JUDGMENT FOR PLAINTIFF

Press, Volume LXXII, Issue 21806, 11 June 1936, Page 11

JUDGMENT FOR PLAINTIFF

CURRENCY QUESTION DECIDED LEAVE TO APPEAL TO PRIVY COUNCIL (rasss association teubobaia.) WELLINGTON, June 10. The Court of Appeal this morning pronounced judgment in the case of the Alliance Assurance Company, Ltd. v. the Auckland City Corporation and the Auckland Transport Board. The question for determination arose out of the provisions of debentures originally given by the Auckland Electric! Tramways Company, but now payable by the Auckland Transport Board. The plaintiff company claimed that sums to be paid on interest coupons which it is expressed are to be payable.at the holders’ opinion in Auckland or in London are, if presented in London, to be paid in English currency. The corporation and the Transport Board contended that the sums were payable in New Zealand currency converted at whatever rate of exchange was current between London and New Zealand on the particular date of payment, in effect, that the debenture holder bears the cost of the exchange between New Zealand and London. A majority of the court—Mr Justice Ostler, Mr Justice Blair and Mr Justice Kennedy—gave judgment in favour of the plaintiff company, while the acting Chief Justice, Mr Justice Reed, delivered a dissenting judgment, in which he decided that at all material times the New Zealand pound and the English pound were different, although they expressed units of account in the same name. Provisional leave to appeal to the Privy Council was granted to the corporation and to the Transport Board. The case was heard by the Court of Appeal on March 18.

The plaintiff company is the holder of a large parcel of debentures issued by the City Corporation when the tramway system of Auckland was taken over by the corporation in July,-1919, from the Auckland Electric Tramways Company, The debentures provide that on presentation of them at the Bank of New Zealand, Auckland, or at the Bank of New Zealand, London (at the option of the holder), on July 1, 1940, the bearer will be entitled to £IOO. The interest coupons similarly provide for

payment at Auckland or London at the holder’s option. The Auckland Transport Board, pursuant to the Auckland Transport Board Act, 1928, took over as a going concern the tramway undertaking of the corporation, with the benefit, and subject to the burden of all contracts and obligations of the corporation, in* eluding the indebtedness in respect to these debentures. The practice of the corporation in paying interest on the debentures was to pay the Bank of New Zealand on the due date for payment, the total amount in New Zealand currency of the interest on all debentures of the loan. The bank then paid the debenture holders, giving to those who required payment in London the nominal amount of their coupon in English currency, and the bank then notified the corporation of the additional amount, ♦if any, required to cover exchange, and the corporation paid that amount to the bank. No protest was made by the corporation, or any debenture holder, until 1933, when the Bank of New Zealand was informed that coupons falling due for payment in London in July, 1933, would be paid in the equivalent of New Zealand currency.