Steven Turik v Mathew Gubag

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 05 April 2013
• Citation: (2013) N5132
• Court: National Court
• Year: 2013
• Judgement Number: N5132

Full : WS NO 957 of 2011; Steven Turik v Mathew Gubag (2013) N5132

National Court: Cannings J

Judgment Delivered: 5 April 2013

N5132

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 957 OF 2011

STEVEN TURIK

Plaintiff

V

MATHEW GUBAG

Defendant

Madang: Cannings J

2013: 22 February, 4 March, 5 April

CONTRACT – written agreement – alleged breach of contract – circumstances in which a cause of action in quasi-contract may arise – quantum meruit

The plaintiff claimed that he had a written agreement with the defendant under which he would be the sales agent on behalf of the defendant, who wanted to sell a piece of land, and negotiate with potential buyers and upon completion of the sale be paid by the defendant a commission of at least 10% of the sale price. The plaintiff claimed that after considerable time and effort he found a potential buyer and negotiated with him to sell the land for K230,000.00; then while negotiations were ongoing after the plaintiff mentioned to him what was happening the defendant without the plaintiff’s knowledge negotiated directly with the buyer and sold him the land for K180,000.00. The plaintiff asked the defendant for 10% of the sale price. The defendant refused to pay so the plaintiff commenced proceedings against the defendant claiming K18,000.00 commission and damages for breach of contract. The defendant denied liability on two grounds, first that there was no contract and secondly if there was a contract he had not breached it, instead it was the plaintiff who breached the contract as he failed to find a buyer.

Held:

(1) There was a written contract under which the plaintiff was to be paid a 10% commission upon successful completion of a sale that he had negotiated.

(2) There was no breach of contract by the defendant as the obligation to pay a 10% commission to the plaintiff only arose upon a sale that had been negotiated completely by the plaintiff, and here the plaintiff had only engaged in preliminary negotiations with the buyer.

(3) However, the plaintiff established a cause of action in quasi-contract in that he performed services pursuant to a contract and his completion of the contract was thwarted by the actions of the defendant and it would be unjust to allow the defendant to benefit from the contract and the services performed without paying just remuneration to the plaintiff.

(4) The appropriate remedy is to award the plaintiff a quantum meruit (the amount that is merited), ie a reasonable amount of money to remunerate him for services actually performed, which was assessed at half the amount (K18,000.00) that would have been earned if the plaintiff had completely negotiated the sale: K9,000.00.

(5) Interest calculated at the rate of 8% per annum on the quantum meruit from the date of service of the writ was awarded to the plaintiff, in the sum of K856.80; in addition the court, having regard to the fact that neither party was legally represented at the trial, fixed costs payable by the defendant at K1,000.00.

(6) The total judgment sum was K9,000.00 (quantum meruit) + K856.80 (interest) + K1,000.00 (costs) = K10,856.80.

Case cited

The following cases are cited in the judgment:

Delphi Corporate Investigations Ltd v Bernard Kipit (2003) N2480

Egga Pua v Otto Benal Magiten (2005) N2892

Leonard Gaua v Joe & Theresia Amir (2010) N3891

Leontine Ofoi v Kris Bongare (2007) N3248

National Housing Commission v Queensland Insurance (PNG) Ltd [1988-89] PNGLR 474

Paradise Farms Ltd v Bank South Pacific Ltd (2010) N3825

Patterson v NCDC (2001) N2145

Sonny Atua v Grace Kemmah (2012) N4687

Steven Naki v AGC (Pacific) Ltd (2005) N2782

The State v Barclay Bros (PNG) Ltd (2004) N2507

Tinange Tamase v MVIT [1992] PNGLR 244

Veltro Ltd v Steven Liu Huang (2006) N4608

STATEMENT OF CLAIM

This was the trial of an action for breach of a contract for services.

Counsel

S Turik, the plaintiff, in person

5th April, 2013

1. CANNINGS J: The question in this case is whether the court should order the defendant Mathew Gubag to pay any money to the plaintiff Steven Turik pursuant to an agreement that the plaintiff claims they entered into in January 2010.

