Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445 (31 October 1968)

HIGH COURT OF AUSTRALIA

WHITLOCK v. BREW [1968] HCA 71; (1968) 118 CLR 445

Vendor and Purchaser - Practice (Vict.)

High Court of Australia

McTiernan(1), Kitto(1), Taylor(2), Menzies(2) and Owen(2) JJ.

CATCHWORDS

Vendor and Purchaser - Contract of sale of land - Certainty - Purchaser's covenant to grant lease to third party supplier of petroleum products "upon such reasonable terms as commonly govern such a lease" - No evidence concerning terms of lease in common use - Term of lease and rent not specified - Whether such covenant, void for uncertainty, severable.

Practice (Vict.) - Supreme Court - Interest on judgment - To be allowed "upon application" at hearing - What constitutes application - Supreme Court Act 1958 (Vict.), s. 78 (1)* (as amended by Supreme Court (Interest on Judgments) Act 1962 (Vict.), s. 2).

HEARING

Melbourne, 1968, February 22, 23, 26.

Sydney, 1968, October 31. 31:10:1968

APPEALS from the Supreme Court of Victoria.

DECISION

October 31.

The following written judgments were delivered:-

McTIERNAN J. These appeals are from the Full Court of the Supreme Court of

2. The appellant in the first appeal was the defendant in an action in which the respondent as plaintiff sought to make him liable to pay back 15,600 pounds ($31,200) which was part of the deposit which the plaintiff had paid on a sale and purchase of land. The plaintiff was the purchaser and the defendant was the vendor. The action was dismissed. On appeal by the plaintiff the Full Court made an order that judgment be entered for the plaintiff. The amount of the judgment is $31,200. In a cross appeal and in the second appeal the plaintiff complains that the Full Court made no order for the payment of interest. (at p450)

3. As a result of negotiations which Brew commenced, Whitlock agreed to sell and Brew agreed to purchase an area of land at Brighton Beach, Victoria, for the price of 165,000 pounds . A contract of sale was drawn up and Whitlock and Brew signed it. (at p451)

4. The part of the contract headed "Terms and conditions of sale" provided as follows :

"The purchaser shall pay a deposit of 16,500 pounds of which

100 pounds shall be paid

on or before the signing hereof and 16,400 pounds

within fourteen days from the date hereof and shall pay the

residue of the purchase money as follows : -

(a) 39,500 pounds within forty-five days from the date hereof, and

(b) the balance, namely, 109,000 pounds within twenty years from

the date hereof."

Clause 5, one of the "special conditions" of the contract, reads thus :

"Portion of the land sold is used for the sale of petroleum,

oils and greases and petroleum products of the Shell Co. of

Australia Limited. The purchaser covenants that he will

immediately upon taking possession hereunder grant a lease

of that portion of the land sold as is now used for the sale of

the abovementioned products to the Shell Co. of Australia

Limited upon terms that the said land leased as aforesaid be

used by Shell or their sub-tenant or licensee for the sale of

such products and upon such reasonable terms as commonly

govern such a lease. In the event of any dispute between the

parties as to the interpretation or operation of this clause such

dispute shall be referred to an arbitrator to be appointed

failing agreement as to an arbitrator by the President for

the time being of the Law Institute of Victoria and such

arbitrators shall arbitrate thereon in accordance with the

provisions of the Arbitration Act 1958." (at p451)

5. The land was at the time the parties entered into the contract in possession of a company which conducted there a garage and a business of selling motor vehicles. This company held a lease of the land, the term of which was five years from 1st October, 1959. In addition to the activities mentioned the company carried on a petrol filling station on a part of the land in question. This business was carried on subject to an agreement with the Shell Co. of Australia Limited (hereinafter called the Shell Co.) dated 16th November 1957. Under this agreement the petrol filling station was, in effect, to be conducted as an outlet only for Shell products. The lessee company by this agreement covenanted with the Shell Co. that without their consent it would not cease to carry on such business for twenty years. On the same date Whitlock entered into a covenant with the Shell Co. that if at any time default were made by the lessee company in payment of any moneys payable under its agreement with the Shell Co. or in performance of its obligations thereunder, he would pay to the Shell Co. the whole of such moneys and himself perform or cause to be performed the obligations of the lessee company under its agreement with the Shell Co. A condition of the contract between Whitlock and Brew was that :

"The purchaser shall be entitled to vacant possession of

the property sold upon acceptance of title and upon payment

of the sum of 56,000 pounds."

