Full Judgment Text & Judicial Ruling

P L D 1950 Privy Council 137

P L D 1950 Privy Council 137

Present: Viscount Simon, Lord Simonds, Lord Morton of Henrytoa, Lord MacDermoft and Lord Reid

JOHN LAVINGTON BONYTHON and others-Appellants

Versus

THE COMMONWEALTH OF AUSTRALIA--Respondent

Privy Council Appeal No. 25 of 1949, decided on 30th Octo ber, 1950, from Australia.

(a) Contract-Currency in which obligation to be discharged to be trailed with reference to lite of contract.

It is as at the date of the contract that it must be decided what currency is meant by the contract as the currency or mea sure of value in which the contract obligation is to be discharged.

(b) Money (lawful) of a country--Power to determine-Exer cisable by legislature of such country.

The power to determine what is lawful money of a country is a power exercisable by the legislature of such a country, and that which was lawful money in the self-governing Colony of Queensland in 1895 was lawful money by virtue of the law of Queensland. Its origin may be sought in the history of the re lations between Queensland, or at an earlier date New South Wales, on the one hand and the Crown or the Imperial Parlia ment on the other. But its existence and validity in 1895 rested (apart from any question arising under the Colonial Laws Validity Act) on the inherent law-making power of the Queensland Legislature.

The Government of a self-governing country, using the terms appropriate to its own monetary system, must be presumed to refer to that system whether or not those terms are apt to refer to another system also. It may be possible to displace that presumption, but, unless it is displaced, it prevails, and, if it pre vails, then it follows that the obligation to pay will be satisfied by payment of whatever currency is by the law of Queensland valid tender for the discharge of the nominal amount of the debt.

The law of Queensland governs that contract and the law determines the meaning of the word " pound ".

Where therefore debentures issued by Government of Queensland (Australia) in 1895 (when there was no distinction in value between Australian pound and English pound) were made payable in " pounds sterling " either in " Brisbane, Sydney, Melbourne or London" on " first day of January, 1945 ", the obli gation was rightly discharged in terms of Queensland currency,

The same substantial obligation was imposed on the Queens-land Government whatever the place chosen for payment, the choice being given to the debenture holder purely as a matter of convenience.

F. Grant K. C. and James Stirling, for Appellants.

Solicitors : Torr & Co.

A. R. Taylor K. C., Megaw and R. Rho-Mitchell, for Respondent.

Solicitors : Coward Chance & Co.

Dates of hearing ; 10th, 11th, 12th and 13th July, 1950.

JUDGMENT

LORD SIMONDS.-The substantial question raised in this appeal, which is brought from a judgment of the High Court of Australia, is whether (as the appellants assert but the respondent denies) the appellants as holders of several sums of Consolidated Inscribed 3i per cent, stock of the Commonwealth of Australia, maturing an the 1st January, 1945, are entitled to be paid in London the nominal amounts of such stock in English currency or, alternatively, to be paid in Australia the equivalent in Austra lian currency of such amounts of English currency.

The appellants instituted their action in the High Court claiming the relief to which they alleged that they were entitled. At the trial of the action on the 15th October, 1947, the learned Chief Justice (Latham C. J.) with the consent of the parties and pursuant to section 18 of the Judiciary Act, 1903-1947, stated a Case and referred for the opinion and consideration of the Full Court of the High Court the relevant questions of law. It is proper, particularly in view of certain submissions made on behalf of the respondent upon the appeal, that the Case Stated should be set out in some detail in this opinion. The material parts of it are as follows (the appellants being referred to as the Plaintiffs and the respondent as the Defendant) :--

" 1.--The Plaintiffs respectively are and since prior to 1st July, 1944, have been inscribed in a stock ledger kept at a Re gistry established by the Defendant at Adelaide under the Com monwealth Inscribed Stock Act, 1911.1945, as the holders of Commonwealth Consolidated Inscribed Stock 3'5 per cent. maturing 1st January, 194.5 (hereinafter referred to as " Com monwealth Inscribed Stock ") in the following amounts that is to say :-(The amounts held by the several plaintiffs are then set out.]

