Sisio Yawanuka trading as Masive Mowing Service v Madang Provincial Government (2013) N5433

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 06 December 2013
• Citation: (2013) N5433
• Docket Number: WS NO 82 OF 2012
• Court: National Court
• Year: 2013
• Judgement Number: N5433

Full Title: WS NO 82 OF 2012; Sisio Yawanuka trading as Masive Mowing Service v Madang Provincial Government (2013) N5433

National Court: Cannings J

Judgment Delivered: 6 December 2013

N5433

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 82 OF 2012

SISIO YAWANUKA TRADING AS MASIVE MOWING SERVICE

Plaintiff

V

MADANG PROVINCIAL GOVERNMENT

Defendant

Madang: Cannings J

2013: 14 June, 6 September, 6 December

CONTRACTS – alleged breach of contract – whether written contract entered into in name of a business is enforceable – repudiation of contract: whether purported “suspension” of contract amounts to termination.

PRACTICE AND PROCEDURE – pleadings – whether defendant permitted to raise argument not mentioned in defence.

The plaintiff commenced proceedings against the defendant provincial government, claiming damages for breach of contract. The plaintiff claimed that he entered into a five-year service contract with the defendant, which was unlawfully terminated without notice after two and a half years. A trial was held on the issue of liability. The defendant argued that the contract relied on by the plaintiff was unenforceable as it was expressed to be a contract between the defendant and a business name, which was an unincorporated association, a legal non-entity. Therefore the defendant is not liable in breach of contract and does not owe anything to the plaintiff.

Held:

(1) The defendant’s argument about non-enforceability of the contract was rejected for two reasons. First, the argument was not raised in its defence, so it could not be raised at the trial. Secondly, the plaintiff signed the contract himself as managing director of his business, so the contract was in fact entered into by the plaintiff and was enforceable by him.

(2) The plaintiff proved that the contract was breached as it was repudiated (by a communication from an officer of the defendant who said, without giving prior notice, that it was “suspended”) in circumstances not provided for by the contract (which contained only a vague clause allowing for termination).

(3) The plaintiff therefore established a cause of action in breach of contract.

Cases cited

Papua New Guinea cases

Cresseri v Halla Resources Corporation [1985] PNGLR 294

Matalau Nakikus v Aquila Tubal (2012) N4845

Mercidita Malihan v Divine Word University (2010) N4112

Mond v Okoro [1992] PNGLR 501

MVIT v Etape [1994] PNGLR 596

MVIT v Pupune [1993] PNGLR 370

MVIT v Waige [1995] PNGLR 202

PNGBC v Tole (2002) SC694

Pundari v Niolam (2011) SC1123

Raim v Korua (2010) SC1062

Overseas Cases

Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378

STATEMENT OF CLAIM

This was a trial on the question of liability.

Counsel

D F Wa’au, for the plaintiff

Y Wadau, for the defendant

6th December, 2013

1. CANNINGS J: The plaintiff, Sisio Yawanuka, runs a business called Masive Mowing Service. He is seeking damages against the defendant, Madang Provincial Government, for breach of contract. He claims that he entered into a written contract with the defendant to provide it with mowing and beautification services, in return for payment of K6,000.00 per month. The duration of the contract was five years, commencing on 31 January 2009. He claims that on 15 August 2011, just over half-way through the contract period, an officer of the defendant, acting without authority and without notice, terminated the contract.

2. The defendant argues that the contract relied on by the plaintiff is incompetent and unenforceable as it was expressed to be a contract between the defendant and a business name – Masive Mowing Service – which is an unincorporated association, ie a legal non-entity. The defendant says that in any event it has paid the plaintiff for the work he did, so it is not liable in breach of contract and does not owe anything to the plaintiff.

