APPEAL COURT RULING

New Zealand Herald, Volume LXX, Issue 21471, 20 April 1933, Page 12

APPEAL COURT RULING

POUND AND STERLING CONFUSION' OF SYMBOLS DISSENTING JUDGE'S VIEW I• • V The successful appeal by tlie Broken Hill Proprietary Company, Limited, discussed at a meeting of the Auckland Transport Board yesterday, arose from . litigation between the company as plaintiff, and the following defendants:—Bertram Lathan and Edward William Hullo, both of the Commonwealth Bank of Australia, Sydney, the trustees of a debenture trust deed securing an issue hv the plaintiff company of £1,500,000 "B" debentures; George Pereival Richardson, of Hailsham, Sussex, and Colin Robert Duncan, of Colchester, Essex, holders, registered on the London register, of the debentures secured by, the trust deed; and Horace Calder, of Melbourne, a- holder registered on the Melbourne register of the debentures.

The question raised in this case was whether sums payable by tho company in London in redemption of, and payment of interest on, its debentures /night to be paid in Australian currency converted into sterling at the rate of exchange current in London, or ought to bo paid in sterling with no allowance for conversion from Australian currency. By each of the debentures the company covenanted that it would on October 1, 1940, or on such earlier day as the principal moneys thereby secured should become payable in accordance with the conditions endorsed thereon, pay to the registered holder thereof £IOO, and would in the meantime pay interest thereon at the rate of 7 per I cent a year by half-yearly payments on the first days of the months of April and October in each year, tho first of such payments to bo made on April 1 then next, and to be made in accordance with the coupons annexed thereto. Condition in Covenant

Condition No. 12 was as follows: — " Tho moneys hereby secured will bo paid as to principal at any office of the Commonwealth Bank of Australia in Sydney, Melbourne, Adelaide, or London at the registered holder's option and as to interest either at any of such offices or at tho said bank's offices at Perth, Brisbane or Hobart." Mr. Justice Maugham held that the redemption of and payment of interest on debentures by the company, with regard to which the debenture-holders had options to require payment in Australia or London, should, if the option to require payment in Loudon were exercised, be paid in sterling, without deduction on account of the exchange value of the pound in Australia. It was against this judgment that the company appealed, the appeal being heard before the Master of the .Rolls, Lord Hanworth, Lord Justice Lawrence and Lord Justice Romer. Lord Justice Lawrence said the only cause of difficulty was the fact that Australia had adopted the same standard unit of value for its currency, and the same name and symbol to indicate th.it unit, as England. Consequently when the term "pound" and tho symbol "£" were used in a doci ment (such as tho trust deed in this case) the question arose whether that term and that symbol Avere as a matter of construction intended to denote tho Australian pound or tho pound sterling. , , . In determining that question here regard must be had to the following essential facts. The company was incorporated in the State of Victoria under the Australian Companies Act, with its head office at Melbourne. On September 22, 1920, the directors passed a resolution at Melbourne "that the sum of £1,500,000 be raised by the issue of 15,000 second mortgage debentures of £IOO each, bearing interest at the rate of 7 per cent per annum. .

"Australian Pounds Indicated" The trust deed to secure that debenture issue was prepared and executed in Melbourne, and after appointing Australian trustees and creating a specific i\nd floating charge on the company's mines and other property in Australia, it provided, inter alia, for the establishment in the joint names of the trustees and the company at the Commonwealth Bank of Australia of a sinking fund for 20 years for the redemption of the whole issue. The trust deed further contained a power to the trustees in the events therein mentioned to take possession of and sell the property charged. Tho second schedule to the trust deed contained the form of debenture and tho conditions to be endorsed. The trust deed was registered as a mortgage at the Melbourne Registry under section 101 of the Australian Companies Act, 1915. In those circumstances it jvas not open to reasonable doubt, that, prima facie, the word "pounds" and the symbol "£" whenever used in the resolution creating the debenture issue and in tho trust deed and debentures were intended to indicate Australian pounds and not pounds sterling, and accordingly that all the sums of money mentioned in the trust deed and in the debentures wore intended to be sums of Australian pounds, and not sums of pounds sterling. If any symbol other - than "£ " had been adopted to indicate the Australian pound no question could have arisen, and he was unable to see how the same sum of money mentioned in any given debenture or coupon could be construed to mean a sum of sterling if the debenture or coupon was presented for payment in London, and a sum of Australian currency if presented for payment in Australia. Lord Justice Homer also gave judgment allowing the appeal.' Lord Hanworth, in the course of a dissenting judgment, said if the contention was well founded that wherever payment was made it was to bo made in the Australian value of money, there was little merit or importance to be attached to the condition that payment might be made at tho option of the payee in London. Ho had come to the same conclusion as Mr. Justice Maugham, if not on quite the same grounds. He regretted to find himself expressing an opinion divergent from his two learned brothers. The order would be as declared by Lord Justice Lawrenco. When the judgment was delivered tho Australian Press Association said it understood that the case was to be taken to the House of Lords.