By cl. 4 of the special conditions it was provided :

"This sale is conditional upon the vendor within ninety

days from the date hereof being in a position to make title

to the land sold and give possession thereof. . . ."

The purchaser, Brew, paid a deposit of 15,600 pounds, which is 900 pounds less than the amount stipulated by the "terms and conditions" of the contract : cl. 1 of which is quoted above. He did not pay any other sum due under the contract. The conditions in Table A of the Transfer of Land Act 1958 (Vict.) were applicable by cl. 3 of the "terms and conditions of sale" of the contract. Whitlock in pursuance of his rights under the contract rescinded it and forfeited the sum of 15,600 pounds paid as part of the deposit. Brew sued Whitlock in the Supreme Court of Victoria for the return of the deposit of 15,600 pounds. The grounds of the claim are mentioned in the judgment of the Full Court. The passage reads thus [1967] VicRp 102; (1967) VR 803, at p 804 :

"The first was that the contract of sale was uncertain in

respect of two of the conditions contained in it (conditions 5

and 6), and it was therefore altogether void, so that there was

no consideration for the payment of the deposit. The second

was that, if there were a valid contract of sale, then when the

vendor purported to rescind the contract for default, his

action was ineffective to produce a rescission, because the

notice of default given by him did not conform to the

requirements

of the contract, and his attempt to rescind amounted

to a repudiation which the purchaser accepted, so that the

contract thereby came to an end. The third was that, if the

contract were valid and had been effectively rescinded by the

vendor on account of the purchaser's default, nevertheless

there were circumstances associated with the purchaser's

mental health at relevant times which made it just that he

should be repaid the deposit, and the Court should exercise

the discretion conferred by s. 49 (2) of the Property Law Act

1958 to order its return."

The action was tried by Gillard J. who rejected each of these contentions, except that cl. 5 was void. But his Honour decided that this did not invalidate the contract. Accordingly the learned judge gave judgment for Whitlock. Brew appealed to the Full Court against the judgment. As stated above, the appeal was allowed and it was ordered that judgment in the sum of $31,200 (the equivalent of 15,600 pounds) be entered for Brew. The reasons for allowing the appeal depend entirely on the view which their Honours formed on the question of the validity of cl. 5 of the special conditions and its importance to the bargain into which the parties entered. The conclusion they reached is in substance that cl. 5 is void for uncertainty, that the clause is not severable from the rest of the contract, which is therefore wholly invalid, and as a consequence no consideration for the payment of 15,600 pounds moved from Whitlock to Brew and the sum was recoverable as money had and received to the use of Brew. (at p453)

6. Gillard J. had decided that cl. 5 is void for uncertainty but he took the view that the rest of the contract was nevertheless valid. The Full Court concurred in the decision of Gillard J. on cl. 5. Their Honours said (1967) VR, at p 805 :

"The learned trial judge pointed out that there was missing

from the provision any specification of the date of

commencement

of the term of the lease, the duration of the term, and the

amount of the rent. In addition there was some evidence that

the area referred to was unidentifiable. The judge held that

the provision was too uncertain to take effect. With this

conclusion we agree, for the reasons which he gave."

It is obvious that the whole matter of the validity of cl. 5 depends upon the construction of the actual words of the clause itself. In my opinion it is not necessary for its validity that the clause should specify in so many words the time of commencement of the proposed lease, its duration or the rent payable if these matters can be inferred from the words of the clause taking into consideration the circumstances which explain the purpose for which the clause was introduced into the contract. It contains a covenant on the part of Brew with Whitlock to grant to the Shell Co. a lease of that portion of the land used at the time of the contract by the lessee company mentioned above for the sale of Shell products. The Shell Co. is not a covenantee. Taking a practical view it is a covenant by Brew with Whitlock to offer a lease as defined by the clause to the Shell Co. No doubt it contemplates that the terms of the lease would be settled by Brew and the company on the basis of what Whitlock and Brew agreed as to the terms of the proposed lease. The obligation of Brew under the clause is expressed to arise on his taking possession. If Brew had gone on with the purchase of the land, the subject matter of the contract, Whitlock would have been able to give him vacant possession of the whole of the land. (at p454)

