The Independent State of Papua New Guinea v Keboki Business Group Incorporated and Morobe Provinsel Gavman [1985] PNGLR 369

• Jurisdiction: Papua New Guinea
• Judge: Pratt J, Woods J, Cory J
• Judgment Date: 03 December 1985
• Court: Supreme Court
• Citation: [1985] PNGLR 369
• Year: 1985
• Judgement Number: SC307

Full Title: The Independent State of Papua New Guinea v Keboki Business Group Incorporated and Morobe Provinsel Gavman [1985] PNGLR 369

Supreme Court: Pratt J, Woods J, Cory J

Judgment Delivered: 3 December 1985

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

V

KEBOKI BUSINESS GROUP INCORPORATED

AND MOROBE PROVINSEL GAVMAN

Waigani

Pratt Woods Cory JJ

26 August 1985

3 December 1985

CONTRACTS — What constitutes — Contract with State — Provision of services — Supply and tender procedures — Common law rules applicable — Separate single contract not required — Authority to contract includes power to authorise signatures — Government Contracts Act (Ch No 34), ss 1, 2 — Minister's (Delegation) Act (Ch No 35), ss 2, 4 — Public Finances (Control and Audit) Act (Ch No 36), s 82.

CONTRACTS — Contract with State — Delegated power to contract — Extent of power — Power includes power to authorise signatures to relevant documents — Supply and tender procedures — Government Contracts Act (Ch No 34), ss 1, 2 — Minister (Delegation) Act (Ch No 35), ss 2, 4 — Public Finances (Control and Audit) Act (Ch No 36), s 82.

STATE — Liabilities of — In contract — Power to contract delegated to specific office holder — Extent of power — Tender and supply procedures — Power includes power to authorise signature to relevant documents — Government Contracts Act (Ch No 34) ss 1, 2 — Minister (Delegation) Act (Ch No 35), ss 2, 4 — Public Finances (Control and Audit) Act (Ch No 36), s 82.

STATE — Liabilities of — In contract — Contract for provision of services — Tender and supply procedures — Contract need not be in writing — Government Contracts Act (Ch No 34), ss 1, 2 — Minister's (Delegation) Act, (Ch No 35), ss 2, 4 — Public Finances (Control and Audit) Act (Ch No 36), s 82.

Contracts with the State are regulated by legislation, namely the Government Contracts Act (Ch No 34), the Minister (Delegation) Act (Ch No 35), the Public Finances (Control and Audit) Act, (Ch No 36), and certain regulations and financial institutions made thereunder which include procedures for supply and tender.

Under the legislation and regulations only certain specified persons have power to bind the State or "to enter into and execute any contract or agreement".

Held

(1) A contract for the provision of services to the State need not be contained in a single document signed on behalf of the State by a designated person; provided the common law requirements as to the existence of a valid contract exist, such a contract may, and usually will, consist of a series of documents specified under the relevant procedures for supply and tender, namely, the document calling for tenders and any specifications, the tender itself and any letter accompanying, and the letter of acceptance.

(2) A person who is delegated the power "to enter into and execute any contract or agreement" on behalf of the State, must exercise the power itself, that is, decide whether or not a contract should be entered into and then convey his decision in the most practical and effective manner; such a delegated power includes the power to sign a letter of acceptance of a tender or authorise its signing by a responsible official.

Discussion by Pratt J of the distinction between delegated powers and authorities.

(3) Accordingly, a valid and enforceable contract for the provision of garbage and sanitary services arose out of a series of documents evidencing a tender and acceptance thereof, notwithstanding the absence of the signature of the person to whom the power to so contract had been delegated.

Keboki Business Group Inc v Independent State of Papua New Guinea and Morobe Provinsel Gavman [1984] PNGLR 281, and reversed.

(4) (Per Pratt J) (Obiter) A contract for the provision of services to the State need not be in writing.

Cases Cited

Bloxham's case (1864) 33 Beav 529; 55 ER 474.

Churchward v The Queen (1865) LR 1 QB 173; 122 ER 1391.