3. A trial has been conducted on the issue of liability. There are three issues:

1 Was there an enforceable contract?

2 Was the contract terminated by the defendant?

3 Did the defendant breach the contract?

1 WAS THERE AN ENFORCEABLE CONTRACT?

4. The defendant concedes that in 2009 a written contract was entered into between it and a party called Masive Mowing Service. The contract was signed by the then Provincial Administrator Mr Joseph Dorpar, on behalf of the defendant, and by the plaintiff Mr Yawanuka as Managing Director of Masive Mowing Service. The defendant also concedes that it was, as claimed by the plaintiff, a five-year contract to provide mowing and beautification services to the defendant and that such services were provided for two and a half years and that Masive Mowing Service was paid for the services provided.

5. The defendant, however, does not concede that the contract can be enforced. It argues that despite its factual existence and despite the fact that money was paid pursuant to it, the contract is, as a matter of law, unenforceable. Mr Wadau for the defendant submitted that Masive Mowing Service was not a corporation, it was simply a business name, so it was in the same position as an unincorporated association, which according to the underlying law can neither sue nor be sued in its name to enforce a contract to which it is a party. It was a legal non-entity. It lacked legal personality. Mr Wadau cited the leading British case Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 in support of those propositions. He also pointed out that although in 2011 Masive Mowing Service was registered as a business name under the Business Names Act, at the date of signing the contract, 8 April 2009, it was unregistered. For all those reasons, Mr Wadau submitted, the contract is not binding. It is unenforceable. Therefore the plaintiff’s claim must be dismissed.

6. I reject those submissions for two reasons. First, I uphold the submission of Mr Wa’au for the plaintiff that the defendant is precluded from raising this argument as it was not set out in the defendant’s defence. The plaintiff commenced proceedings by writ of summons, on which was endorsed a statement of claim. Liability is therefore to be determined in accordance with the law of pleadings, a fundamental principle of which is that the parties are confined to bringing evidence and asserting arguments that are raised in a statement of claim (in the case of plaintiffs) or a defence (in the case of defendants). Sakora AJ, as he then was, made this clear in Mond v Okoro [1992] PNGLR 501:

The purpose of pleadings in civil actions is to ensure that the scope of the dispute between the parties is defined with some precision. Every party is thereby made aware of the case to be made by his opponent, and his preparation for the trial can be directed to the actual controversy. They are intended to inform each party of the case he will have to meet at the trial, and to inform the court of the issues for adjudication. And pleadings require the parties to plead facts in support of a claim or defence. Facts must be specifically alleged so that the opposite party is not surprised. Certain rules of pleadings such as notices and time limits come into play also to ensure parties do not attempt "trial by ambush".

7. This principle has been reinforced by numerous decisions of the Supreme Court, including Cresseri v Halla Resources Corporation [1985] PNGLR 294, MVIT v Pupune [1993] PNGLR 370, MVIT v Etape [1994] PNGLR 596, MVIT v Waige [1995] PNGLR 202, PNGBC v Tole (2002) SC694, Raim v Korua (2010) SC1062 and Pundari v Niolam (2011) SC1123.

8. By raising at the trial, without prior notice, the defence that the contract is unenforceable due to its being entered into by a party lacking legal personality, the defendant is guilty of attempting a trial by ambush. This defence was not raised expressly or impliedly in the defendant’s defence, so it cannot be entertained.

9. The second reason for rejecting the defence is that it is misconceived. Masive Mowing Service was not an unincorporated association. It was not any form of association. It was a business name. The fact that it was unregistered is inconsequential. The evidence shows that it was Mr Yawanuka’s business name and that he was a sole trader and that the contract was entered into by him, using the business name Masive Mowing Service. I find that as a matter of both fact and law the contract was entered into between the defendant and Mr Yawanuka, both of whom are legal entities. The contract is therefore enforceable.

2 WAS THE CONTRACT TERMINATED BY THE DEFENDANT?

10. I find that the defendant terminated the contract when on 15 August 2011 one of its officers, Mr Thomas Neruse, head of the Finance and Administration Branch of the Madang Provincial Administration wrote to Mr Yawanuka, advising him that due to “an oversight during Budget Formulation” his contract was not included in the 2011 budget. Mr Neruse continued:

Payments for January to May (K30,000.00) were made out of the Traffic Registry Funds that has now been...