Bonython v Commonwealth

[1950] UKPCHCA 3

[PRIVY COUNCIL.]

BONYTHON AND OTHERS.

Appellants

Plaintiffs,

THE COMMONWEALTH OF AUSTRALIA.

Respondent.

Defendant,

ON APPEAL FROM THE HIGH COURT

OF AUSTRALIA.

Currency—“ Pounds sterling ”—Debentures—Redemption—Debentures issued by Oovernment of Queensland in 1895, repayable in 1945—Conversion of debentures into Commonwealth, inscribed slock—Sums expressed in pounds sterling payable at option of debenture holder in Brisbane, Sydney, Melbourne or London.

In 1895, wlion the money of account of the Colony of Queensland was the same—and the money of payment was substantially the same—as that of Great Britain, the Government of the Colony, pursuant to statutory authority, issued a series of debentures in denominations of £1,000 and £500, some of which were subscribed for in England and others in Australia. Except for the variation in the amount, the debentures provided :—“ This debenture entitles the holder to the sum of one thousand pounds sterling . . . together with interest. . . . The principal sum will be jiayable on the first (lay of January 1945 either in Brisbane, Sj^dney, Melbourne or London at the option of the holder ”. In 1932, the Commonwealth of Australia having taken over the public debt of the State (as it had become) of Queens­ land, the holders of debentures which had been issued in Queensland surren­ dered them and were issued with Commonwealth inscribed stock, which, it was admitted, conferred on the holders rights conforming in all particulars with the rights conferred by the debentures. In 1945 the only currency which was legal tender in Australia was the Commonwealth currency which, except as to denomination, w'as distinct from that of Great Britain, the value in exchange of the £B being higher than that of the £A. The holders of the stock claimed that in respect of eaoli debenture of £1,000 they were entitled to be paid £151,000 in London or the equivalent in Australian <'urrency if the debentures were ])ayabie in .Australia.

Held that the question what on the true construction of the debenture according to its proper law—which was that of Queensland—was intended by the use therein of the words “ pounds sterling ” must be determined as at the date of the issue of the debenture ; at that time, although the money of account was the same and the money of payment substantially the same, the monetary system of Queensland was not in a real sense the same as that of Great Britain, because the former depended on the law of Queensland, which was a self-governing Colony ; it could not be inferred from the mere use of the word “ sterling ” in conjunction with the word “ pounds ” that the currency of Great Britain rather than that of Queensland was intended ; the substantial obligation of the debenture was the same whether it was payable in London or in Australia, and there w'as nothing to indicate that the debenture was to be repaid in anything but the lawful money of Queensland ; the Government of Queensland, using in the debenture the terms appropriate to its own monetary system, must be presumed—in the [absence of any circumstances which might displace the presumption ; and there were none such in this case—to refer to that system, whether or not those terms were apt to refer to another system also. Accordingly, the obhgation of the debenture would be discharged by the payment of £A1,000, if the debenture was payable in Australia, or the equivalent in English currency if payable in London.

Decision of the High Court of Australia :

Bonylhon v. The Commonwealth,

(1948) 75 C.L.R. 689, approved.

Appeal from the High Court to the Privy Council.

This was an appeal by the plaintiffs from the judgment of Latham C.J. delivered in conformity with the decision of the Full Com-t of the High Court in Bonython v. The Commonwealth (1) .

Fred. Grant K.C. and James Stirling, for the appellants.

A. R. Taylor K.C., John Megaw and R. Else-Mitchell, for the respondent.

Lord Simonds delivered the judgment of their Lordships as follows :—

The substantial question raised in this appeal, which is brought from a judgment of the High Court of Australia, is whether (as the appellants assert but the respondent denies) the appellants as holders of several sums of consolidated inscribed .3| jier cent, stock of the Commonwealth of Australia, maturing on 1st January 1945, are entitled to be paid in London the nominal amounts of such stock in English currency or, alternatively, to be paid in

(1) (1948) 75 C.L.R. .589.

Austriiliii tlic (TjuivaJent in .'Viist.ralian ourrency of .such amounts of l<]n̂Hisli cinTciicy.