Coogee Esplanade Surf Motel Pty Ltd v Commonwealth (1976) 50 ALR 363.

Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520.

Howell v Falmouth Boat Construction Co [1951] AC 837; 2 All ER 278.

L (AC) (An Infant), Re [1971] 3 All ER 743.

Levita's case (1867) 3 Ch App 36.

Powell v Lee (1908) 99 LT 284.

Robertson v Minister of Pensions [1949] 1 KB 227.

Robophone Facilities v Blank [1966] 1 WLR 1428; 3 All ER 128.

Appeal

This was an appeal from a decision of Kidu CJ, namely, Keboki Business Group (Inc) v Independent State of Papua New Guinea and Morobe Provinsel Gavman [1984] PNGLR 281, in which his Honour determined that a contract for the provision of garbage and sanitary services was not binding on the State but was subject to the principles of quantum meruit.

Counsel

J Reeve, for the appellant.

I R Molloy, for the first respondent.

T Doherty, for the second respondent.

Cur adv vult

3 December 1985

PRATT J: On 18 February 1983 the first respondent in this appeal, who is also a cross-appellant and the plaintiff in the original action, submitted to the Morobe Province Supply and Tenders Board a written tender for a sanitary/garbage contract at Wau for a period of twelve months renewable for a further period of one year. The amount of tender was in the vicinity of K90,000, and was outside the K50,000 limit imposed on the Morobe Board (per Government Gazette No 43 of 1977 at 12; annexure "F" to the affidavit of John Vulupindi). Consequently, they referred the matter to the Central Supply and Tenders Board which itself has a limit of K100,000.

The Morobe Board is admitted to be a "National Government Supply and Tenders Board". It is not an integral department of the Morobe Province, though no doubt its functions are restricted to matters occurring within the boundaries of that province. There is no question that the Central Supply and Tenders Board is also a National Government Supply and Tenders Board.

On 1 July 1983, the plaintiff-company received a letter from Morobe Board signed by its chairman advising them that they had been awarded a contract, that a letter of security in the sum of K2,250 should be lodged, made out in favour of the State (not the Province), and requesting acknowledgement of "this letter of acceptance by having receipt endorsed on the attached copy of this letter signed by a duly authorised officer of your company". This the company did on the same date. It then commenced to carry out its task and submitted the monthly accounts for July, August and September totalling K27,194.40. By this stage the company became sufficiently concerned to engage a firm of solicitors in order to obtain reimbursement for work performed by it. Despite inquiries with the Morobe Board by telex on a number of occasions, a great silence prevailed. About this time it appears that the second respondent had advised both the appellant and the first respondent that the matter was not one which concerned the MorobeProvincial Government. Almost simultaneously, the first respondent was likewise advised by the National Government that it was of no concern of the National Government either. Caught in this mid-court situation, the company resolutely continued to perform what it believed to be its contractual obligations (no doubt to the relief and good health of the Wau residents), presumably believing that commonsense and fair play would prevail in the long run. After all they had an official document signed by the chairman of the Morobe Board to say that they had been given the contract together with the company's acknowledgement. As the second respondent put in a token appearance only at the commencement of argument on the appeal, I shall simply refer hereafter to the first respondent only.

The State says categorically that there never was a binding contract between it and the company. The document signed by the Morobe Board is a worthless piece of paper. The State also contends that it is not subject to the principles of quantum meruit either. The convoluted and tortuous process of reasoning which the State has had to develop in order to reach these conclusions has been painful to watch. The dust of diversion has been greatly increased by the State's failure to place any of its cards on the table at the pleading stage.

The learned trial judge came to the conclusion that the contract was not binding on the State because it was not "executed" by the designated officer of the State. No mention is made by his Honour as to why the contract had to be in writing and thus require execution, or whether or not the State had entered into an agreement in some form other than in writing. His Honour correctly stated that the Board, be it Central or Morobe, does not have the power to enter into a contract on behalf of the State. I do not understand counsel for the respondent to submit to the contrary.

I do not consider it necessary to examine the various pieces of legislation concerning the limitations on the powers of a public servant to act within his authority. The matter under appeal is...