7. Clause 5 is not uncertain in respect of the portion of the land to which it applies. This would be ascertainable by evidence in case of dispute. The clause requires that the lease should contain terms binding the Shell Co., if it be the lessee, to use the portion of the land to be the subject of the lease for the sale of its products which are mentioned. Of course such terms are not sufficient to constitute a lease. The controversial words of the clause are those which say that the lease is also to be "upon such reasonable terms as commonly govern such a lease". The meaning of the word "lease" is not uncertain. But it cannot be held that the words quoted are sufficient to create a legally enforceable promise to grant a lease to the Shell Co. unless you can gather from such words that Whitlock and Brew had a common intention as to what would be the "terms" of the lease. In order to have a lease there must be, in addition to the parties and property, an ascertainable period for its duration, an ascertainable rent, and an ascertainable point of commencement. On behalf of Brew there is an admission that it can be inferred that the lease which Brew covenanted to grant, if accepted by the Shell Co., would be expressed to commence when Brew went into possession under the contract of sale. If Brew observed the covenant and the Shell Co. entered into a lease with him there would be no interruption in the sale of their products. The question is whether the words quoted are sufficient to indicate a consensus between Whitlock and Brew on the duration of the proposed lease to the Shell Co. and rent. I think we should presume that both Whitlock and Brew had in mind when they made the contract that the Shell Co. took leases of premises and under such leases acquired rights in respect of the sale of its products on the premises and that there were "terms" which were "common" to such leases. As Brew contended the words of the covenant were uncertain, the onus was on him of showing that there were no "terms" which were "common" to leases which the Shell Co. took of premises on which to sell its products, or that the company did not take such leases if that was the case. As regards the duration of the proposed lease, it is clear that the purpose of cl. 5, which must have been as well understood by Brew as Whitlock, was to afford some measure of protection to Whitlock in case he incurred liability to the Shell Co. under the indemnity which is mentioned above. The covenant would serve to require Brew to preserve the exclusive rights which the Shell Co. had enjoyed in respect of the petrol filling station on the land, the maintenance of which was very important to Whitlock by reason of the indemnity. In the light of the circumstances known to both parties surrounding the insertion of cl. 5 in the contract it is right, I think, to draw an inference that it was the common intention of the parties that the duration of the lease would correspond with the unexpired period of the indemnity, which Whitlock gave to the Shell Co., just as it is right to draw an inference that the common intention of the parties was that the proposed lease would commence when Brew went into possession under the contract. I think it is erroneous to hold that cl. 5 is incomplete and void on the ground that it does not mention the date of commencement or the period of duration of the proposed lease. It is enough as between Whitlock and Brew that it can be inferred from the circumstances, which explain the insertion of the covenant in the contract, when and for how long the parties may be presumed to have intended. The word "terms" where secondly used in cl. 5 should, I think, be read to include a term providing for the payment of rent by the Shell Co., because such a term could be assumed without question to be common to the leases referred to. The amount of rent is not mentioned. But it is sufficient to make the covenant certain on this matter that the parties expressly agreed that the amount of rent is to be reasonable. The final sentence of cl. 5 is not part of the covenant. The arbitrator is not to complete the covenant or to supplement any defect in it. That is not the purpose for which the arbitrator is appointed. The thing which he is appointed to do is merely to resolve "any dispute between the parties as to the interpretation or operation of this clause". (at p455)

8. The question whether the covenant to grant a lease to the Shell Co. may be specifically enforced by Whitlock does not arise. It may no doubt be a covenant in respect of which the Court would hesitate to decree specific performance. But I think that there is no such vagueness about the words - "upon such reasonable terms as commonly govern such a lease" - as ought to induce the Court to hold that an action at law cannot be brought by Whitlock against Brew in which such damages as the law would allow could be recovered against him. I would not regard Brew's contention that his covenant under consideration is invalid as "an honest one" (Foley v. Classique Coaches Ltd. (1934) 2 KB 1, at p 7 ). It is obvious that he as well as Whitlock intended it to be effective. In striving to discover the intention of the parties evinced by cl. 5 I have been guided by the well-known statement of Lord Tomlin which is as follows :

". . . the problem for a court of construction must always

be so to balance matters, that without violation of essential

principle the dealings of men may as far as possible be treated

as effective, and that the law may not incur the reproach of

being the destroyer of bargains" : Hillas and Co. Ltd. v.

Arcos Ltd.

[1932] UKHL 2; (1932) 147 LT 503, at p 512

.

