Home | Databases | WorldLII | Search | Feedback High Court of Solomon Islands

Onote'e v Attorney General [2024] SBHC 150; HCSI-CC 144 of 2020 (8 October 2024)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 144 of 2020

BETWEEN

NELSON ONOTE’E
Claimant

AND:

ATTORNEY GENERAL
Defendant

Date of Hearing: 16 August 2024
Date of Judgment: 8 October 2024

Mr. S. Lalase for the Claimant
Mr. E. for the Defendant

JUDGMENT

AULANGA PJ

1. The Claimant and the former Premier of Guadalcanal Province, Mr. Anthony Veke, purportedly entered into an oral agreement for the Claimant to perform various maintenance and repair works on the building complex, known as the Guadalcanal Provincial Headquarters, in Honiara. The oral or hand shake agreement occurred on unspecified dates in 2016, 2017 and 2018.
2. The Claimant did not plead or particularise the specific terms of the agreement in the claim, making it vague and ambiguous for the Court to ascertain the intention of the parties at the time the agreement was formed.
3. The Claimant purchased the materials and performed the various maintenance and repair works. He received some payments for the work done however, he claimed that the payments received were not the total amount he should receive from the Defendant. He suffered business loss. The Claimant says that the Defendant breached the agreement and seeks the following reliefs in the claim:
   1. The full payment of $1, 434,840 for the amount of work done without defects;
   2. Payment for business loss of 10% per month effective from year 2016 to date of judgment;
   3. Further orders as the Court deems fit; and
   4. Costs.
4. The Defendant denies liability. The Defendant says the pleadings have failed to disclose a cause of action in contract for the claim for damages. The Defendant further says that if there was an oral agreement or contract, which the Defendant denied, it was illegal for not conforming to the procurement rules of the Guadalcanal Provincial Government and therefore, is unenforceable.

Background of the case

5. The Claimant is the proprietor of his company called Nelson’s Construction. The company provides glass window placements and installation works, including maintenance and related works.
6. In 2016, he performed some maintenance works at the Guadalcanal Provincial Building for a total cost of $426,660. There was no mention in the pleadings and evidence that $426,660 was the agreed amount to be paid to the Claimant upon the completion of the work. In 2018, he was paid $102,600 for that work which he asserts was an underpayment with $324,060 still outstanding.
7. In the same year, he performed another maintenance work valued $173,000 at the same building. He was paid $86,500 with the balance still outstanding.
8. In 2017, the Claimant was requested to perform various maintenance works at the same building complex with a total cost of $33,800. That was not paid. In the same year, 2017, he performed another work by installing new sets of lock to an old building owned by the Defendant with a total cost of $5,000. He did not receive any payment for the work.
9. The Claimant was frustrated and sought legal representation. On 2 September 2019, his former lawyer JSP Legal Services, issued a letter of demand to the Defendant to settle his outstanding payments within 21 days. In the letter, the Claimant claimed a further outstanding amount of $958,980 for a construction work he did to the Defendant’s shop. There was no mention about the terms of the agreement for that work except for the amount claimed and nature of the work done.
10. According to the claim, the outstanding payment due to be paid to the Claimant was $1, 434,840. The Claimant says he has suffered financial loss as a result of the Defendant’s failure to settle his debt which amounted to the breach of the oral agreement.

Issues for considerations

11. Both parties have agreed to these three issues for the Court to consider. First; whether or not there was a binding agreement or contract between the parties. Second; whether the Claimant can claim the outstanding payment owed to him by the Defendant for damages. Third; whether the Claimant can be refunded for the costs incurred for payment of the materials.

Issue 1: whether or not there was a binding agreement or contract between the parties

