National Bank of Australasia Ltd v Scottish Union & National Insurance Co
[1951] HCA 78
•19 March 1951
Vaned
Sadotuu
Bank \Scot-
fish Union &
NaHonal Insur
84 C.L.R.] OF AUSTRALIA.
177
[HIGH COURT OF AUSTRALIA.]
NATIONAL BANK . OF
AUSTRALASIA"!
LIMITEDAppellant;
Defendant,
AND
SCOTTISH UNION AND NATIONAL I N - \
SURANCE COMPANY AND OTHERS j ^̂ espondents.
Defendants and P laintiff,
ON APPEAL FROM THE SUPREME COURT OP
QUEENSLAND.
Currency—Bank—Business in England and Australia—Scheme of arrangement— ̂
H. C. OF A.
Sanction by English and Australian courts—Stock issued to creditors—Currency
1950-1951.
{as between English and Australian) not specified—English and Australian
registers— Winding up—Currency in which stock payable in liquidation— Time
Me l b o u r n e ,
as at which currency to he determined—Significance of presence in English or
1950,
Australian register.
Oct. 9-13.
A bank was formed in Queensland in 1872. It carried on the business of
1951,
banking and accepted deposits in England and Australia. In 1893 it sus
March 19.
pended payment. The larger portion of its liabilities was due to English
Latham C.J.,
Dixon,
customers and creditors generally. A scheme of arrangement was adopted,
Williams,
Webb and
but it failed, and a further scheme was adopted in 1897.
The latter scheme
Fullagar JJ.
—as well as the former—received the approval in the first instance of the Supreme Court of Queensland and subsequently of the High Court of Justice in England. The latter scheme provided for the issue of interminable inscribed deposit stock, which was to become repayable in certain circum stances, including the liquidation of the bank. The form of stock certificate prescribed provided for the statement of the amount thereof by the use of the £ sign, but it did not state whether English or Australian currency was intended. It contained no provision for statement of the place of issue or the place of payment in the event of its becoming payable. Some of the certificates stated the place of issue, but it did not appear that any of them
[ E d it o r ’s N o t e ;—On D5th October 1951, the Judicial Committee of the
Privy Council granted special leave to appeal from the decision of the High Court.]
VOL. L X X X IV .
— 12
]78 HIGH COURT
[1950-1961.
][. C. OF A. specified a jilaco of payment. The scheme provided for a register of stock
1950-1951.
in England and for one in Australia ; also for the transfer of stock from
cither to the other. The bank went into voluntary liquidation in 1947.
N a tional
Hank of
Held
A ustralasia
Lt d .(1) By Dixon, Williams, Webb and Fullagar JJ. {Latham C.J. dissenting)
| V. | that holders of the stock whose stock at the commencement of the winding up |
Scottishwas on the English register should bo paid according to the face value of
U nion
AND
the stock in English currency.
N ational
I n s ur anc e(2) By the whole Court that holders of the stock whose stock at the
Co .commencement of the winding up was on the Australian register (as well,
per Latham C.J., as those on the English register) should be paid according
to Ihe face value of the stock in Australian currency.
Decision of the Supreme Court of Queensland {Macrossan C.J.) : In re Queensland National Bank Ltd. (In Voluntary Liquidation), (1950) Q.S.R. 264, varied.
A p p e a l from the Supreme Court of Queensland.
This was an appeal from a decision on an originating summons in the Supreme Court of Queensland. The summons was taken out by Fred Pace, liquidator of the Queensland National Bank Ltd. (hereinafter described as the Bank), which was in voluntary liquidation, for an order under s. 258 of The Companies Acts 1931 to 1942 (Q.) determining certain questions arising in the winding up. The decision was that of Macrossan C.J., from whose judg ment the following statement of the facts is substantially taken ;— The Bank was incorporated in Queensland under The Companies Act of 1863 of the then Colony of Queensland in 1872. I t was registered in England as a foreign company under the provisions of s. 35 of the Companies Act 1907 (Imp.) (7 Edw. 7, c. 50) in 1908 ; it commenced to carry on the ordinary business of a trading bank in Brisbane and elsewhere in Queensland in 1872, and it opened a branch at Sydney in New South Wales in 1881. By an Act of the Parliament of Queensland assented to in 1876 the Bank was authorized to open and keep registers of shareholders in places beyond Queensland. In 1878 it opened a register of shareholders in London which was kept until it went into voluntary liquidation. In 1878 the Bank opened a branch in London. The functions performed by this branch consisted mainly of providing the Bank’s customers in Australia with facilities for financing their over-seas purchases, and sales. The London branch of the Bank also received money on deposit from persons in the British Isles. The Bank appointed a local board of directors in London and it dele gated certain powers to the local board. The articles of association
84 C.L.R.] OF AUSTRALIA.
179>
of the Bank provided tha t local directors in the exercise of delegated
H. C. OF A.
powers should conform to any regulations imposed upon them by
1950-1951.
the directors of the Bank.