The Plaintiffs are and at all material times have been resi dent in Australia.

2.-The Commonwealth Inscribed Stock referred to in para graph 1 hereof was originally issued by the Defendant in or about the month of March, 1932, to the Australian Mutual Provident Society upon the surrender of Queensland Government Deben tures hereinafter referred to. It is admitted that the said Com mon wealth Inscribed Stock was issued to the Australian Mutual Provident Society subject to the condition that the same confer-red upon the registered holders thereof for the time being rights which conformed in all particulars with the rights conferred by the said Queensland Government Debentures,

3.-By the provisions of Act 58 Victoria No. 32 of the Par liament of Queensland and known as the Government Loan Act of 1894 the Governor-in-Council of the Colony of Queensland was authorised to raise by wily of loan for the Public Service of the Colony such several sums of money not exceeding in the whole the sum of Two million pounds as might be required for purposes therein set out. Pursuant to the powers conferred by the said Act the Governor-in-Council for the said Colony of Queensland on 26th April 1895 raised by way of loan in London England the sum of '1,250,000 part of the sum authorized by the said Act and on 3rd July 1895 raised by way of loan in Australia sums of E250,000 and x,500,000 respectively balance of the sum so authorized and in respect of all the sums so raised issued debentures for varying amounts but otherwise in the form following that is to say :

ONE THOUSAND POUNDS

QUEENSLAND Identical Si. T1.

GOVERNMENT DEBENTURE No. 1 1,C00 Series Si.

ISSUED BY THE GOVERNOR in Council, by authority of the PAR LIAMENT of QUEENSLAND under the Act 58 Victoria No. 32.

This Debenture entitles the Holder to the sum of One Thousand Pounds Sterling, which, together with interest at the rate of Three Pounds Ten Shillings per centum per annum is secured upon the Consolidated Revenue of Queensland.

The Principal Sum will be payable on the First day of Jan uary 1945 either in Brisbane, Sydney, Melbourne or London at the option of the holder ; but notice must be given to the Trea surer of the Colony, on or before the First July 1944 of the place at which it is intended to present this Debenture for payment of such principal.

The Interest Will commence on the first day of January 1896 and will be payable on the 1st January and 1st July in each year, at the Treasury in Brisbane or at the offices of the Agents of the Government in Sydney, Melbourne or London on presentation of such of the annexed coupons as shall then be due, and not otherwise.

When this Debenture is issued the place at which the Pur chaser wishes the interest first falling due to be paid, shall be endorsed on the Debenture ; any change in the place of payment of interest must be registered at the Treasury in Brisbane or at the offices of the Agents of the Government in Sydney, Melbourne or London six months prior to the date on which such interest shall be payable, and the transfer at the same time endorsed on the Debenture.

Dated at Brisbane this 1st day of November 1895.

E. DESHON H. W. NORMAN

Auditor General. Governor of Queensland.

T. M. KING HUGH M. NELSON

Under Secretary. Colonial Treasurer.

4.-The sum of 250,000 referred to in paragraph 3 hereof was wholly subscribed by the Australian Mutual Provident Society a company incorporated and carrying on business in Australia and with respect thereto the Governor-in-Council in Queensland caused 150 of the debentures referred to in paragraph 3 hereof each for the sum of 1,000 and 200 of the said debentures each for the sum of 500, to be issued in Queensland to the said Australian Mutual Provident Society.

5.-On each of the debentures referred to in paragraph 4 the place at which the Purchaser wished the interest first falling due to be paid was endorsed as Sydney. No change in the place of payment of interest under the said debentures was registered.

6.-The following is a copy of the form of coupon annexed to the said 1,000 debentures :--

QUEENSLAND GOVERNMENT DEBENTURE 1,000 SERIES S1. 1,000

Half year's Dividend at the rate of Three Pounds Ten Shillings per centum per annum, due 1st January 1945.

17.10.0 H.M.N.

The coupon annexed to the said 500 debentures was in the same form except as to the sums mentioned therein.