The. a.[)p(‘lliints instituted their action in the Higli Court cTiiming the relief to which they alleged tliat they were entitled. At fhe trial of tlu' action on 15th October 1947, the learned CTief Justice {Lalliaiii C.J.) with the consent of the parties and pursuant to s. 18 of the Judiciary Act 1903-1947, stated a ca,se a.nd releri'('(l for the o]>inion and consideration of the Full Court of the High Court the relevant questions of law. It is j)ro])cr, ])articularly in view of certain submissions made on behalf of the res])ondent upon the apjieal, that the case stated should be set out in some detail in this opinion. The material parts of it are as follows (the a])pellants being referred to as the plaintiffs and the respondent as the defendant) :—

“ I.—The ])laintiffs respectively are and since prior to 1st Julv 1944 have been inscribed in a stock ledger kept at a Registry established by the defendant at Adelaide under the Commonwealth Inscribed Stock Act 1911-1945 as the holders of Commonwealth consolidated inscribed stock 3.5 per cent, maturing 1st January, 1945 (hereinafter referred to as ‘ Commonwealth inscribed stock ’) in the following amounts that is to say :—[The amounts held by the several plaintiffs are then set out.] The plaintiffs are and at all material times have been resident in Australia.

2. —The Commonwealth inscribed stock referred to in paragraph 1

hereof was originally issued by the defendant in or about the month of March, 1932, to the Australian Mutual Provident Society upon the surrender of Queensland Government debentures hereinafter referred to. It is admitted that the said Commonw^ealth inscribed stock was issued to the Australian Mutual Provident Society sub­ ject to the condition that the same conferred upon the registered holders thereof for the time being rights w'hich conformed in all particulars with the rights conferred by the said Queensland Government debentures.

3. —By the provisions of Act 58 Victoria Ro. 32 of the Parliament

of Queensland and known as The Government Loan Act of 1894 the Governor in Clouncil of the Colony of Queensland wus authorized to raise by way of loan for the Public Service of the Colony such several sums of money not exceeding in the whole the sum of two million ])ounds as might be required for purposes therein set out. Pursuant to the powurs conferred by the said Act the Governor in Council for the said Colony of Queensland on 26th April 1895 raised by way of loan in London England the sum of £1,250,000 part of the sum authorized by the said Act and on 3rd July 1895

raised by way of loan in Australia sums of £250,000 and £500,000 respectively balance of the sum so authorized and in respect of all the sums so raised issued debentures for varying amounts but otherwise in the form following that is to say :—

One Thousand Pounds

Queensland Identical Si. Tl.

Government Debenture

No. 1

£1,000 Series Si.

Issued by the Governor in Council, by authority of the Parlia­

ment OE Queensland under the Act 58 Victoria No. 32.

This Debenture entitles the Holder to the sum of One Thousand Pounds Sterling, which, together with interest at the

rate of Three Pounds Ten Shillings per centum per annum is

secured upon the Consolidated Revenue of Queensland.

The Principal Sum will be payable on the First day of January 1945 either in Brisbane, Sydney, Melbourne or London at the option of the holder ; but notice must be given to the Treasurer of the Colony, on or before the First July 1944 of the place at Avhich it is intended to present this Debenture for payment of such principal.

The Interest will commence on the first day of January 1896 and will be payable on the 1st January and 1st July in each year, at the Treasury in Brisbane or at the offices of the Agents of the Government in Sydney, Melbourne or London on presentation of such of the annexed coupons as shall then be due, and not otherwise.

When This Debenture is issued the place at ivhich the Purchaser wishes the interest first falling due to be paid, shall be indorsed on the Debenture ; any change in the place of payment of interest must be registered at the Treasury in Brisbane or at the offices of the Agents of the Government in Sydney, Melbourne or

London six months prior to the date on which such interest shall

be payable, and the transfer at the same time indorsed on the

Debenture.

Dated at Brisbane this 1st day of November 1895.

E. Deshon,

H. W. Norman,

Auditor General.

Govern,or of Queensland.

T. M. King,

Hugh M. Nelson,

Under Secretary.

Colonial Treasurer.

4.—The sum of £250,000 referred to in paragraph 3 hereof was Avholly subscribed by the Australian Mutual Provident Society a company incorporated and carrying on business in Australia and with respect thereto the Governor in Council in Queensland caused

iiiUH couK;r

[1950.

15(1 ol (he (|(4K'nlui'('w r(‘l(i7T(!(l l.o in piinigriipli hereof euoh for llu' sum ol .1'I,()()() jukI L'OO of (Jk\ sn.id (l(d)(mfure.s (iuc.li for the .sum ol .L'500, to he is.siied in (^iKunisliind (,o the .said Au.straJiun Mutual I’ruN’ident Soe-ie(.y.

