IN THE SOLOMON ISLANDS COURT OF APPEAL

Case name: 	Attorney General v Faleusia (Trading as Mams Beautification) 	
		
Citation:		
		
Decision date: 	11 April 2025	
		
Nature of Jurisdiction	Appeal from Judgment of the High Court of Solomon Islands, Bird J	
		
Court File Number(s):	38 of 2023	
		
Parties: 	Attorney General v Margaret Faleusia (Trading as Mams Beautification) 	
		
Hearing date(s): 	1 April 2025	
		
Place of delivery: 		
		
Judge(s): 	Muria P
Gavara-Nanu JA
Lawry JA	
		
Representation: 	E Waiwaki for the Appellant 
E Olofia for the Respondent 	
		
Catchwords: 		
		
Words and phrases:		
		
Legislation cited:		
		
Cases cited:	K L Engineering & Constructions (PNG) Ltd v Damansara Forest Products [2002] PNGLR 30, Keith Reid v Murray Hallam & Allcad N1337; Davies Peter Koringo v National Broadcasting Corporation (Unreported Supreme Court Decision, 3rd April 1998), 	
		
ExTempore/Reserved:	Reserved 	
		
Allowed/Dismissed:	Allowed 	
		
Pages:	1-6	

JUDGMENT OF THE COURT 
1. 	In an amended Category B Claim filed on 8 October 2020, against the defendant (“the Appellant” hereon) the Claimant (“the Respondent” hereon) sought a declaration that the Appellant was in breach of the tender contract No. TI-HON 9/15 CTB C19/15. The Respondent also sought an Order that the Appellant reimburse the sum of SBD$304,868.70 for the cost of expenditure it (MAMS Beautification) said it incurred in preparing its tender, prior to the alleged breach of contract. The Respondent also sought assessment of damages for breach of contract as well as for loss of business and 5% statutory interest from the date of the Claim to the date of the judgment. The Respondent also claimed any other Orders the court deemed appropriate and costs.
A. Background facts
2. 	On 26 October 2015, the Appellant invited interested contractors to bid for routine horticultural and debris control works along the main Honiara town highway. The invitation to interested bidders was published in the Solomon Island daily newspaper on three separate days. The Respondent was one of the bidders. The tender was closed on 12 November 2015. The Respondent claimed its tender met all the requirements and claimed that it was recommended for the works and was awarded contract No. TI-HON 09/15 CTB C19/15 for the tender price of $1,187,720.00 to carry out the works over a period of two years. The Respondent claimed it was later told to contact the Appellant “to finalize the contract agreement”. There was a delay in the contract being signed and on 4 March 2016, the Appellant blamed the Respondent for the delay in the Solomon Islands daily newspaper and stated that the Respondent lacked the capacity to carry out the works. The Respondent claimed, it later contacted the relevant agents of the Appellant and was assured that the awarding of the tender to it was still not cancelled but was told that “there were possibilities for either sharing the contract works with the other companies awarded with the same contract or be given a new contract”. The Respondent claimed on 21 March 2016, it “wrote to the Prime Minister requesting an appointment with him (the Prime Minister) and demanded re-instatement of its award or redress the breach of its tender contract”. 
3. 	The Respondent’s Claim was tried on 26 July 2023. The decision of the primary court was delivered on 24 August 2023. In the decision, the primary court noted that on 3 December 2015, the Respondent received an award letter from the Appellant “for finalization of the agreement”. The primary judge noted, among others, that no contract was signed by the parties and the Respondent did not provide any receipts for its claims. The primary judge further noted that the Appellant had revoked the award given to the Respondent because it was considered that the Respondent lacked capacity to carry out the works. It was explained to the court below during the hearing, by the Tenders Board official that when an award is given, it is for the parties to discuss and later sign the contract.
4. 	In its decision, the primary court found the Respondent had accepted the offer by the Appellant. The primary court expressed this in the following way:-
