit.

The evidence is quite clear that the work was not done. There was no installation of any culverts. The officer of the plaintiff company admits that.

The plaintiff is, therefore, claiming for the supply of materials, but he has no evidence that he purchased any materials. There is evidence that there are some materials stockpiled adjacent to the area, but the ownership of those materials is disputed. If the plaintiff had purchased these, then he must have some documentation supporting the purchase. The manager of the company says that he paid cash for the materials from the government store in Mount Hagen and, now that the government store is closed, he is unable to get any copies of the receipts. However, here we are not talking about a cash purchase of a few kina. The total referred to in the documentation for the materials is over K30,000. I find that a company paying over K30,000 in cash at the government store for such materials is a bit farfetched and extremely unlikely business practice. Where is the evidence of such a large cash withdrawal from the company bank account if there is no other more relevant documentation?

If he did own the materials and had not installed them, where is his stock take and action to take or assume title to the materials once he was unable or failed to install them.

The title to any materials at the site of the proposed work is disputed by the defendant, and the fact that the plaintiff has taken no steps to assert his title weighs the claim in favour of the defendant.

The evidence is quite clear and undisputed by both plaintiff and defendant that there was no work done on the installation of the culverts, and there is no evidence to support the plaintiff's claim for having purchased any materials.

The total result of all the agreements to do work was some maintenance and gravelling about which there is no real dispute and for which the two amounts of K10,000 and K3,356 appear to be relevant.

I order judgment for the plaintiff for K13,356 plus interest at 8 percent from the date of issue of writ to today, which calculates at K1,665.65.

Lawyer for the plaintiff: Kopunye Lawyers.

Lawyer for the defendant: Legal Officer - Provincial Government.