5, ()n ciU'li ol the de,h('nl ni'es rcdenaHl to in |)ii,mgi'U|)li 4 tin' plaee jit whieh tin'. |)urehns(U' wished the int.c'rest first falling due to !)(' |)ii.id was indors('.(l a.s Sydiuy. Ko cinuige in the place <jf payment ol intm-est muhn' ( he .said (hdaentures wa.s registered.

'I’Ik' lollowing is a (aijiy ol (In; lonn of e.oupon a.nne.ved to the said 1' I ,((0(( (h'hc'td nres :

().

(j) 11 r: I'l N ,S I, A N I) () () V M RN MKN'J’

.1) K1 i 10 N'l’ 11R10

id,000 Sioluios SI.

£1,000

I hdl yc'ar s I )ividend a.t i he ra.te of Tlrnu! I’ound.s Ten Shillings per (■('ninm per a.nnnm, diu' hst Janiniry I!)I5.

£17.10.0 '

H.M.N.

'I’he (•onpon aaine.xed to the sa.id £500 debentures was in the.same form ('.\eept as to the sums meid ioned tluwein.

Ihuh-r and by virlin' of an agreement made the 12th day of .l)('eemb(T 1027 between the defendant of the lir.st ]>art and the Sta.(es of New South Wales, \'ietoria., Qneenshuid, South Australia, Weshnai .Vnstraliai a.nd 'lansmania of tlie sc'Cond third fourth fifth si.xth a.nd seventh parts a.n(l under a.nd b)' virtue, of the Fimmcial Ai/rccmciil ylcf 1028 No. 5 of 1028, tlu' Financial Afii'canent Valida- l-lon. .-let 1020 No. -I of 1020, a.nd t he Financial . iffrccninils {Commo)i- vrallh Liahiliti/) .let 1022 No. 2 of 1022 (all of the Parliament of the Commonwealt h of Australia.) the pidih'e. debt of (he State of Qnetmsiand which included the lia.bility of tha.t Sta.te under and in r('sp('ct of (he debentures mentioned in para,graph I heriiof was ta.ken c)\-er by ( he ilefendaut.

7.

I'pon tlu' i.ssne (o (he .Vn,stra.lia.n Mutual Provident Society of (lu ̂Commonwealth inserilu'd stock relerred to in ])aragraph I a.nd for sonu‘ time theri'aftt'r the sanu' was inscribed in the stock h'dger kept a.t (he Kegi.stry in Brisbane and iid.erest was jiaid there. I’p'"' subseipiently to the, pla,in(ilTs becoming the holders of th(' said stock the sa.me was ti'a,nsferred (m the Registry kept at Adelaitle and thereafter interest wa,s paid there.”

8.

'I'he ease then set out eorresjumdenee ])assing between the a.])|u'lla.nls and the resfiondent whieh may be briefly summarized. On (tr about 15t h December I O i l, the d’reasurer of tlie Common­ wealth sent to the lioklers of (lie in-scribed stock in (]uestion a letter inviting them to convert their maturing .securities into a new issue ma.de by the Commonwealth and a.dding that, if they should not (ind it possible to convert their securities, they would be “ redeemed

on the due date on presentation at the Commonwealth Bdnk by or on their behalf on 22nd December 1944 to the Deputy Registrar of inscribed stock at Adelaide, the appellants requested that “ in accordance with the conditions on which the said stock was issued ” the amount of the stock held by them respectively should “ be paid on maturity in London in sterling”. On 30th December 1944, the Deputy Registrar replied that this request had been submitted to the Commonwealth Treasury adding that the conditions of the loan provided that six months’ notice of redemption in London would be necessary and enclosing certain forms which he invited them to fill in and return. The forms were alternative and were for conversion of the existing securities to a new loan or for redemption in cash. On or about 2nd January 1945 the Deputy Registrar wrote a further letter to the appellants in which, after quoting the redemption provisions of the original debentures, he added, “ As the holders of the stock did not give the notice required by the terms of the debenture they are now precluded from exercising an option for payment in London.”

The case then proceeded as follows

“ 16.—None of the plaintiffs completed the forms referred to in

paragraph 14 hereof nor did they or any of them present the said

inscribed stock at the Commonwealth Banic.

