AWARD IN BONDS CASE

Otago Daily Times, Issue 23703, 10 January 1939, Page 10

AWARD IN BONDS CASE

HOUSE OF LORDS DECISION PAYMENT OF GOLD VALUE BASIS (From Our Own Correspondent) (By Air Mail) LONDON, Dec. 15. Judgment was given in the House of Lords upholding a decision of the Court of Appeal, that Canadian bonds were repayable in this country on a gold value basis, and that a Canadian law to the contrary did not apply. The decision dismissed an appeal brought by the New Brunswick Railway Company, of Canada, to which the respondents were the British and French Trust Corporation, Ltd., of Coleman street, E.C. The case concerned 992 5 per cent, first mortgage bonds of £IOO each, issued by the railway company. The Canadian Parliament passed a law in 1937 that obligations under gold clauses in contracts could be discharged by payment in ordinary currency at the nominal value. The Court of Appeal had decided that English law controlled payments in London, and that the bondholders were entitled to repayment on a gold value basis.

The Lord Chancellor, Lord Maugham, in his judgment, said that the gold clause in the bonds was intended to protect the holder against a depreciation of the currency in New Brunswick.

He did not think, however, that their lordships’ decision applied also to interest on bonds.

The Court of Appeal’s award of £182,444 to the corporation was therefore reduced to £181,562,

The railway company was ordered to pay the costs.