	“In this case, the defendant (Appellant) awarded the tender to the claimant (Respondent) on 3 December 2015. That offer was supposed to have been finalized upon signing of the contract agreement between the parties. This did not eventuate because the defendant had awarded the tender to another bidder and revoked the offer to the claimant. I have stated that the defendant’s offer to the claimant is binding on the parties. I am of that view because the only condition that needed to be done for the completion of the offer was for the signing of the contract agreement. That indicates the meeting of the minds of the parties. The meeting of their minds is the indicative (sic.) of their intention to be bound by the offer dated 3 December 2015. When the offer was revoked by the defendant on 14 April 2016, they have breached their intention to complete their said offer”. (Our underlining).
5. 	The Appellant raised two grounds of appeal, in which the Appellant basically claims the primary judge erred in law in finding that there was a binding contract between the parties, because there was none executed by the parties. The Appellant also claims that, if there was anything the Respondent was entitled, it was limited to the pre-contract preparations. In this case, the Appellant had fulfilled all such obligations. The primary judge therefore erred in granting the relief sought by the Respondent in its Claim. The Appellant seeks orders that the primary judge’s Orders be set aside, and the appeal be allowed with costs.
Submissions
(I) By the Appellant
6. 	The Appellant basically submitted that all that happened in this case was, only the tender process was completed but that was in anticipation of a formal contract being executed by the parties, pursuant to which the Respondent would have performed its parts of the contract. In this case, the final part of the process was the signing of the contract but that did not happen. The Respondent did not render any intended services because there was no contract executed between the parties.
(ii) By the Respondent
7. 	The respondent claimed that the fact that it was awarded the tender contract amounted to a binding contract. Therefore, the primary judge was right in granting the reliefs sought by the Respondent. The appeal should therefore be dismissed with costs.
Consideration
8. 	There is no dispute that no formal contract was executed by the parties. We note that in a letter to the Respondent by the Tender Board dated 3 December 2015, which the Respondent relied on, in the second last paragraph of the letter, the Secretary of the Central Tenders Board advised the Manager, MAMS Beautification, which is the Respondent, as follows. “In this regard, you are hereby advised to contact MID to formalize contract agreement formalities before the execution of this contract”. This was a clear indication that formal contract negotiations were ongoing and the formal contract was yet to be formalized and executed.
9. 	Thus, there being no contract on foot, we find the Appellant had no obligation to reimburse the Respondent with money which the Respondent expended to pay for equipment to use, if and when the contract was executed later. The payment of such equipment was a risk the Respondent took by its own decision; it was not based any term of a contract between the parties. In K L Engineering & Constructions (PNG) Ltd v Damansara Forest Products [2002] PNGLR 30 (28 June 2002), the National Court of Papua New Guinea stressed this very point when it held that any damages claimed by a plaintiff in a contract must flow from the terms of the contract. In that case, the plaintiff sought damages against the defendants for breach of logging and stevedoring contracts. The defendants filed their defence but their defence was struck out on an application by the plaintiffs. The matter went before the court for assessment of damages. The court said among others, that amount of damages claimed must flow from the terms of the contract between the parties under which the plaintiff was making its claim and the plaintiff had the onus to prove its claims on the balance of probabilities: Keith Reid v Murray Hallam & Allcad N1337; Davies Peter Koringo v National Broadcasting Corporation (Unreported Supreme Court Decision, 3rd April 1998) were followed.
10. 	In this case there was no contract executed by the parties. The Appellant therefore has no obligation to pay for the damages claimed by the Respondent. For this reason, we find the judge erred in ordering damages against the Appellant, because the damages did not follow from any formal contract between the parties.
11. 	Consequently, we set aside the Orders given by the learned primary judge on 24 August 2023 and allow the appeal.
12. 	We order the Respondent to pay the Appellant’s costs of and incidental to this appeal as well as the costs of and incidental to the proceedings in the court below. Such costs to be taxed if not otherwise agreed.
13. 	Orders accordingly. 
Muria P
Gavara-Nanu JA
Lawry JA