DC7026
PAPUA NEW GUINEA
IN THE DISTRICT COURT OF JUSTICE
CIVIL JURISDICTION
GRFCV NO.  42 OF 2021

Between:

MOSES GELAYA and TANDAPE PUNGA – Company Representative and General Manager of GAWINI PODENE INVESTMENT LIMITED and GAWINI PODENE INVESTMENT LIMITED
Complainant

And:

DICKSON MARA
First Defendant

And:

ERIC YAWAS
Second Defendant
 
Tari: DCM E. Komia
26 November 2021

CONTRACT LAW – breach of agreement to lend and repay money – liability admitted – defendants contest liability aspect – first defendant claims monies borrowed on second defendants instruction – second defendant denies such understanding – principles of contract law applied – conduct of defendants at the time of borrowing money – whether defendants minds met so as to borrow the money – liablity shared between the defendants.

Held:
1.	An agreement between defendants to enter into a separate agreement with a complainant is still a good agreement and as such, the intentions of the parties, the meeting of the mind, and the terms of their agreement prior to entering a separate agreement with a complainant is still An agreement, therefore, laws and principle of contract law must be carefully applied to identify the liable party in circumstances where liability is denied by both defendants.

2.	Where liability has been admitted by the defendants but the defendants contest goes in so far as to who should be fully liable to settle the claim, the courts in determining such liability should thread carefully the intentions of the defendants prior to and at the time of agreement with the complainant, and if there is no proper evidence to specifically point out the liable parties, the fairest thing to do is to award liability against the party who made the initial agreement with the complainant.

3.	Where liability has been admitted by the defendants but the defendants contest goes in so far as to who should be fully liable to settle the claim, the courts in determining such liability should thread carefully the intentions of the defendants prior to and at the time of agreement with the complainant, and if there is no proper evidence to specifically point out the liable party(ies) but there is evidence that both defendant had benefitted from the agreement, then the fairest thing to do is to award liability against the defendants on equal portions.

Papua New Guinea cases cited
Bay Cabs Ltd v Kokiva [2019] PGNC 326; N7957
Mel v Brian Bell and Company Ltd [2005] PGDC 114; DC287
Woodward v Woodward [1987] PNGLR 92 

Legislations
District Courts Act
Companies Act 1997

Counsels:
Complainant: in person	
First Defendant: in person
Second Defendant: in person		

INTRODUCTION

1.	This is a claim for an informal loan agreement between the complainant and the defendants. The complainant claims that the first defendant approached them and requested for a K 10, 000.00 and got the money and gave to the second defendant to use for some clerical work associated with the Hela Provincial Governments Assembly in 2016.

BRIEF FACTS 
2.	The complainants are representatives of a local company, registered as Gawini Podene Investment Ltd, and the first defendant was the former budget officer of Hela Provincial Assembly, whilst the second defendant was the former President of the Hulia Beneria Local Level Government.

3.	The first defendant borrowed K 10, 000.00 from the company, which was facilitated by the complainants. The first defendant then took the money and gave it to the second defendant to use for what they say are clerical work for the provincial assembly.

4.	The first defendant is the principal borrower and he alleges that both the second defendant and himself expanded the money for the clerical work.

5.	The money was never repaid to date, and the complainants are claiming the principal sum without any interest. Their claim is specifically on contract law that the defendants despite the agreement to repay, have not done so to date, and they are praying that this court orders the defendants to repay their K 10, 000.00 as agreed.

ISSUE

6.	During the cause of trial, it became imminent that, liability was not an issue, but the focal issue was between the first and the second defendant on who should be laible to settle the K 10, 000.00 that was borrowed from the complaiant.

EVIDENCE
7.	The first defendant in his evidence through his undated affidavit statement said that the second defendant and himself met and discussed the possibility of borrowing some money for the clerical work. He said the money borrowed was to be expanded for vehicle hire, fuel, accommodation, food and clerical work such as typing, printing, photocopying and other miscellaneous costs.

8.	The second defendant in his sworn testimony from the witness dock stated that he had not agreed in principle for the money to be borrowed. Neither the figure, nor the time the money would be repaid were agreed. All he stated was that there was discussion for some money to be borrowed. He was only aware that the money K 10, 000.00 was borrowed and brought to him, and the fisrt defendant and himself then used the money for that clerical work in Mendi.

STANDING

9.	The first defendant in his opening submission disputed the standing of the complainants and argued that the defendant’s do not have standing to represent the company. In his submission, he stated that the company has a separate legal personality and can never be treated in that same regard as a person. He stated that Mr. Gelaya was not employed by the company and did not have any representative capacity to represent the company.

10.	He further stated that Mr. Punga although being the owner of the company does not necessarily have the standing to institute proceedings on behalf of the company. I understand the first defendant’s argument to be raising the principle of corporate veil to assist him in his defence to his case.

11.	Mr. Gelaya submitted briefly that whilst the company may have separate personality, the mechanics of the company and its operations are performed by individuals or real persons like himself. Mr. Gelaya also provided copies of his employment record, and his work identification card which identified him as the company representative, and Mr. Punga as the Managing Director.

