DEBENTURE INTEREST.

Manawatu Standard, Volume LVI, Issue 11, 11 December 1935, Page 10

DEBENTURE INTEREST.

AN INTERESTING JUDGMENT. Per Press Association. WELLINGTON, Dec. 11. Judgment in the case of the T._and G. Lite Assurance Society was delivered by the Court of Ap.peal this morning. Between 1926 and 1928 the T. and G. Society, incorporated in Victoria, advanced to the Mt. Albert Borough Council £130,000 upon the security of certain debentures bearing interest at £5 13s 9d per cent, per annum. Interest at that rate was paid on the debentures up 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, and 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 Aot, 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 wyit for. £446 17s 6d. The corporation counter-claimed for £2610 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 to be argued in the Court of Appeal: (1) Whether the Victorian Statutes relied on by the Borough Council had application to the debentures. (2) Whether the interest payable under the debentures was reduced by the Financial Emergency Act, 1931 (Victoria). (3) Whether if the rate of interest was reduced, the Borough Council was entitled to a refund of the interest paid in excess of the reduced rate. The first two questions were argued on October 8,9, 10 and 11, 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, the contract itself and the law applicable thereto disclosed that the proper law of contract was the law of New Zealand and that, accordingly, the Victorian Statues relied on by the corporation did not apply and that the interest payable under’ the debentures was not reduced by the Financial Emergency Act, 1931 (Victoria). , , _. Each member of the Bench, Sir Michael Myers and Justices Reed, Smith, Johnston and Fair, wrote long judgments, giving various reasons toi their views, but all arrived at common answers to the questions before the Court. , . . , Costs £6O were ordered to be paid by the Borough Council. After the judgment had been delivered, Mr O’Shea, senior counsel foi the Borough Council, asked for conditional leave to appeal to the Privy Council, hut the Court decided that m this case the application should more properly be made to the Supreme Court.