2. The plaintiff claims that under the agreement he was to be sales agent on behalf of the defendant, who wanted to sell a piece of land in Madang town, and negotiate with potential buyers and upon completion of the sale be paid by the defendant a commission of at least 10% of the sale price. The plaintiff claims he found a potential buyer, “Mr B”, and negotiated with him to sell the defendant’s property for K230,000.00; then while negotiations were ongoing, after the plaintiff mentioned to the defendant what was happening, the defendant without the plaintiff’s knowledge negotiated directly with Mr B, and sold him the land for K180,000.00. The plaintiff says that he asked the defendant for 10% of the sale price. The defendant refused to pay anything so the plaintiff commenced proceedings against him claiming K18,000.00 commission and damages for breach of contract.

3. The defendant failed to attend the trial but filed a defence to the statement of claim, denying liability on two grounds, first that there was no contract and secondly if there was a contract he had not breached it, instead it was the plaintiff who breached the contract as he failed to find a buyer. Four issues arise:

1 What are the facts?

2 Was there a contract?

3 Has liability been established?

4 What orders should the court make?

1 WHAT ARE THE FACTS?

4. The court has only heard evidence that supports the plaintiff’s version of events but it is credible evidence and I rely on it to make the following findings of fact. On 27 January 2010 the plaintiff and the defendant signed a one-page document, which stated:

LETTER OF AGREEMENT

I Mr MATHEW GUBAG of C/: Madang Provincial Government, PO Box 2108, Madang, Madang Province, do give my consent to Mr STEVEN TURIK of PO Box 624, Madang, Madang Province to act as my Sales Agent to negotiate on my behalf to sell to potential buyers my registered State Lease at Section 59, Lot 8 with a total size of 0.0966 hectares and located at Bemlon St, Newtown, Madang.

I hereby agree, and give these three undertakings to Mr Steven Turik if he successfully negotiate and sell my land.

1. If he sells the land for K200,000.00 or less than I agree to pay him a ten percent (10%) commission of the price sold;

or

2. If he successfully negotiate and sell the land for a price above the initial sales price of K200,000.00 than I agree to pay him that balance as commission less K200,000.00;

and

3. Upon successful completion of the sales, I will pay Mr Steven Turik his commission after fourteen days of the final payment of the sales price.

I Mr Steven Turik do agree to act as Sales Agent for Mr Mathew Gubag and accept the three undertakings given above.

We hereby agree and sign, dated Wednesday the 27th day of January 2010.

....... [Signed .............. ....... [Signed ..............

MR MATHEW GUBAG MR STEVEN TURIK

Lease Holder Sales Agent

5. Within a few days after signing the agreement the plaintiff approached a Madang resident, “Mr B”, and told him that he was the sales agent for the defendant and that the Bemlon Street property was for sale for a price of K230,000.00. Mr B told the plaintiff that he was interested but that he would have to sort things out with his bank before he took the matter further. Mr B (who swore an affidavit concerning these events, which was admitted into evidence) did not disclose the information about his interest in the property to anyone including the defendant. One month later – I estimate in early March 2011 – Mr B had a visit from the defendant who offered to sell him the property for K180,000.00. Mr B accepted the offer and later made full payment to the defendant.

6. There is no direct evidence of how the defendant became aware that Mr B was a potential buyer but as Mr B has given evidence that it was not him I draw the inference and find as a fact that it was the plaintiff who gave that information to the defendant, which the defendant then used to approach Mr B and negotiate directly with him, thereby leaving the plaintiff out of the arrangements.

7. After finding out about the sale of the property to Mr B for K180,000.00 the plaintiff approached the defendant and asked for K18,000.00, being 10% of the sale price, as his commission pursuant to their agreement. The defendant refused to pay anything.

2 WAS THERE A CONTRACT?

8. This is a question of law. As pointed out in Steven Naki v AGC (Pacific) Ltd (2005) N2782 an arrangement between two or more parties is regarded as a contract, giving rise to legally enforceable rights and obligations, when three essential elements exist:

· agreement between the parties;

· an intention to create legal relations; and

· support of the agreement with consideration.

9. Each of those elements applied here. The...