In the view which I take that cl. 5 is not invalid it is not necessary to discuss whether the contract could stand without it. (at p456)

9. For these reasons I think that the appeal of Whitlock should be allowed. It follows from this opinion that there is no substance in Brew's cross appeal or in the second appeal. In my opinion both should therefore be dismissed. (at p456)

KITTO J. The main problem in this case arises not from any uncertainty of language in the document headed "contract of sale" but from the omission of the parties to reach a concluded agreement upon the matter to which special condition 5 is addressed. The clause contains a so-called covenant by the purchaser that immediately upon taking possession of the subject land he will grant a lease of a portion of the land to the Shell Co. of Australia Limited. The portion is defined as that which "is used" (i.e., at the date of the document) for the sale of petroleum, oils and greases and petroleum products of the Shell Co. I am prepared to assume that the vendor is right in saying, as he does, that this description is sufficient to enable the portion to be identified. As regards the term of the lease, it sufficiently appears, I think, that the commencing date is to be the date when the purchaser obtains possession. But upon no other topic does the document indicate what the provisions of the lease are to be. It does say that the lease is to be granted "upon such reasonable terms as commonly govern such a lease", and that would have been enough if evidence had established that for such a lease an ascertainable set of reasonable terms are in common use. But this has not been established, and the result is that the document does not record a consensus ad idem as to the duration of the term, the rent, or anything else except the commencing date and the premises intended to be let. Provision is indeed made for arbitration in the event of any dispute between the parties "as to the interpretation or operation of this clause", and I should have understood this as extending to any dispute as to what terms are reasonable and commonly govern such a lease, if in fact any such terms had existed. But it clearly would not authorize an arbitrator to force upon the purchaser such terms as he (the arbitrator) might think are reasonable and ought commonly to govern such a lease, for to do so would be to alter the contract. (at p457)

2. The problem to which I have referred as the main problem is whether the fact that special condition 5 is, for this reason, of no contractual effect carries the consequence that the whole document is in like case, or whether, on the other hand, the provisions of the document apart from special condition 5 constitute by themselves a concluded contract from which that condition is properly to be considered a separate and severable provision. The document contains a provision specifically entitling the purchaser to vacant possession of the property sold upon acceptance of title and upon payment of 56,000 pounds. That sum was by a later provision made payable within forty-five days from the date of the document, the purchaser's liability to pay the balance of the purchase price, 109,000 pounds, being deferred for twenty years. Special condition 5, so far as it goes, is a direct qualification of the provision as to vacant possession, for what it sets itself to do is to saddle the purchaser's taking of possession with an immediate obligation to grant a lease to the Shell Co. It is therefore clear on the face of the document that the parties had no intention of agreeing upon a sale which would entitle the purchaser to receive vacant possession without having to grant any lease to the Shell Co. ; and it follows that to treat the "contract" as binding though shorn of special condition 5 would be to turn the sale into a different sort of sale from that which the parties contemplated. Courts are of course anxious to hold parties to what they have agreed upon, but there can be no justification for holding them to something they have not agreed upon. In my opinion the decision of the Full Court of the Supreme Court that no concluded contract of sale was made between the parties is correct ; and as it is agreed that if that be so the purchaser is entitled to recover the moneys he paid to the vendor under the supposed contract the Full Court's order that judgment be entered for the purchaser on his claim should be affirmed. (at p457)

3. The question of interest remains. Interest was sought in the statement of claim, and again in the notice of appeal to the Full Court. It was not asked for orally at the trial, because the judge decided the case in favour of the defendant ; nor was it asked for orally at the hearing of the appeal to the Full Court. The Full Court's order as announced did not deal with interest, and the formal order was therefore properly drawn up with no mention of it. The plaintiff then brought a substantive motion before the Full Court, seeking an amendment of the order ; but this was plainly misconceived for the slip rule was inapplicable and the Court had no power to amend its order. The plaintiff, however, by a cross appeal asks this Court to vary the order which the Full Court made on the appeal, by adding a provision for interest. This we can and should do if the Full Court was in error in omitting such a provision. As the Full Court had power to make any order the trial judge should have made, the question is whether the trial judge, if he had decided the case in favour of the plaintiff, should have made an order for interest notwithstanding that no oral application for such an order was made to him. (at p458)

