Evening Post. TUESDAY, DECEMBER 10, 1933. "AS GOOD AS GOLD"

Evening Post, Volume CXVI, Issue 147, 19 December 1933, Page 10

Evening Post. TUESDAY, DECEMBER 10, 1933. "AS GOOD AS GOLD"

The Press Association cannot be accused of extravagance in the report supplied yesterday of the final decision on the validity of the gold clause in British contracts. The whole report of this highly interesting and important judgment was to I a single sentence of less than five and a half lines, of which exactly two were filled by the names of the appellant and the tribunal! The slightly longer extract from the comments qf the "Financial News" oni the subject |serves, by emphasising the import-! t ance of the decision, to protest against such niggardly treatment, and,. Oddly enough, the message from New York, of which the main purport is that the decision is likely to cause less stir in the United States than if it had been delivered six or seven months ago, is given more space than the two London ffigments combined. Yet when the decision of the English High Court is unanimously confirmed by three Judges in the Court of Appeal and then reversed by the House of Lords it has acquired from the sporting or dramatic standpoint a special interest in the popular mind which is entirely independent of its intrinsic import-j anee. In this case we are not even told whether the Judges in the House of Lords were unanimous. As no mention is made of dissent, there is of course a very strong presumption that they were, but seeing that a single word would have put it beyond a doubt, it surely should have been supplied. And a very few more words would have sufficed to tell us how many Law Lords were on the Bench, and who they were—-both material points when the unanimous decision of the Court of Appeal has been overruled.

By a singular coincidence yesterday brought us word, though not through any Press report, of another decision-of an analogous subjectltjatter which is of. special concern to New Zealand arid may affect an important measure now before the House of Representatives. According to a private message, which the Finance Minister was unable to confirm last night, the right of the Adelaide Electric Supply Company to make an interest payment in London in Australian currency has been rejected by the Judicial Committee of the Privy Council. Here, as in the gold clause case, the highest tribunal has overruled the decision of the English Court of Appeal, but otherwise the fortunes df war in Loth the inferior tribunals were curiously different. In the Australian case the original judgment of Mr. Justice Maugham dismissed the Adelaide Company's claim to pay in Australian currencyi This judgment was reversed, apparently by a two-thirds majority, in the Court of Appeal. With the four judges in these two Courts thus evenly divided, the Judicial Committee has now restored Mr. Justice Maugham's judgment and held the Prudential Assurance Company entitled to payment in sterling. But whether this final decision was unanimous'we shall never know. The decisions of the Judicial Committee are not supposed to be judgments, but opinions. They merely represent the advice tendered to the Sovereign by his private counsellors on the petitions of his subjects, and Heaven forbid that they should speak to him with discordant voices! The legal fiction of unanimity is accordingly maintained by the minority's withdrawal of its dissenting opinion. The case in which Mr. Justice Farwell gave his decision on October 28, 1932, was brought by Mr. Josiah Feist against the Intercotnmunale Beige D'Electrieite on a 5| per cent, gold bond part of an issue of 1500,000 made by the defendants in September, 1928. Following the established formula of the gold clause the first provision of the bond was as •follows:—. 'Phe company ... ■will on Septein*be& lf-J.963; ox-aB-sasJj-eatlit* clay, as

the principal moneys hereby secured become payable in accordance with the conditions endorsed hcrcon, pay to the bearer . . . the sum of £100 in sterling in gold coin of the United Kingdom of or equal to the standard of weight, and fineness existing on September 1, 1928. The other clauses which lhe Judges held to be material provided that the bond AYas to be construed and the rights of the parties determined according lo the laws of England, and that the bonds of this issue shall constitute anrl they, and each of them, hereby are declared to bo, the direct and unconditional liability arid obligations of the company in sterling in gold coin of the United Kingdom in aeeovdancc w»t'l tnc provisions of the bond and these conditions. The first clause of the plaintiff's claim was that the company had undertaken to discharge their obligations "by tendering in payment of the principal and interest gold coin of the United Kingdom to the appropriate amount of or equal to the standard of weight and fineness existing on September 1, 1928." And, secondly, he claimed that they were bound to pay such a sum in sterling as would on the day of payment "be sufficient to purchase in the market gold of not less weight and fineness than that contained in the gold coin of the United Kingdom which would have sufficed to discharge such payment if falling due on September 1, 1928." It -will he noted that the plaintiff's claim follows the terms of his gold clause very closely—so closely, indeed, lhat it would never have troubled the Courts if the law had remained in 1932 and 1933 as it was when the bond was issued. But the Legislature had queered the pitch in the meantime* and the question was whether it had queered it sufficiently to prejudice the rights of the plaintiff. A conflict had been established between the first clause of the bond and the subsequent clauses which it was for the Judges to resolve. In 1928 the Treasury ceased issuing notes. The Bank of England took it on again, but in the same denominations of £1 and 10s, and these were made legal tender up to any amount. Gold had been withdrawn from circulation. Gold coins were no longer available, and Bank of England notes had taken their place and represented sterling. In these circumstances Mr. Justice Farwell held that "the contract could not be considered as a "contract for the payment of bullion."' It was "a simple contract lo secure the payment of a sum of money," and defendants could discharge their obligation by tendering that sum in whatever happened to be legal tender at the time. In the Court of Appeal, where, as already stated, Mr. Justice Farwell's decision was affirmed by all the three Judges* the point was perhaps most succinctly stated by Lord Justice Lawrence in the following passage: The parties might not have foreseen the present result, and he agreed that it rendered the Stipulation as to payment in,gold coins otiose, but that re* suit was brought about by the Legislature. The obligation of the company was to pay a debt; the amount of the debt was £100 sterling, carrying interest at the iato of 5$ per cent. The company had agreed to pay that debt and interest in gold coins, but the Logis' lature had said that it might lawfully be discharged by tendering bank-notes, and the eompaiiy therefore was entitled to discharge its indebtedness by tendering bank-notes and to extinguish its obligation under the bond by that mode of payment. And now this unanimous decision has been reversed by "an apparently unanimous^decisioo of the House of Lords. The decision, says the "HPinanelil New*,'* is a most important step Jji tiefence of a legal contract as against financial conveniences* The chief importance of the decision is the vindieaiion of the truth that at least the British gold clause remains' as good a.s gold, and that payment ia gold does not m«in payment In paper.