17. —The defendant has not paid to the plaintiffs or any of them

the principal moneys due on maturity of the said inscribed stock. On and from 1st January 1945 the defendant was at aU times ready and willing to repay the said principal moneys in Australian currency equal to the amount inscribed but no larger amount, at Adelaide aforesaid or elsewhere in Australia as might be required by the holder. Save as appears from the letters hereinbefore set forth, no notice for the redemption of the said inscribed stock has been given by the Treasurer of the Commonwealth to the plaintiffs or any of them.

18. —The parties having appeared before me and agreed that all

the facts necessary to determine this action are stated in this case I state the following questions of law arising in the action for the opinion and consideration of the Full Court of the High Court of Australia :—

{a) With respect to the Commonwealth inscribed stock held by the plaintiffs was the defendant bound to pay the principal sums secured thereby in English currency in London six

months after tlie date of the delivery of the letters referred to

in paragrajihs 10, Tl and 12 of this case ?

(b) H nay when and where did such moneys become due and

])ayable ?

(c) H the ])rinci])al sums are payable in Australia are the plaintilTs res])cctively entitled to be paid in Australian currency the ecpiivalent of the principal sums in English currency ?

(d) Are the jilaintids resjiectively entitled to interest upon the amount of the said stock held by each of them at per cent. ]>er annum since 1st January 1945 ?

Dated this 15th day of October One thousand nine hundred and forty-seven.

J. G. Latham,

Ciiief Justice.'’

These questions were an.swered as follows : the majority of the Full Court {Rich, Dixon and AlcTiernan JJ.) answered questions (a), (c) and {d) in the negative : Dixon and McTieman JJ. thought it unnecessary to answer {b) : Rich J. was of opinion that the principal sums were payable at the places mentioned in the debentures upon presentation of the inscribed stock. Latham C.J. and Starke. J. dissented, the former being of ojrinion that the appellants were entitled to be paid in Australia on 1st January 1945 the equivalent in Australian currency of the principal sums in English currency, the latter that they were entitled to be paid the principal sums on 1st January 1945 in English currency in London. Both Latham C.J. and Starke J. Yvere of opinion that the appellants were not entitled to interest, but Starke J. thought that they were entitled to damages for breach of contract by reason of the respondent’s failure to pay on 1st January 1945 and that such damages might be measured by the interest payable on the said stock.

These answers being remitted to the learned Chief Justice, he gave judgment in conformity with the answers of the majority, and from that judgment this appeal is brought.

Before dealing with the matters which alone appear upon the face of the case to have been in disjmte between the parties and Yvere the subject of conflicting opinions in the High Court, their Lordships must deal with a submission made on behalf of the respondent which admittedly was not made to the High Court. It was to the effect that, Yvhatever rights the ap])ellants might have had if they had retained the original debentures, their ])resent rights must be determined solely by their status as holders of consolidated inscribed stock of a certain issue made under the

81 C.L.E.]

OF AUSTRALIA.

authority of the Commomvealth Inscribed Stock Act 1911-1933, and that the statutory terms of issue and redemption precluded the payment of anything but the nominal amount of the stock in Australian currency at par. Their Lordships do not feel at liberty to entertain this submission. The statement in par. 2 of the case (which was based on allegations and admissions in the pleadings) that the inscribed stock was issued “ subject to the condition that the same conferred upon the registered holders thereof for the time being rights which conformed in all particulars with the rights conferred by the said Queensland Government debentures,” the further statement in par. 18 that “ all the facts necessary to determine this action are stated in this case,” the form and substance of the questions submitted for this opinion of the Full Court, and the opinions delivered by the several members of that Court make it clear that the action has throughout proceeded upon the footing that, though not all the terms and conditions of the original debentures were appropriate to the substituted inscribed stock, yet their rights in regard to the currency in which, and the place at which, payment should be made were unaltered. It is upon this footing that their Lordships decide this appeal.

The first question that emerges arises on a narrow point of construction. It is whether the appellants, having failed to give the proper notice on or before 1st July 1944, in any event lost their right to require payment in sterling in London. This Avould not necessarily be fatal to their substantial claim, for, in the opinion of Latham C.J., they would, though precluded from requiring payment in London, still be entitled to payment in Australia of the equivalent in Australian pounds of the nominal amount of their stock in English pounds. Nor, on the other hand, woidd it avail them to succeed upon this point if, being paid in London, they were entitled to be paid in English pounds only the equivalent of the nominal amount of their stock in Australian pounds. The vital question to be decided is what was the sub­ stantial obligation created by the debenture. Their Lordships, nevertheless, think it right, in view of the difference of opinion in the High Court, to make some observations on this preliminary matter.