7.-Under and by virtue of an agreement made the 12th day of December 1927 between the Defendant of the first part and the States of New South Wales, Victoria, Queensland, South Austra lia, Western Australia and Tasmania of the second third fourth fifth sixth and seventh parts and under and by virtue of the Financial Agreement Act 1928 No. 5 of 1928, the Financial Agreement Validation Act 1929 No. 4 of 1929, and the Financial Agreements (Commonwealth Liability) Act 1932 No. 2 of 1932 (all of the Parliament of the Commonwealth of Australia) the public debt of the State of Queensland which included the lia bility of that State under and in respect of the debentures men tioned in paragraph 4 hereof was taken over by the Defendant.

8.-Upon the issue to the Australian Mutual Provident Society of the Commonwealth Inscribed Stock referred to in Para-graph 1 and for some time thereafter the same was inscribed in the stock ledger kept at the Registry in Brisbane and interest was paid there. Upon or subsequently to the Plaintiffs becom ing the holders of the said stock the same was transferred to the Registry kept at Adelaide and thereafter interest was paid there."

The Case then set out correspondence passing between the appellants and the respondent which may be briefly summarised. On or about the 15th December, 1944, the Treasurer of the Commonwealth sent to the holders of the inscribed stock in question a letter inviting them to convert their maturing securi ties into a new issue made by the Commonwealth and adding that, if they should not find it possible to convert their securi ties, they would be " redeemed on the due date on presentation at the Commonwealth Bank." To this letter the applicants made no answer. By letters written by or on their behalf on the 22nd December, 1944, to the Deputy Registrar of Inscribed Stock at Adelaide the appellants requested that " in accordance with the conditions on which the said stock was issued " the amount of the stock held by them respectively should " be paid an maturity in London in sterling ". On the 30th December,1944, the Deputy Registrar replied that this request had been submitted to the Commonwealth Treasury adding that the condi tions of the Loan provided that six months' notice of redemption in London would be necessary and enclosing certain forms which he invited them to fill in and return. The forms were alternative and were for conversion of the existing securities to a new loan or for redemption in cash. On or about the 2nd January, 1945, the Deputy Registrar wrote a further letter to the appellants in which, after quoting the redemption provisions of the original debentures, he added, " As the holders of the Stock did not give the notice required by the terms of the debenture they are now precluded from exercising an option for payment in London.

The Case then proceeded as follows :

16.--None of the Plaintiffs completed the forms referred to in paragraph 14 hereof nor did they or any of them present the said inscribed stock at the Commonwealth Bank.

17.---The Defendant has not paid to the Plaintiffs or any of them the principal moneys due on maturity of the said inscribed stock. On and from the 1st January 1945 the Defendant was at all times ready and willing to repay the said principal moneys in Australian currency equal to the amount inscribed but no larger amount, at Adelaide aforesaid or elsewhere in Australia as might be required by the holder. Save as appears from the letters hereinbefore set forth, no notice for the redemp tion of the said inscribed stock has been given by the Treasu rer of the Commonwealth to the Plaintiffs or any of them.

18.-The parties having appeared before me and agreed that all the facts necessary to determine this action are stated in this Case I state the following questions of law arising in the action for the opinion and consideration of the Full Court of the High Court of Australia :

With respect to the Commonwealth Inscribed Stock held by the Plaintiffs was the Defendant bound to pay the principal sums secured thereby in English currency in London six months after the date of the delivery of the letters referred to in paragraphs 10, 11 and 12 of this Case ?

If nay when and where did such moneys become due and payable ?

If the principal sums are payable in Australia are the Plaintiffs respectively entitled to be paid in Australian currency the equivalent of the principal sums in English currency ?

Are the Plaintiffs respectively entitled to interest upon the amount of the said stock held by each of them at 3i per cent. per annum since 1st January 1945 ?

Dated this 15th day of October One thousand nine hundred and forty-seven.

J. G. LATHAM,

Chief ,Justice."

