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

• Jurisdiction: Papua New Guinea
• Court: Supreme Court
• Citation: (2003) SC705
• Date: 24 March 2003
• Year: 2003

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

Supreme Court: Amet CJ, Sawong J, Kandakasi J

Judgment Delivered: 24 March 2003

1 APPEALS—PRACTICE AND PROCEDURE—A party seeking to raise arguments on appeal not raised in the Court below—In fairness, a party is obliged to raise all the relevant issues and/or arguments that should be raised in the Court below first—A failure to do so precludes such a party from raising it on appeal.

2 CONTRACT—Contract governed by statute—Contract with a provincial government for provision of services—Tender and Ministerial approval under the Public Finances (Management) Act 1995 not complied with—Contract amounted to an illegal and void contract—Contract is null and void—Restitution is only remedy available for part performance and to avoid unjust enrichment provided the private contracting party is innocent.

3. CONTRACT—Terms of contract—Construction of—Fair and liberal approach appropriate so as to give effect to agreement of the parties—Court not there to destroy agreement of parties—Court can supply missing terms and or strike out meaningless clause or words in a contract—Whether price uncertain in present case—Machinery to ascertain price certain—No basis to find contract void for uncertainty.

4 Yama Security Services Limited v Warupi and MVIT (2000) WS 225 of 1999 (Unreported and unnumbered judgment of the National Court dated 25 August 2000), The State v Keboki Business Group Inc and Morobe Provinsel Gavman [1985] PNGLR 369, Visvanathan Subendranathan v The Independent State of Papua New Guinea (1999) SCA 106 of 1998 (Unreported and unnumbered judgment of the Supreme Court dated 27 October 1999), MVIT v John Etape [1994] PNGLR 596, MVIT v Pupune [1993] PNGLR 370, Sylvanus Gorio v National Parks Board [1982] PNGLR 364, Panga Coffee Factory Pty Ltd v Coffee Industry Corporation Ltd [1999] PNGLR 627, Patterson v NCDC (2001) N2145, Inakambi Singorom v John Kalaut [1985] PNGLR 238, PLAR No 1 of 1980 [1980] PNGLR 326, Norah Mairi v Alkan Tololo (No 2) [1976] PNGLR 125, The Independent State of Papua New Guinea v Barclay Brothers (PNG) Ltd (2001) N2090, The Independent State of Papua New Guinea v Barclay Brothers (PNG) Ltd (1992) (Unreported and Unnumbered Supreme Court judgment delivered on 31 December 2002), Rainbow Holdings Pty Ltd v Central Province Forest Industries Pty Ltd [1983] PNGLR 34, Putput Logging Pty Ltd v Phillip Ambalis [1992] PNGLR 159, Open Bay Timber Pty Ltd v The State [1993] PNGLR 246, Tian Chen Ltd v The Tower Ltd (No 2) (2003) N2319, Credit Suisse v Allerdale BC [1996] All ER 129, Cowan v Mibourn (1867) LR 2 Ex 230), Liverpool Borough Bank v Turner (1860) 2 DF & J 502, St John Shipping Corp v Joseph Rank Ltd [1957] 1 QB 267, Wade v Gold Coast City Council (1971) 26 LGRA 349, Westdeutsche Bank v Islington LBC [1996] AC 669, Scammel & Nephew Ltd v Ouston [1941] AC 25, Hillas (WN) and Co Ltd v Arcos Ltd (1932) 38 Com Cas 23, York Air Conditioning and Refrigeration (A/asia) Pty Ltd v Commonwealth (1949) 80 CLR 11, Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, Life Insurance Co of Australia Ltd v Philips (1925) 36 CLR 60 and Whitlock v Brew (1968) 118 CLR 445 referred to

Facts:

The National Court dismissed an action by the Appellant seeking to declare a contract between itself and the Respondent void. The Appellant's action was on the basis of non–compliance with tender and ministerial approval requirements under the Public Finances (Management) Act 1995 and uncertainty in its price. The contract was part performed and paid for but the Appellant could not make any payments on further invoices due to lack of funds or its inability to secure the necessary funds to complete the contract.

Held:

1. A party is not at liberty to raise a point on appeal that should have been raised in the Court below in the interest of fairness and to do justice. By his conduct, a party who fails to raise all the issues that should have been raised in the court below is precluded from raising them on appeal.

2. The requirements under s59 and s61 of the Public Finances (Management) Act 1995 are mandatory and where a contract is entered into in breach of those requirements, it is illegal and therefore null, void and unenforceable.

3. The requirements under the Public Finances (Management) Act 1995 are to enable transparency in all public contracts and to safeguard against corruption and enable securing of fair contracts with public institutions and or bodies for the best services at a competitive or best price.

4. A person dealing with the State or any of its arms or instrumentalities or a public institution to which the Act applies, is bound to comply with the requirements of the Act and every person dealing with such institutions or bodies is deemed to be aware of these requirements.

5. A failure to ensure compliance with the requirements of the Act operates to the detriment of the party contracting with the State or a public authority to which the Act applies.

6. Where an illegal contract is part performed, an action for recovery or restitution is available if not already paid for in equity to avoid unjust enrichment conditional on the innocence of the contracting parties.

7. In the present case, the contract between the Appellant and the Respondent is null and void for non–compliance with the public tender requirements and Minister for Finance's approval under the Public Finances (Management) Act 1995.

8. However, since the contract was part performed and the Appellant received goods and services from the Respondent, in equity the Respondent is entitled to pursue its claim for a recovery of the costs and expenses it has incurred by way of restitution. But this is conditional on showing its innocence in the creation of the illegal contract.

9. In the construction of words used in a contract, the court is duty bound to adopt a fair and liberal approach with a view to upholding the agreement of the parties, if the intention of the parties can be ascertained. For the courts are there to uphold the agreement of parties and not to destroy it. In so doing, the court can supply any reasonable term missing from the contract or strike out meaningless words or clauses in a contract. A part performance of a contract speaks in favour of a contract existing more than not. In the present case, there are sufficient details as to the price of a contract and/or how it is to be ascertained. Therefore, there can be no uncertainty about such a term.

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By the Court: This is an appeal from a decision of the National Court given on 5 December 2000. By an originating summons (OS 155 of 1999), the Appellant (FPG) applied for orders in the form of a declaration that an alleged contract between the parties made on 16 January 1998 (the contract) was void. Two grounds were advanced for the application. First, it is void for failure to comply with the Public Finances (Management) Act 1995 (the PF(M)A or the Act). Secondly and/or in the alternative, that it is void for uncertainty. That application was dismissed resulting in this appeal.

Arguments and decision of the National Court

Two provisions of the Public Finances (Management) Act 1995 were relied on to support the FPG's argument that the contract is void and unenforceable. Firstly it argues that there was a failure to call for public tenders for works or services as required under s59 of the Act. Secondly, there was a failure to obtain ministerial approval of the contract under s61 of the Act.

In relation to the second and/or alternative ground, the FGP argued that the contract was bad for uncertainty in the contract price because that could not be easily ascertained.

The learned trial judge in dismissing the FPG's application decided that the issue of obtaining approval under the Public Finances (Management) Act 1995 was not "unsolvable". He was of the view that it is an issue between the Provincial Government and the Minister for Finance. Then he made reference to a decision of Sevua J in Yama Security Services Limited v Warupi and MVIT (2000) WS 225 of 1999 (Unreported and unnumbered judgment of the National...