4. The relevant section, s. 78 of the Supreme Court Act 1958 (Vict.) as amended by s. 2 of the Supreme Court (Interest on Judgments) Act 1962 (Vict.) obliges the judge at the hearing to make such an order "upon application", unless good cause is shown to the contrary. Obviously this means upon application made to him at the hearing. But no special mode of application is prescribed. There is no reason why it should not be made in writing. The judge at the hearing had the pleadings before him, and in the statement of claim there was a claim for interest. I can see no difference between a claim for interest and an application for interest. If the judge had decided to order the defendant to repay the moneys he had received he ought, I should think, to have looked at the statement of claim to ascertain the extent of the relief that was sought. If he had done that he would have seen that a claim for interest was before the Court and should have called upon the defendant to show cause why interest should not be awarded. In my opinion he could not properly have refused interest on the ground that counsel for the plaintiff had not repeated the application orally. (at p458)

5. While I agree that the appeal against the order dismissing the motion for amendment should be dismissed, I would allow the cross appeal against the Full Court's order on the appeal from Gillard J. There is also an appeal by the plaintiff against the refusal of the Supreme Court of a motion for the allowance of interest, but the procedure was misconceived and in my opinion this appeal should be dismissed for the reasons given by Gowans J. in the Full Court. (at p458)

TAYLOR, MENZIES AND OWEN JJ. On 21st December 1961 John Raymond Brew (whom we shall call the respondent) entered into a contract for the purchase from Whitlock (the appellant) of certain land described as the whole of the land comprised in three specified certificates of title. The purchase price was 165,000 pounds payable as to 16,500 pounds by way of deposit within fourteen days from the date of the contract (i.e., by 4th January 1962), as to 39,500 pounds within forty-five days from the same date (i.e., by 4th February 1962) and as to the balance of 109,000 pounds within twenty years from that date. By special condition 1 the respondent had the right to pay the whole or any part of the balance of 109,000 pounds at any time upon giving three months' notice to Whitlock of his intention so to do. Further, the respondent was to be entitled to vacant possession of the property sold upon acceptance of title and upon payment of the first two payments, amounting to 56,000 pounds for which the contract stipulated. (at p459)

2. In fact, the whole of the deposit was not paid. Of the deposit payable the respondent paid 15,600 pounds and the second amount, payable by 4th February 1962, was not paid at all. Then, on 19th February 1962, the appellant gave to the respondent a notice in writing specifying these defaults and intimating that if they were not remedied the appellant would after the expiration of fourteen days rescind the contract. The notice purported to be given pursuant to cl. 6 of Table A in the Seventh Schedule to the Transfer of Land Act 1958 (Vict.) which had been adopted by the parties in the contract. The defaults were not remedied and on 19th March 1962 the appellant by notice purported to rescind the contract. (at p459)

3. Originally the respondent alleged that this notice was ineffective and that its service amounted to a repudiation of the contract by the appellant. But before us the only substantial question which was argued was whether the contract was uncertain and wholly void. It was conceded that in the event of this contention being upheld the respondent was entitled to a return of the moneys which he had paid under the contract. (at p459)

4. The contention that the contract was uncertain rested upon the provisions of special condition 5 which was in the following terms :

"Portion of the land sold is used for the sale of petroleum,

oils and greases and petroleum products of the Shell Co. of

Australia Limited. The purchaser covenants that he will

immediately upon taking possession hereunder grant a lease

of that portion of the land sold as is now used for the sale

of the abovementioned products to the Shell Co. of Australia

Limited upon terms that the said land leased as aforesaid be

used by Shell or their sub-tenant or licensee for the sale of such

products and upon such reasonable terms as commonly govern

such a lease. In the event of any dispute between the parties

as to the interpretation or operation of this clause such dispute

shall be referred to an arbitrator to be appointed failing

agreement

as to an arbitrator by the President for the time being

of the Law Institute of Victoria and such arbitrators shall

arbitrate thereon in accordance with the provisions of the

Arbitration Act 1958."