These questions were answered as follows : the majority of the Full Court (Rich, Dixon and McTiernan JJ.) answered ques tions (a), (c) and (d) in the negative : Dixon and McTiernan JJ. thought it unnecessary to answer (b) : Rich J. was of opinion that the principal sums were payable at the places mentioned in the debentures upon presentation of the inscribed stock. Latham C. J. and Starke J. dissented, the former being of opinion that a the appellants were entitled to be paid in Australia on the 1st January, 1945, the equivalent in Australian currency of the prin cipal sums in English currency, the latter that they were entitled to be paid the principal sums on the 1st January, 1945, in Eng lish currency in London. Both Latham C. J. and Starke J. were of opinion that the appellants were not entitled to interest, but Starke J. thought that they were entitled to damages for breach of contract by reason of the respondent's failure to pay on the 1st January, 1945, and that such damages might be measured by the interest payable on the said stock.

These answers being remitted to the learned Chief Justice, he gave judgment in conformity with the answers of the majority, and from that judgment this appeal is brought.

Before dealing with the matters which alone appear upon the face of the case to have been in dispute between the parties and were the subject of conflicting opinions in the High Court, their Lordships must deal with a submission made on behalf of the respondent which admittedly was not made to the High Court.

It was to the effect that, whatever rights the appellants might have had if they had retained the original debentures, their pre-sent rights must he determined solely by their status as holders of Consolidated Inscribed Stock of a certain issue made under the authority of the Commonwealth Inscribed Stock Act, 1911.33, and that the statutory terms of issue and redemption precluded the payment of anything but the nominal amount of the stock in Australian currency at par. Their Lordships do not feel at liberty to entertain this submission. The statement in paragraph 2 of the Case (which was based on allegations and admissions in the plead ings) that the Inscribed Stock was issued " subject to the condi tion that the same conferred upon the registered holders thereof for the time being rights which conformed in all particulars with the rights conferred by the said Queensland Government Deben tures," the further statement in paragraph 18 that " all the facts necessary to determine this action are stated in this case," the form and substance of the questions submitted for this opinion of the Full Court, and the opinions delivered by the several members of that Court make it clear that the action has throughout proceed ed upon the footing that, though not all the terms and conditions of the original debentures were appropriate to the substituted in-scribed stock, yet their rights in regard to the currency in which, and the place at which, payment should be made were unaltered. It is upon this footing that their Lordships decide this appeal.

The first question that emerges arises on a narrow point of construction. It is whether the appellants, having failed to give the proper notice on or before the 1st July, 1944, in any event lost their right to require payment in sterling in London. This would not necessarily be fatal to their substantial claim, for, in the opin ion of Latham C. J., they would, though precluded from requiring payment in London, still be entitled to payment in Australia of the equivalent, in Australian pounds of the nominal amount of their stock in English pounds. Nor, on the other hand, would it avail them to succeed upon this point if, being paid in London, they were entitled to be paid in English pounds only the equivalent of the nominal amount of their stock in Australian pounds. The vital question to be decided is what was the substantial obligation created by the debenture. Their Lordships, nevertheless, think it right, in view of the difference of opinion in the High Court, to make some observations on this preliminary matter.

As has already been stated, the original debentures provided that the principal sum would be payable on the 1st January, 1945, either in Brisbane, Sydney, Melbourne or London at the option of the holder, but that notice must he given to the Treasurer of the Colony on or before the 1st July, 1944, of the place at which it was intended to present the debenture for payment. No provision was made for the event of notice not being given on or before the 1st July, 1944, an event which happened in the case of the appel lants. What then are their rights ? Two views are possible : the first, for which the appellants contend, that, ac they had on the 22nd December, 1944, nominated London as the place of payment, the respondent was bound to pay in London within a reasonable time after notice had been given and at the latest on the 22nd June, 1945 ; the second, for which the respondent contends, that it was a condition precedent to the option being exercised that due notice should be given on or before the 1st July, 1944, and that, the condition not having been complied with, payment was due only in Australia. It was not made clear, upon the footing that the respondent's contention was right, at what place in Australia payment must be made, and this difficulty is not dimi nished by the change that has taken place in the nature of the security.

