INTEREST ON DEBENTURES

Evening Star, Issue 22209, 11 December 1935, Page 10

INTEREST ON DEBENTURES

INSURANCE COMPANY'S CLAIM UPHELD BY COURT OF APPEAL JUDGMENT AGAINST MOUNT ALBERT BOROUGH [Pee United Peess Association.] WELLINGTON, December 11. Judgment in the case of the T. .and G. Life Assurance Society against the Mount Albert Borough Council was delivered by the. Court of Appeal this morning. Between 1926 and 1928 the T. and G. Society (which is incorporated in Victoria) advanced to the Mount Albert Borough Council £130,000 upon the security of certain debentures, bearing interest at £5 Is 9d per cent, per annum. Interest at that rate was paid on the debentures to September 1, 1934, but on March 1, 1935 (the half-yearly interest day), the council paid only £3,250, leaving a balance of £446 17s 6d, alleging that it was not bound to pay this balance in view of certain financial emergency legislation passed in Victoria between 1928 and 1934, and particularly in view of the Financial Emergency Act of 1931 (Victoria), which reduced the rate of interest to 5 per cent. The society denied that the debentures were affected by this legislation, and issued a writ for £446 17s 6d. The corporation counter-claimed for £2,610_4s lOd, which, it alleged, it had overpaid .in ignorance of this legislation and its effect. By order of the Chief Justice, the following questions were ordered Jo be argued in the Court of Appeal:—(l) Whether the Victorian Statutes relied on by the' Borough Council had application to the debentures; (2j whether the interest payable under the debenture was reduced by the Financial Emergency Act of 190 l (Victoria) ; (3) whether, if the rate of interest were reduced, the Borough Council was entitled to a refund of interest paid in excess of .the reduced rate. -The'first two questions were argued on the Bth, 9th, 10th, and lith, of October, the court not desiring to hear argument on the third. • In _ its judgment the Court this morning was unanimous in the opinion that an examination .of the circumstances surrounding the contract, thecontract itself, and .the law applicable thereto, disclosed that the proper law of contract was > the law of New Zealand, and that, accordingly, the Victorian Statutes relied on by, the cor-, poration did not apply, and that the interest payable under the debentures, was not reduced by . the Financial Emergency Act of 1931, (Victoria). Each member of the _ bench (Sir Michael Myers, Mr Justice Reed, Mr Justice Smith, Mr_ Justice Johnston, and Mr Justice Fail") wrote long judgments giving various reasons for their views, but all arrived at common answers to the questions before the court. Costs of £6O were ordered to be paid by the Borough Council. After the judgment was . delivered, Mr O’Shea, senior counsel for the Borough Council, asked for conditional leave to appeal to the Privy Council,, but the court, decided, that, in this case; the application should more properly be made to the Supreme Court, .