Both the learned judge of first instance and the Full Court thought that the omission of this clause to specify the term of, or the rent payable under, any lease to be granted by the respondent to the Shell Co. of Australia Limited meant that it was uncertain. But whilst the former took the view that it was severable from the rest of the contractual provisions the Full Court held that it was not and that the whole contract fell. Acting on the view which he had entertained the learned trial judge entered judgment in his Court for the appellant but an appeal to the Full Court succeeded and that Court directed that judgment should be entered for the respondent for $31,200 (15,600 pounds). It is from this order that the appellant now appeals but there is also an appeal at the instance of the respondent from an order dismissing a motion made on his behalf to the Full Court seeking an amendment of that Court's order to provide for the payment of interest on the amount which the respondent had recovered. The question whether the respondent is entitled to this additional relief is raised also by a cross appeal and we shall defer consideration of these two matters until the substantive point raised by the appellant's appeal has been discussed. (at p460)

5. The first question to be considered is whether the contention that special condition 5 is uncertain should be upheld. The appellant asserts that it should not and that, in effect, that clause simply provides that in the event of there being no agreement as to the terms of the contemplated lease, including both the period during which it is to subsist and the rent to be paid, the parties shall enter into a lease in the form settled by an arbitrator. Of course, if this were so the basis for the contention that the clause is uncertain would disappear. But the language of the clause does not permit of this view. The lease is to be "upon such reasonable terms as commonly govern such a lease" and in the event of a dispute "as to the interpretation or operation" of the clause the dispute is to be referred to arbitration. We are firmly of opinion that the expression "upon such reasonable terms as govern such a lease" is not, in the context in which it appears, apt to refer to either the period for which the contemplated lease is to subsist or to the rent to be payable thereunder. Nor do we think that the further expression "as to the interpretation or operation" of this clause covers a dispute as to either of those matters. We, therefore, are of opinion that the clause is uncertain in that it neither specifies nor provides a means for the determination as between the parties of the period for which the contemplated lease shall be granted or the rent which shall be payable thereunder. (at p461)

6. It, therefore, becomes necessary to determine whether the condition is severable from the rest of the provisions of the contract or whether the whole contract falls. On this point the learned judge of first instance after referring to the observations of Knox C.J. in Life Insurance Co. of Australia Ltd. v. Phillips [1925] HCA 18; (1925) 36 CLR 60 , and to Fitzgerald v. Masters [1956] HCA 53; (1956) 95 CLR 420 , held that the condition was of such a quality that it could be ignored. But those cases and Nicolene Ltd. v. Simmonds (1953) 1 QB 543 , to which also he made a reference, are simply particular examples of conclusions reached by the application of a general principle. That general principle is stated by Knox C.J. in the first-mentioned case (1925) 36 CLR, at p 72 :

"When a contract contains a number of stipulations one

of which is void for uncertainty, the question whether the

whole contract is void depends on the intention of the parties

to be gathered from the instrument as a whole. If the contract

be divisible, the part which is void may be separated from

the rest and does not affect its validity."

Observations in the same case make it clear that in seeking to ascertain the intention of the parties to a written contract extrinsic evidence may not be resorted to except where such evidence may be called in aid in the interpretation of the written instrument. Clearly enough, it seems to us, it is not to the point to make an independent examination of extrinsic facts, even if they were within the knowledge of both parties, and upon such evidence to conclude that a particular provision was or was not of importance to them or to either of them; the question for determination is the intention of the parties as disclosed by the contract into which they have entered. Neither Phillips Case [1925] HCA 18; (1925) 36 CLR 60 nor Fitzgerald v. Masters [1956] HCA 53; (1956) 95 CLR 420 bear any resemblance to the present case. Nor does the case of Nicolene Ltd. v. Simmonds (1953) 1 QB 543 , the headnote of which, as was pointed out in Fitzgerald v. Masters (1956) 95 CLR, at p 427 , inaccurately states the effect of the contract then under consideration. Of course, cases may arise where a vague, uncertain or meaningless clause in a contract may simply be ignored. An elementary example of this is to be found in the last clause on p. 2 of the contract in this case. But special condition 5 does not fall into any such category; nor can it be said to be a clause inserted solely for the benefit of one of the parties and capable of being waived by him. It is, in a sense, definitive of the ultimate rights which it is contemplated the purchaser is to get under his contract. The clause provides that the respondent will immediately upon taking possession grant a lease the effect of which will be to deprive him of possession of part of the land in return for a promise to pay rent. Of course, the Shell Co. is in no way obliged to take a lease but it is clear enough from the terms of the contract that it was contemplated that it would. The case is, perhaps, not as clear as the case where a contract for the sale of land is entered into with a reservation to the vendor of an unspecified part (Pearce v. Watts (1875) LR 20 Eq 492 ). Nor are we concerned with the problem that would have arisen in the present case if there had been a conveyance from the appellant to the respondent (cf. South Eastern Railway Co. v. Associated Portland Cement Manufacturers (1900), Ltd. (1910) 1 Ch 12 ). The case more closely resembles Duggan v. Barnes [1923] VicLawRp 4; (1923) VLR 27 , where A agreed to sell land to B for a stated price and B undertook to grant a lease to any person who should purchase A's business. There the court had no difficulty in holding that B's undertaking was a material and inseverable part of the consideration for A's promises. In our view the same conclusion must be reached in this case and the fact that here it is the purchaser, and not the vendor, who is asserting the invalidity of the contract is of no consequence. In our opinion the appellant's appeal should be dismissed. (at p462)