12. This case involves a purported breach of an oral contract. An oral contract normally forms from a conversation. In common law, it can constitute a valid contract that can be enforceable in the Court. Where the existence and the terms of the oral contact are in issue, the Claimant bears the onus of proving its existence. The relevant conversation must be proved to the reasonable satisfaction of the Court that the consensus reached by the parties was capable of forming a binding contract and was intended by the parties to be legally binding. If the Claimant seeks to prove an oral contract by relying on conversations that occurred years ago, it is necessary to bear in mind the observations of McLelland CJ in Eq Watson v Foxman^[1] regarding the fallibility of human memory:
    • “... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consider-ation of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”^[2]
13. I think it is important to traverse the law on oral contract as held in other jurisdictions to assist me in deciding the issues in this proceeding.
14. To ascertain whether an oral conversation can amount to a legally binding contract, the Court in Watir v Semmy^[3] when referring to Steven Naki v. AGC (Pacific) Ltd,^[4] has outlined the following important factors that ought to be considered:
    • “If a person submits that there was a contract – especially if an oral contract is relied on – the court must be able to identify the ‘who, what, when, where and would’ of the contract. That is:
    • Who are the parties?
    • What is the subject of the contract and what are its terms?
    • When was the contract entered into? A particular date must be identified.
    • ·Where was the contract entered into? This is vital if the contract is oral.
    • ·Would anyone be able to sue on the basis of it?”^[5]
15. In Douglas v Mikhel,^[6] the Court outlined the relevant principles that need to be considered when dealing with oral contract. They are; the party relying on an oral contract bears the onus of proving its existence; the conversation must be proved to the satisfaction of the Court, which must feel persuaded of its existence; the Court must be satisfied that any consensus reached must be capable of forming a binding contract and was intended by the parties to be legally binding; the history of the relationship between the parties is also relevant and the conduct of the parties prior and at the time of the formation of the contract as well as after the contract.^[7] The law insists that there must be material or cogent proof of those factors because of the inherent difficulties when relying on an oral contract as a cause of action in a civil proceeding.
16. Premised on the decision of Douglas v Mikhel cited above, where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the Court, which means, the Court must feel an actual persuasion of its occurrence or its existence before it can be reasonably concluded as a valid and legally binding contract. Anything short of will render the contract uncertain and unenforceable in the Court.
17. Further, the Court must also be satisfied that there was a meeting of the minds of the parties to the agreement. The Court in our jurisdiction continued to resonate that trite legal requirement in a good number of cases. For example, see: Wewela v Commodities Export Marketing Authority^[8] and SI Broadcasting Corporation v Mark Bisili^[9]. In SI Broadcasting Corporation v Mark Bisili,^[10] then Judge Kabui succinctly explained this requirement as: “... a contract is binding at law when founded on the agreement between two parties to the contract. There must be meeting of the minds as it is often said in the law of contract”.^[11] Any agreement that falls short of this, is ambiguous or uncertain, and will be unenforceable.
18. In the present case, the Claimant relied on the oral contract as a cause of action for the damages sought in the claim. He pleaded in the claim and as repeated in his sworn statement at pages 14-39 of Court Book A that he was requested by the former Premier of the Guadalcanal Province, Mr. Anthony Veke, an agent of the Defendant, to perform the various maintenance and repair works to the building owned by the Guadalcanal Provincial Government. These occurred on unknown dates in 2016, 2017 and 2018 in Honiara.
19. However, upon considering the claim and evidence, I find the Claimant merely recited his part in the performance of the various maintenance works but failed to plead in the claim and prove in evidence the following important aspects of the conversation in order to establish a valid contract. These are; the specific terms of the agreement of the exact dates the oral agreement was said to have been entered into by the parties; the types of work required to be performed by the Claimant; the duration required for those tasks to be completed; the agreed amount of money the Defendant should pay the Claimant for each of the task and whether any party would be able to sue on the basis of those conversations. Furthermore, the claim and the evidence did not specify who should be paid for the materials; the amount of money the Defendant should pay the Claimant upon completion of each segment of the work and the manner in which the Claimant should be paid.
20. The claim seems to suggest that the Claimant was requested to do those various works for the Defendant based on the conversations he had with Mr. Veke. However, in the absence of pleadings on the specific terms of the oral agreements, that makes the agreements rather confusing, vague and ambiguous. Therefore, the Court is unable to ascertain the intention of the parties to have the agreement legally binding and enforceable in Court. This is a fundamental flaw to the Claimant’s case. Because of the uncertainty and vagueness of the conversations, they cannot constitute a valid contract that is actionable in the Court. As rightly said by Foukona DCJ in Dalgro Solomon Islands Ltd v KK Real Estate Proprietor Ltd^[12]: “In any contract the terms must be certain. If there is any uncertainty in the terms, the court will declare the contract void for reason of uncertainty.”^[13]
21. Based on those reasons, I hold that the conversations entered into by the Claimant and Mr. Veke, as the agent of the Defendant, on those unspecified dates did not amount to any valid contract. They are simply vague and uncertain conversations, devoid of a valid contract. Hence, it is difficult for the Court to hold that they constitute a valid agreement. The burden is on the Claimant to plead the specific terms or elements of the oral agreement as outlined in Steven Naki v. AGC (Pacific) Ltd (supra) before it can be considered a valid agreement. For these reasons, I am not persuaded that a valid contract was formed between the parties.
22. Even if an oral contract was formed, there is another critical matter raised by the Defendant that would render the contract void and unenforceable. That is, the oral contract was illegal because it was formed and performed in contradiction to the procurement rules and procedures of the Guadalcanal Provincial Government.
23. The evidence of Fredolyn Don Ricky in Court Book Part A page 95 is worth noting. It clarifies the process the Defendant must follow when awarding of contract to the public. Relevantly, awarding of contract must follow and conform to the procurement process in the Procurement Manual of the Guadalcanal Provincial Government. This is because the Provincial Government is an entity of the State and any contractual undertakings entered into by the Provincial Government with the public must be safeguarded by the procurement rules. The procurement rules operate as safeguards to prevent abuse of the bidding process and more importantly, to allow integrity in the administration and disbursement of the provincial funds in contractual undertakings. The contract for service claimed by the Claimant, falls in a category of contract that must be considered through the procurement process. This is to ensure it conforms with procurement and financial guidelines of the Guadalcanal Provincial Government.
24. Section 61 of the Procurement Manual in Court Book Part B^[14] outlines 5 steps that need to be followed before a contract can be awarded to a bidder. First, the advertising of the contract; second, the issuing of tender documents; third, is bid submissions and bid opening; fourth, is evaluation of the bids and fifth, is the award of the contract. The Procurement Manual is clear that the Provincial Tender Board is the authority to award contract to the bidder and not the Premier.
25. The Claimant never applied for any contract that was advertised by the Defendant. At best, it was only a hand shake arrangement. There is no issue that the awarding of the various maintenance works was done outside of the procurement process and without the approval of the Provincial Tender Board. The effect of this is that the conversations were unauthorised arrangements made without the approval of the Provincial Tender Board and was contrary to the procurement rules. Therefore, they must be declared void on public policy. For that reason, the purported oral contract is illegal and cannot be enforced in Court. This is another defect in the Claimant’s case.