As has already been stated, the original debentures provided that the principal sum would be payable on 1st January 1945, either in Brisbane, Sydney, Melbourne or London at the option of the holder, but that notice must be given to the Treasurer of the Colony on or before 1st July 1944, of the place at which

HIGH COUllT

[1950.

it was iiitaiukal to present the debenture for ]>ayment. IS'o pro­ vision was made lor the event of notice not being given on or before 1st July 191J, an event which happened in the case of tiu' appella-nts. Wlurt then are their riglits ? Two views are possible : the tlrst, for wliich the ap)]vellants contend, that, as they Inul on 22nd December 1944 nominated London as the ])lace of ])ayment, the resjvondent was bound to ]>ay in London Avithin a reasonable time after notice had been given and at the latest on 22nd June 1945 ; the second, for which the respondent contends, tluit it was a condition precedent to the option being exercised that dne notice should be given on or before 1st July 1944, and that, the condition not having been complied wdth, payment was due only in Australia. It was not made clear, upon the footing that the resjmndent’s contention was right, at what ])lace in Australia ])ayment must be made, and this difficulty is not diminished by the change that has taken place in the nature of the security.

Their Lordshi])S, for a reason which will shortly appear, do not find it necessary to determine which of these conflicting views is the right one. If the option is not exercised no place is desig­ nated for payment and the ])ro])er place of ])ayment must in that case be implied from the terms of the debenture. It is difficult, however, to find in the document clear indications on which to found this inference. The appellants would prefer Mr. Justice Dixon’s view on this jjreliminary point, though, of course, challenging his final conclusion. On this view the length of notice required would be associated with the obligation of the Government to provide the money on the due date at any of the places named and not with the existence of the option itself. In other words, if the debenture holder does not give due notice, he cannot require ]>ayment on the due date, but he does not lose his right to require payment at the ]Jace named by him when reasonable notice (which may be assumed to be six months’ notice) has been given and ex- ]hred. But even so, this inter])retation will not avail the appellants unless it is followed by the conclusion that their claim to be paid in London involves the right to receive English currency. The (piestion which will decide the ap])eal is whether, even if the claim to b(i ])aid in Ijondon was good, the appellants became entitled to be ])aid in due course in English currency in London the nominal amount of their stock or only the equivalent of that amount of Australian currency. For brevity, these alternatives will he referred to as jiayment in English currency (or j)ounds) and pay­ ment in vVustralian currency (or jvounds).

At the outset it must be determined whether in the year 1895 when the original debentures were issued, the word “ sterling ” in connection with pound denoted the currency of England alone, or, alternatively, the currency of England rather than that of Queensland. For even upon this point there has been some conflict of opinion in the High Court, and, as their Lordships venture to think, some confusion arising from the speeches of some of the noble and learned Lords who took part in the decision of Adelaide Electric Supply Coy. Ltd. v. Prudential Assurance Co. Ltd. (1). In the year 1895 such a question, if asked, would have appeared otiose. Alike in London and in Brisbane, the pound was the pound sterling and the unit of account was properly denominated by either name. As Starve J. said in the present case, “ Before fluctuations in exchange occurred in the value of the currencies of England and Australia it was not unusual in commercial documents operating within Australia, e.g., cheques, to find the obligation expressed in pounds sterling for that was the unit of account in Australia.”

It is therefore in their Lordships’ opinion impossible to infer from the mere use of the word “ sterling ” in conjunction with the word “ pound ” in a document of the year 1895, whether it be a contract between Brisbane merchants or a debenture issued by the Queensland Government, that the currency of England rather than that of Queensland was intended. It is significant that, when at a later date the values of the English and the Queensland (or, more properly, the Australian) pound diverged so that con­ venience required that the units of account should be differently described, the word sterling was appropriated to the English pound and for greater clarity the symbols £E and £A were used in cases in which confusion might arise.

