Lamson Store Service Co Ltd v Russell Wilkins and Sons Ltd [1906] HCA 87

Lamson Store Service Co Ltd v Russell Wilkins and Sons Ltd [1906] HCA 87 - HCA 1906 case summary — Zoe

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The following judgments were read : - Grirritu C.J. This is an appeal from an order of Cooper C.J. wi s rejecting a proof of debt for £885 tendered by the appellant com- Soe pany in the winding-up of the respondent company. The proof ,, Sizer,

was founded upon an agreement dated 12th August 1904, made between the appellants and the respondents. By this agreement, which recited that the appellants, therein called the lessors, were the sole owners of letters patent in the United Kingdom and in New South Wales, Queensland, South Australia, and New Zealand, for manufacturers of automatic, pneumatic, and mechanical apparatus for cash and despatch service in drapery, grocery and other stores, banks, warehouses, factories, offices, &c., and that the respondents, therein called the lessees, desired to use the particular apparatus called the "Lamson Perfection Cable System," it was stipulated (amongst other things), as follows : - "1. It is witnessed that the lessors do hereby demise and lease unto the lessees the said apparatus to be used only in the lessees premises at Queen-street Brisbane in the State of Queensland for the term of ten years from the date of completion of the said system, and thereafter until the lessees shall give the lessors two months' notice in writing before the expiration of any current year determining this lease; provided that the lessors hereby reserve the right to determine this lease at any time after the expiration of the said term of ten years by giving two calendar months' notice in writing to the lessees. "2. Yielding and paying therefor an annual rental as follows :
Six pounds ten shillings sterling net per annum per station. Each home station to be considered and paid for as one station. Such annual rental to be paid without any deduction whatever at the offices of the company situate at 234 Clarence-street Sydney aforesaid." By clauses 3, 4 and 5, it was stipulated that the lessors should at their own expense keep the apparatus in repair except when

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public, and so be likely to induce future purchases from the patentees, The agreement contains stipulations apt for all these purposes, to which I will directly refer in detail. I will deal separately with the stipulation that in certain events the rent for the whole term of ten years was to be paid in full in advance. Regarding the agreement from this point of view, can it be pre- dicated of any of the conditions on which an amount equal to the deferred instalments of rent was to become payable at once that it could not be regarded as a genuine pre-estimate of the lessors' probable or possible interest in the due performance of the obligation? I leave for a moment the default in payment of any instalment of rent in advance. The first condition is that the lessees will not without the lessors' consent discontinue the use of the system during the term. Such a discontinuance might or might not be injurious to the reputation of the patented appli- ance, and the amount of the injury would obviously be uncertain. It might be very small or very great. The next condition was that the appliance should be used on the specified premises as erected. A removal to other premises might have the effect of greatly diminishing the beneficial effect to the lessors of the public exhibition stipulated for. The next condition, that the lessees should not detach, remove, sell, assign, underlet or part with the possession of the system or any part thereof (by which I understand any substantial integral part of the system), sug- gests the same considerations. In the same way the conditions that the lessees should not make unreasonable or improper use of the system, or suffer or make any changes or additions in it without the lessors' written consent, and that the-lessors should be allowed access to examine and make necessary repairs, are conditions directed to ensure the full and fair exhibition of the appliance in its entirety. The damages for a breach of any of these conditions would be problematical, to this extent at least, that a jury could not be directed to assess them upon any fixed arithmetical basis. I think they might fairly be the subject of

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Lord Watson's statement of the rule which is entirely in accord- ance with the earlier cases I have cited. The principle laid down by Lord Dunedin is of much wider application, and on the face of it interferes less than the earlier cases did with the discretion of the Court in applying its own views of the meaning of the language used by the parties. But he in no way declares the rules laid down in the earlier cases to be erroneous or no longer applicable. I think, therefore, that the generality of that state- ment of principle must be controlled by the facts of that case, and cannot be taken as a pronouncement that the old rules are to be treated as no longer applicable, and that the new principle of interpretation is in all cases to take their place. It is not perhaps necessary to decide that question at present, because in the view I take it is immaterial whether the rule of interpreta- tion, which I have been considering, or the principle stated by Lord Dunedin is to be taken as the proper guide. I propose to apply to the facts of this case the simple test suggested by Lord Dunedin, namely, whether the "sum stipulated for can or can not be regarded as a genuine pre-estimate of the creditor's probable or possible interest in the due performance of the principal obligation." It is impossible in applying the test to separate the covenants for payment of rent from the other covenants of the agreement. In Astley v. Weldon (1), where it was attempted to separate the covenant to pay a certain sum of money from other covenants in respect of which the damages for breach were uncertain, Chambre J., in delivering judgment said : - "There is one ease in which the sum agreed for must always be considered as a penalty; and that is, where the payment of a smaller sum is secured by a larger. In this case it is impossible to garble the covenants, and to hold that in one case the plaintiff shall recover only for the damages sustained, and in another that he shall recover the penalty: the concluding clause applies equally to all the covenants."

At a glance

Court

Decision date

Before

Source

Judgment (127 paragraphs)

ware 'The question whether a certain sum fixed ina contract to be paid by the

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