Their Lordships, for a reason which will shortly appear, do not find it necessary to determine which of these conflicting views is the right one. If the option is not exercised no place is designated for payment and the proper place of payment must in that case be implied from the terms of the debenture. It is difficult, however, to find in the document clear indications on which to found this inference. The appellants would prefer Mr. Justice Dixon's view on this preliminary point, though, of course, challenging his final conclusion. On this view the length of notice required would be associated with the obligation of the Govern ment to provide the money on the due date at any of the places named and not with the existence of the option itself. In other words, if the debenture-holder does not give due notice, he cannot require payment on the due date, but he does not lose his right to require payment at the place named by him when reasonable notice (which may be assumed to be six months' notice) 'has been given and expired. But even so, this interpretation will not avail the appellants unless it is followed by the conclusion that the claim to be paid in London involves the right to receive English currency. The question which will decide the appeal is whether even if the claim to be paid in London was good, the appellants became entitled to be paid in due course in English currency it London the nominal amount of their stock or only the equivalent of that amount of Australian currency. For brevity, these natives will be referred to as payment in English currency (or on pounds) and payment in Australian currency (or pounds).

At the outset it must be determined whether in the year 1895 when the original debentures were issued, the word " sterling " in connection with pound denoted the currency of England alone, or, alternatively, the currency of England rather than that of Queens-land. For even upon this point there has been some conflict of opinion in the High Court, and, as their Lordships venture to think, some confusion arising from the speeches of some of the noble and learned Lords who took part in the decision of Adelaide Electric Supply Co. Ltd. v. Prudential Assurance Coy. Ltd. (1934 A C 122). In the year 1895 such a question, if asked, would have appeared otiose. Alike in London and in Brisbane, the pound was the pound sterling and the unit of account was property de-nominated by either name. As Starke J. said in the present case, " Before fluctuations in exchange occurred in the value of the currencies of England and Australia it was not unusual in com mercial documents operating within Australia, e.g., cheques, to find the obligation expressed in pounds sterling for that was the unit of account in Australia."

It is therefore in their Lordships' opinion impossible to infer from the mere use of the word " sterling " in conjunction with the word " pound " in a document of the year 1895, whether it be a contract between Brisbane merchants or a debenture issued by the Queensland Government, that the currency of England rather than that of Queensland was intended. It is significant that, when at a later date the values of the English and the Queensland (or, more properly, the Australian) pound diverged so that convenience re quired that the units of account should be differently described, the word sterling was appropriated to the English pound and for greater clarity the symbols E and A were used in cases in which con-fusion might arise.

But in 1895 this was not so and, as already observed, the enquiry what was the substantial obligation created by the deben tures is not to be concluded by pointing to the use of the word "sterling".

The question then is what upon the true construction of the debenture of 1895 according to its proper law is intended by the use of the words therein "pounds sterling", This is a question which must be determined as at the date of its issue. "It is as at the date of the contract that it must be decided what currency is meant by the contract as the currency or measure of value 4 in which the contract obligation is to be discharged" ; see Auckland Corporation v. Alliance Assurance Co. (1937 A C 587 at p. 603).

It appears to their Lordships that in the consideration of this question too much emphasis should not be laid upon the fact that the money of account of Queensland and England was the same in 1895. It was undoubtedly similar at that date, and before and after that date, in the sense that the same nomenclature, pounds, shillings and pence, was used to describe its units of value. In other respects too, though not in all respects, the monetary systems were the same in the two countries. But by 1895 Queensland had for nearly forty years been separated from New South Wales and had been a self-governing colony with power to make laws for its own peace order and good government. The power to determine what is lawful money of a country is a power exercisable by the legislature of such a country, and that which was lawful money in the self-governing Colony of Queensland in 1895 was lawful money by virtue of the law of Queensland. Its origin may be sought in the history of the relations between B Queensland, or at an earlier date New South Wales, on the one hand and the Crown or the Imperial Parliament on the other. But its existence and validity in 1895 rested (apart from any question arising under the Colonial Laws Validity Act) on the inherent law-making power of the Queensland Legislature. It is worth while to pursue this question, which is in the background of the present appeal ; for, as their Lordships venture to think, it may not have been sufficiently present to the minds of the learned Judges who have considered…

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