But in 1895 this was not so and, as already observed, the inquiry what was the substantial obligation created by the debentures is not to be concluded by pointing to the use of the word “ sterling ”. The question then is what upon the true construction of the debenture of 1895 according to its proper law is intended by the use of the words therein “ pounds sterling ”. This is a question w'hich must be determined as at the date of its issue. “ It is as at the date of the contract that it must be decided what currency is meant by the contract as the currency or measure of value in which the contract obligation is to be discharged ” ; see Auckland Corporation v. Alliance Assurance Co. (2).

(1) (1934) A.C. 122.

(2) (1937) A.C. 587, at p. 603.

HIGH COURT

[L950.

Jt u])])eixi',s to their Jjordsliips that in tlie consideration of this question too much emphasis should not be laid upon the fact that the moiu^y of account of Queensland and J<]ngland was the same in 1895. It was undoubtedly similar at that date, and before and aJter that date, in the sense that the same nomenclature, pounds, shillings and pence, was used to describe its units of value. In other respects too, though not in all resjiects, the monetary systems were the same in the two countries. But by 1895 Queensland had for nearly forty years been separated from New (South Wales and had been a self-governing colony with power to make laxvs for its own peace order and good government. The ]iower to determine what is lawful money of a country is a power exercisable by the legislature of such a country, and that which was lawful money in the self-governing Colony of Queensland in 1895 was lawful money by virtue of the law of Queensland. Its origin may be sought in the history of the relations between Queensland, or at an earlier date New South Whales, on the one hand and the Crown or the Imperial Parliament on the other. But its existence and validity in 1895 rested (apart from any (|uestion arising under the Colonial Laws Validity Act 1865 (Imp.) ) on the inherent law-making power of the Queensland legislature. It is worth while to pursue this question, which is in the background of the present appeal ; for, as their Lordshijxs venture to think, it may not have been sufficiently present to the minds of the learned Judges who have considered similar questions in earlier cases. Leaving aside the vital distinction between the two monetary systems in that they depend on different law-making powurs, their Lordships think that the identity (or, as it were better said to avoid confusion, the similarity) of the two systems can be over-stressed. For, while it is true enough, as already stated, that the money of account, in the sense of the denomination of the units of account, was the same in New (South Wales and in England, yet the money of payment, by which the obligation to pay so many units of the money of account could be discharged, was by no means immutable. In England the unit of account has been from Anglo-Saxon times until today the pound, dignified at an early date by the addition of the word “sterling”, but the money of payment by which a debt of a pound could be discharged has suffered changes innumerable. Coins of silver or of gold whose names are now almost forgotten have passed current and been legal tender at different periods. So too in New South Wales the early settlers took with them the money of account which they had known, but from the date of the first settlement

metallic coin was scarce, particularly that which was current in England, and the history of the currency of the colony, including as it extended northwards the territory which afterwards became the colony of Queensland, is studded with johannas, Spanish dollars, ducats and other exotic coins. It will illustrate the divergence between the monetary systems of England and the colony if reference is made to but one of many proclamations made by the Governor of New South Wales, namely that of 19th November 1800, by which he attached a rate at which each of these and many other coins should be considered legal tender in all payments or transactions in the colony.

The changes which were effected first by the attempt to drive oiit the Spanish dollar and promote the circulation of the sterling money of Great Britain, then by the discovery of gold in Australia and the establishment of Branches of the Royal Mint first at Sydney and then at Melbourne, by Acts of the Imperial Parliament, notably perhaps 26 & 27 Viet. c. 74 and 29 & 30 Viet. c. 65 and proclamations made thereunder and by Acts too of the New South Wales legislature of 1854 and 1855 make an intricate story into which it is not necessary to delve. Undoubtedly the result was a gradual assimilation of the monetary systems so that in 1895 not only the money of account but also the money of payment was substantially the same in both countries, yet not entirely the same, for The Treasury Notes Acts of Queensland (30 Viet. No. 11 & 56 Viet. No. 37), to which Starke J. refers in his judgment, show that the self-governing colony of Queensland not only could, but did, as it thought fit, regulate its own monetary system.

This was the position when under the authority of the Government Loan Act of 1894 of the Colony of Queensland the Governor in Council raised the loan and issued the debentures which are the subject of this appeal, and it is with this background that the nature of the obligation incurred by the Government of Queensland must be considered.