7. The claim that the respondent is entitled to an order for the payment of interest rests upon s. 78 of the Supreme Court Act as introduced by the Supreme Court (Interest on Judgments) Act 1962. That sub-section is now in the following terms:

"s. 78 (1) Upon all debts or sums certain hereafter recovered

in any action the Judge at the hearing shall upon application

unless good cause is shown to the contrary allow interest to

the creditor at a rate not exceeding eight per centum per

annum or (in respect of any bill of exchange or promissory

note) at a rate not exceeding twelve per centum per annum

from the time when such debt or sum was payable (if payable

by virtue of some written instrument and at a date or time

certain); or if payable otherwise then from the time when

demand of payment has been made:

Provided that nothing herein contained shall extend to

authorize the computation of interest on any bill of exchange

or promissory note at a higher rate than eight per centum

per annum where there has been no defence pleaded." (at p462)

8. The respondent, by his statement of claim, sought the recovery of the moneys paid under the contract, together with interest on the sum of 15,600 pounds at the rate of eight per centum per annum "from the date hereof until payment or judgment". But, as the respondent failed in the first instance no mention of interest was made upon the hearing. Then, in his notice of appeal to the Full Court he indicated that he would seek the reversal of this order and an order that judgment be entered in his favour for the sum of 15,600 pounds "and interest thereon". On the appeal the respondent, as already appears, was successful but no application for an order for the payment of interest was made at the hearing and, accordingly, the Full Court's order did not provide for interest. That order was made on 18th July 1967 and entered on 22nd August 1967. Thereafter, on 29th August 1967, the appellant moved the Full Court pursuant to a notice of motion seeking an amendment of the Court's order to provide for payment of interest. This motion was dismissed and the respondent appealed against the order of dismissal and, at the same time, cross-appealed against the substantive order made on his appeal to the Full Court on the ground that that order should have provided for the payment of interest. (at p463)

9. The motion to the Full Court was dismissed substantially on the ground that that Court had no power to make an order for the payment of interest in the absence of an appropriate application being made to it and that neither the claim for interest in the statement of claim nor the reference to interest in the notice of appeal constituted "an application within the meaning of s. 78". In our view this conclusion was correct. The form of s. 78, as it now stands, differs materially from the form in which it stood prior to 1962. Under the old section the court at the hearing or the jury on the trial of any issue or of an assessment of damages might, if they thought fit, allow interest to the creditor "upon all debts or sums certain hereafter recovered in any action". The express requirement that an application should be made was absent for the words "upon application" found no place in that section, or, for that matter in s. 79 though, no doubt, if a summing up omitted to direct the jury in accordance with the section and no objection was taken by the plaintiff he could not thereafter complain. Sections 78 and 79 were, however, replaced by three new sections in 1962 - s. 78, s. 79 and s. 79A. By each of these sections the power to give interest in the various cases mentioned, whether tried with or without a jury, was committed to the judge alone. The power, however, was expressed throughout these sections to be exercisable "upon application". (See ss. 78 (1), 79 (1) and (2) and 79A (1).) And when the terms of s. 78 (1) are scrutinized it is seen that the power to give interest under that section is to be exercised, if it be exercised at all, at the hearing and it is to be exercised upon application in respect of debts or sums certain recovered. The language of the section naturally supposes an application being made after "the recovery" of the debt or sum certain and that the power to give interest will, if it is exercisable at all, be exercised at the hearing. This being so, it cannot be said that the claim in the statement of claim or in the notice of appeal to the Full Court constituted an application within the meaning of the section. Accordingly we are of opinion that the Full Court's decision on the motion was right and that the cross appeal and the appeal from the order made on the motion should be dismissed. (at p464)

ORDER

Appeals and cross appeal dismissed with costs.