12.	Every company that is registered under the Companies Act with the Investment Promotion Authority in this country are managed and controlled the ‘board’ of the company, as per s.109 of the Companies Act. The board of the company appoints the persons who are given the authority to manage the company’s operations. Board or board of directors is defined under s.108 of the Companies Act as directors of the company who number not less than the required quorum acting together as a board of directors; or where the company has only one director, that director.

13.	It is also trite thaton registration or incorporation, a company assumes legal entity or personality that is separate and distinct form it’s shareholders. Section 16 of the Companies Act provides in very clear terms that “a company is a legal entity of its own separate from its shareholders and continues in existence until it is removed from the register.” So as long as it remains in the register, a company can sue and be sued in its own name and style, and carry on business as an ordinary person will.

14.	In this case, the company is represented by its employee Mr. Gelaya, and its sole director and shareholder Mr. Punga. Mr. Punga whilst being a director has authorized Mr. Gelaya to represent the company in this court, as he is the company representative. I find that he has the standing and the capacity to represent the company by virtue of his employment status. Even if his status is challenged, I am of the opinion that Mr. Punga’s appearances alongside him with their statements and letter confirming his employment as company representative is good enough to establish their standing to sue for the company.

15.	On the other hand, the company itself is also named as a co-complainant and I see no basis for this argument. I will dismiss that submission, and allow the two co-complainants to proceed with the case on behalf of the company. 

DISCUSSION
16.	In relation to the substantive matter that is before this court, the first defendant argues strenuously that the he obtained the monies after they (first and second defendant) agreed that they would require some money to travel from Tari into Mendi to get some archived documents for the old Southern Highlands Provincial Assembly, and at the same time do copies and some clerical work associated with the records. He further mentions that he negotiated to borrow the money from the complainants, after the standing the second defendant and himself agreed that the monies would be repaid by the second defendant. The first defendant had at that time understood that the monies would be repaid sooner given the second defendants standing.

17.	On the other hand, the second defendant responded to the first defendants argument by stating that, whilst there were some clerical work to be done and they both understood that the job required some money, he had not entered into an agreement with the first defendant to borrow any money. He stated that the first defendant came back to him with a K 10, 000.00 which they used and went to Mendi to do those work.

18.	A microscopic scrutiny of the evidence given by the first and second defendant tends to establish that there was purportedly a verbal agreement between the first and second defendant. But the terms of that verbal agreement between the defendants themselves are not unambiguous. 

19.	Whilst this proceeding is based on a claim of an oral or verbal agreement, and its liability has been admitted, the contention between the defendants as to who should bare the liability is seriously another matter for this court to carefully deliberate on. Their arguments tend to establish an issue I have raised above, therefore it is proper to look inot the nature of their agreement prior to the first defendant engaging himself in borrowing the K 10, 000.00.

20.	It is trite law that an agreement must be clear and precise and the terms must be agreed to by parties. Furthermore, in an oral or verbal agreement, the parties must agree to terms that are specific and certain, so as to avoid ambiguity, that can render the agreement void. 

21.	A party to any court proceeding cannot plead verbal agreement with respect to an agreement for the Sale of Property, but the complainant can plead verbal agreement for other types of agreement. In the case of Mel v Brian Bell and Company Ltd [2005] PGDC 114; DC287 (16 October 2005), the District Court presided by Gauli M. enforced a verbal agreement in which parties agreed to use the complainants vehicle to assist them in recovering a stolen vehicle belonging to the defendant. The court found in favor of the plaintiff stating that there was an agreement and it was binding and enforceable for all intent and purpose.

22.	The Supreme Court in Woodward v Woodward [1987] PNGLR 92 also stated per curiam that;

“where as a general rule, the court will not enforce an agreement the terms of which are so vague or indefinite that the intention of the parties cannot be ascertained with reasonable certainty, nevertheless, if the court can resolve the uncertainty by reference to other acceptable evidence or the subsequent conduct of the parties, it may enforce the agreement where parties have acted upon and intended the agreement to have legal effect.

23.	Whilst the above reasonings point towards a claimant claiming breach of contract under a verbal agreement, I find the principle relevant in so far as it applies for the defendants in this case, for this court to rationalize the law and apply it to the defendants to establish who should bare how much in terms of the liability. After considering all the evidence put forward by the first and second defendants, I find that both defendants one way or the other agreed to borrow the money, and did use the money.

24.	I can not safely rely completely on the first defendants agreement, neither can whilst I am inclined to lean toward the second defendant’s argument, I note that the money was used by both the defendants. This makes me both weary and wary of the fact that I am not given the strength in terms of evidence, neither am I aware that there is a certainty around the second defendant’s argument, thus; they should both be liable for the monies they borrowed and expended.

25.	I will also award costs. Now, I understand there is a confusion as to whether the courts can make decisions for costs after awarding an amount that reaches the jurisdictional ceiling. I am fortified in my opinion that the jurisdictional limitations do not affect the cost aspect. Costs are following on from the decision, and as such, they are not counted with the jurisdictional amount, hence I shall award costs.

26.	I will therefore Order that;

1.	The first defendant shall pay K 5, 000.00 to the complainant by or before 25th December 2021.

2.	The second defendant shall pay K 5, 000.00 to the complainant by or before 25th December 2021.

3.	Cost of this proceeding shall be borne by the defendants on equal portions which this court shall award at K 500.00.

4.	Time is Abridged.

By the Court.
Magistrate E. Komia