The question can be posed in this way. The facts being that, though there were in a real sense two monetary systems, tlie money of account was the same and the money of jjayment substantially the same in the two countries, what meaning is to be attributed to the use by the legislature and executive authority of Queensland of the words “ pound ” and “ sterling ” in a Queensland Act and an instrument made thereunder ? Necessarily the question is a somewhat artificial one ; for it is safe to assume that a divergence in' the value of the Queensland pound and the English pound w'as in the contemplation of nobody. But this at least seems clear,

VOL. LXXXI.—32

tluit, if 110 siicli (livorgcnce was tlioiiglit of, it cannot have been intended 1 hat the debenture holder should obtain a different measure of value or the Queensland Government be placed under U: different liability according to the jilace of payment; in other words, it is clear that, the same substantial obligation was imposed on the Quecnshuid Government whatever the place chosen for jiaynient, the choice being given to the debenture holder purely a-s a matter of convenience. The position is wholly different from tlmt which arises where the creditor is expressly given an option not onl}̂ as to the place of payment but also as to the currency in which it shall be made and is perhajis given the further pro­ tection of the familiar gold clause.

The conclusion to which, as a matter of construction, their Lordshijis come, that the substantial obligation under the deben­ ture is the same whatever the place of ]>ayment, clears the way to a solution of the Yvhole ])roblem. It has been urged that, if London is chosen as the place of payment, then English law as the lex loci solutionis governs the contract and determines the measure of the obligation. But this contention cannot be accepted. The mode of performance of the obligation may, and probably will, be determined by English laYv ; the substance of the obligation must be determined by the proper law of the contract, i.e., the system of law by reference to which the contract was made or that with W'hich the transaction has its closest and most real connection. In the consideration of the latter question, W'hat is the proper law of the contract, and therefore what is the substance of the obligation created by it, it is a factor and sometimes a decisive one that a particular place is chosen for performance.

It appears to their Lordships that it is thus that the decision in the Adelaide Case (1) is to be explained. There w'as in that case considerable diversity of view upon Yvhat appears to be a question of fact, viz., the identity or similarity of the English and Australian pound at different periods of their history, and it is clear that some at least of the learned Lords wdio heard the case found a greater degree of identity and similarity than a further examination of the facts appears to their Lordshq^s to justify. But the decision itself can be fairly rested on the fact that under the altered articles of the Adelaide company payment of dividends upon its stock W'as to be made in Australia oidy. It was therefore easy to conclude that upon the true construction of the contract the place of per­ formance determined the substance of the obligation, i.e., the currency by Avhich the obligation w'as to be measured. This

(1) (1934) A.C. 122.

appears to have been the view taken of the case by this Board in Payne v. Deputy Federal Commissioner of Taxation (1) : “ The actual decision was this ; that an obligation to pay a preference dividend of (say) £5 which was originally payable in England but which by an alteration of the company’s articles, binding on the preference stock­ holder, had been made payable only in Australia, was effectively discharged by a payment in Austrahan currency, although the stock­ holder in England received owing to the rate of exchange less than £5 in English currency.” The same view of the case appears to have been taken in the Auchland Case (2), where Lord Wright, delivering the judgment of the Board, said : “ It is quite clear that the whole problem arose because of the divergence in value of the two currencies, and it was solved, as a question of construction, by determining what currency on the true construction of the contract was connoted by the use of the word ‘ pound It is true that in the latter case, where alternative places of payment, one of them London, were provided, it was decided that the creditor who elected to be paid in London was entitled to be paid the nominal amount of his coupon interest iu; English currency without any allowance for exchange. But the relevant principle had already been correctly stated in the passage just cited and was further emphasized in a later passage of the judgment (3) where, in reference to the Adelaide Case (4), it was pointed out that the mode of performance of a contract is to be governed by the law of the place of per­ formance but “ that this principle is, no doubt, limited to matters which can fairly be described as being the mode or method of performance and is not to be extended so as to change the sub­ stantive or essential conditions of the contract.” If the Board, nevertheless, found it possible to hold that as a matter of construc­ tion of the contract the nature of the substantial obligation was determined by the place of performance, that decision can only be rested on the words of the particular contract and the surrounding circumstances as the Board found them to exist.

In the present case it is clear that, if it had been provided that payment would be made in London only, that would have been an important factor in determining the substance of the obligation, though other features, not present in the Adelaide Case (4), could not be ignored. But payment in London was only one of four alternative modes of performance and the fact that London might be chosen as the place of payment becomes a factor of little or no weight. If the substance of the obhgation is in every case the

(1) (1936) A.O. 497; see per Lord

(2) (1937) A.C. 587, at p. 604.