Issue 2: whether the Claimant can claim the outstanding payment owed to him by the Defendant for damages

26. I have found that there was no legally binding contract between the Claimant and the Defendant. I also found that even if there was a contract, it is void on the ground of illegality of contract. As such, the question is whether the Claimant can be able to sue for damages arising from the breach of the contract.
27. In my view, a contract that is uncertain is void ab initio and cannot be enforced in Court. Thus, any claim relying on the contract for damages is null and void.
28. This also applies to the consideration of the contract that was void on the ground of public policy. The Court will not lend its aid to the Claimant who found his cause of action on the contract that did not conform or comply with the procurement procedures and guidelines. For these reasons, this issue is answered in the negative.

Issue 3: whether the Claimant can be refunded for the costs incurred for payment of the materials

29. This issue begs the question of whether the Claimant should be left without remedy in light of his claim that he had fully performed the work for the benefit of the Defendant. The Claimant submits that he had paid the materials with his own expenses and therefore, he should be refunded for the cost of the materials incurred. By implication, it would be unjust for the Defendant to benefit from the service done by the Claimant.
30. The amount of $1, 434,840 is the sum that ought to be paid to the Claimant for the various maintenance works. It is not clear in the pleadings and evidence whether this amount is for refund or as money to be paid under the oral contract.
31. It is trite law that where an illegal or void contract was performed to the benefit of another party, the first party is entitled to claim for recovery or restitution of proven expenses, which can be assessed on the basis of quantum meruit. This will be assessed on evidence.32. I have considered the claim. Unfortunately, it fails to disclose a cause of action for restitution. There is no particularisation of the facts and orders for restitution and as a result, the claim did not disclose a cause of action for restitution upon which the Court can order refund of all his expenses for the purchase of the materials. Further and more importunately, how much to be refunded is unknown.
33. The Claimant bears the onus to plead restitution and with cogent proof to enable the Court to order refund of his financial expenses. The Claimant did not provide receipts from the supplier of the materials, making it difficult for the Court to establish the amount to be refunded to the Claimant. The breakdown provided by the Claimant at page 23 of the Court Book Part A is at best an estimation. Such an estimation cannot amount to evidence upon which the court can award restitution.
34. There is also an issue that the Claimant was subcontracted by Peter Milton Suimae of FINJAY Building & Construction to do the work for the Defendant. In any event, any liability claimed by the Claimant as the subcontractor cannot be apportioned to the Defendant but to the contractor. I do not see any relevance of this issue to the damages sought against the Defendant in this proceeding.
35. In summary, I find the Claimant’s claim uncertain and vague. If there was a valid contract, it is void and unenforceable in Court. The fallback claim for restitution fails for lack of proof and specificity. As a result, claim must be dismissed in its entirety with costs to be paid to the Defendant on standard basis.

Orders of the Court

1. The claim is dismissed in its entirety.
2. Cost of this proceeding is to be paid to the Defendant on standard basis.

BY THE COURT
Augustine Sylver Aulanga
PUISNE JUDGE

^[1] [1995] NSWCA 497; (1995) 49 NSWLR 315
^[2] At page 319
^[3] [2019] PNGC 6
^[4] [2006] N5015
^[5] Paragraph 10
^[6] [2023] NSWSC 979
^[7] Paragraph 18
^[8] [2018] SBHC 45; HCSI-CC 149 of 2014
^[9] [2000] SBHC 5; HC-CC 218 of 1998
^[10] Ibid
^[11] Referred to in paragraph 7 of Wewela v Commodities Export Marketing Authority [2018] SBHC 45; HCSI-CC 149 of 2014

[12] [2008] SBHC 90; HCSI-CC 290 of 2008

^[13] At page 3
^[14] Pages 247-251