(3) (1937) A.C., at p. 606.

Russell of Killowen at p. 509.

(4) (1934) A.C. 122.

.same, liow can it affect tlie rigiits of one debenture bolder who elects to be paid in Melbourne tlia,t another has elected to be paid in Jjondon ?

The (piestion then is what is the proper law of the contract, or, to relate the general (piestion to the ])articular problem, within the framework of what monetary or financial .system should the instrument be coirstrued ? Upon the assumption that express reference is made to none, the (question becomes a matter of imjilication to be derived from all the circumstances of the transaction.

Apjilying this test to the present case, as was properly done in Goldsbrovgh Mort Co. Ltd. v. Hall (1) (a case in which the judg­ ments of Ftillagar J. in the Supreme Court of Victoria and of the learned Judges of the High Court have been of the greatest assist­ ance in the consideration of this appeal), their Lordships find in the circumstances overwhelming evidence that it was to the law of Queensland that the parties looked for the determination of their rights. As has been pointed out, the debentures were issued on the authority of a Queensland Act which empowered the Governor in Council to raise by way of loan not more than £2,000,000 for the pubhc service of the Colony. By the same Act the loan was secured on the public revenues of the Colony, and was made re­ payable on 1st January 1945. These circumstances must be of great, if not decisive, weight in determining what is the proper law of the contract: see R. v. International Trustee (2) and compare Mount Albert Borough Council v. Australian Tonperance Society (3). It is not inconceivable that the legislature of a self-governing colony should authorize the raising of a loan in terms of a currency other than its own, but where it uses terms which are apt to describe its own lawful money, it must require the strongest evidence to the contrary to suppose that it intended some other money. Here there are no countervailing features except (a) that the lender was given a choice of payment in London and (h) that the larger part of the authorized loan of £2,000,000 was in fact raised in London. The weight of the first factor has already been discussed ; the second is more difficult to assess. As has been pointed out by Dixon J., no details of this tramsaction have been given and the history and fate of the debentures issued in London were not revealed. The safer course is to examine the contract as between the present appellants or their predecessors in title and the Government of Queensland and to disregard what must be a matter

(1) (1949) 78 C.L.R. I.(3) (1938) A.C. 224, at p. 238.

(2) (1937) A.C. 500, jjer Lord Atkin

at p. 531.

81 C.L.K.]

OF AUSTRALIA.

of mere speculation, wlietlier tlie fact that similar debentures had been, or were to be, issued in London was a circumstance, from which an intention could fairly or reasonably be implied that the debentures issued to them in Queensland were to be repaid in anything but the lawful money of Queensland.

The expression has been used above in reference to the Queensland loan “ terms wliich are apt to describe its own lawful money,” and it is urged that, as they are ajit also to describe the lawful money of England, the matter is carried no further. But this appears to ignore the substance of the argument. The Government of a self-governing country, using the terms appropriate to its own monetary system, must be presumed to refer to that system whether or not those terms are apt to refer to another system also. It may be possible to displace that presumption, but, unless it is displaced, it prevails, and, if it prevails, then it follows that the obligation to pay will be satisfied by payment of whatever currency is by the law of Queensland valid tender for the discharge of the nominal amount of the debt; cf. the Legal Tender Cases in the United States of America (1) and Re Chesterman's Trusts (2). It becomes an irrelevant consideration whether the parties ever thought that the money of account of Queensland and England might at a future date, though still bearing the same name, become disparate in value or whether in fact that divergence took place. The law of Queensland governs the contract and that law determines the meaning of the word “ pound ”.

Coming to this conclusion as to the substance of the obligation undertaken by the Queensland Government, their Lordships think it necessary in regard to the subsidiary claim by the appellants to interest to say no more than that that claim has in the circumstances no validity. They will assume without deciding the question that the Court had in this case a discretionary power to- award interest, but upon this assumption they entertain no doubt that the discretion was rightly exercised in refusing to do so.

Their Lordships will humbly advise His Majesty that this appeal should be dismissed. The appellants must pay the respondent’s costs of the appeal.

Solicitors for the appellants, Torr <& Co.

Solicitors for the respondent. Coward, Chance & Co.

E. P. H.

(1) (1934) 79 U.S. 382 [293 Law Ed.

(2) (1923) 2 Ch. 466.

311].