N ational
B ank of
The moneys received by the Bank in London on fixed deposit carried interest a t the rate of four to five pounds per centum per
A ustrala .sia
L t d .
annum, the terms of the deposit being from one to five years.
V.
Scottish
In March 1891 the Banlc held over £4,000,000 on fixed deposit in London and in March 1893 it so held there over £2,970,000.
U n io n
AND
N ational
In May 1893 the Bank found itself in financial difficulty and sus
I n s u r a n c e .
pended payment on 15th May 1893. Seven other banks carrying
Co.
on business in Australia also suspended payment in the months of April and May 1893. On 15th May 1893 a petition was presented to this court for the winding up of the Bank by the court and on 17th May 1893 this court appointed a provisional liquidator of the Bank. The date of hearing the petition for winding up was adjourned from time to time by orders of this court. On 30th June 1893 the Bank submitted to this court for its sanction a scheme of arrangement with its creditors and on tha t day the court directed tha t meetings of the creditors of the Bank should be called in Brisbane and in London for the purpose of considering the scheme of arrangement submitted. On 24th July 1893 a meeting of the Bank’s British creditors was held in London and was attended either personally or by proxy by 1,238 creditors wffiose debts amounted to over £857,000. A resolution was unanimously passed at this meeting agreeing to the said scheme of arrangement with certain amendments. A meeting of the English shareholders of the Banlc held in London on the same day also unanimously agreed to the said scheme as so amended ; this meeting was attended either personally or by proxy by 474 shareholders of the Bank holding 34,751 shares. On 27th July 1893 a meeting of the Bank’s creditors was held in Brisbane and was attended either personally or by proxy by 4,949 creditors whose debts amounted to £954,978. This meeting unanimously approved the said scheme of arrangement as so amended. On the same day a meeting of the shareholders of the Bank held in Brisbane also unanimously approved the said scheme of arrangement as amended. On 31st July 1893 this court sanc tioned the said amended scheme of arrangement with certain minor amendments, discharged the provisional liquidator, and stayed all proceedings on the petition for winding up. The scheme of arrangement so sanctioned by this court is hereinafter called the old scheme of arrangement. Proceedings were also taken in the Supreme Court of New South Wales and in Her Majesty’s High
180 HIGH COURT
[1950-1951.
H. C. ok̂ A. of Just'ice (Companies Winding up) in England to obtain sanction of the said courts to the old scheme of arrangement.
N ational the Supreme Court of New South Wales on Bank ok Ifth August 1893 sanctioning the old scheme of arrangement and an Lt d . order was made by the said High Court of Justice on 13th September
V. ' u'̂ NioN' proceedings then before that court in relation to the winding up
1893 sanctioning the old scheme of arrangement and staying all
and
of the Bank.
Insuhanol Under the relevant English legislation then in force, namely, Co. The Joitit Stock Co-mpanies Arrangement Act, 1870 (Imp.) (33 & 34 Viet., c. 104), the assistance of the court to sanction such a scheme of arrangement could not be invoked except in a winding up compulsory, voluntary or under supervision. I t seems to be clear that the winding-up proceedings taken in England were taken only for the purpose of enabling the compromise of the Bank with its creditors to be sanctioned by the court and that if an effective winding-up order had been made in England it would have been ancillary to a winding up in Queensland. See now Palmer, P art II., 15th ed., p. 127, where reference is made to the order of Vaughan Williams J. of 8th July 1893 in the winding-up proceedings in England in relation to the Bank whereby he ordered that no steps or proceedings were to be taken under the order for winding up without the sanction of the court.
The following provisions of the old scheme of arrangement have, I think, a bearing on the determination of the questions which now fall to be decided.
“ 5. Debts owing by the Bank to Her Majesty’s Government at the date of the suspension of the Bank shall be paid by the Bank in terms of an agreement whereby it has been agreed that the said Government (without prejudice to any preferential rights which the said Government may possess in respect of such debts in the event of the Bank being wound up at any time hereafter) as to £2,000,000 part of such debts will accept twelve deposit receipts of the Bank, each for one-twelfth of the said sum of £2,000,000 payable at intervals of six calendar months, com mencing six years from the time when this scheme is sanctioned by the Supreme Court, and bearing interest from the same date at the rate of 44% per annum, payable half-yearly. And as to £360,000 balance of such debts as aforesaid will not during any one period of six consecutive calendar months withdraw any sum or sums exceeding in the whole the amount of £100,000 and will not make any such withdrawals without giving the Bank six calendar months’ notice of their intention to make the same
84 C.L.R.] OF AUSTRALIA.
181
respectively. Provided, that from and after the time when this
H. C. OF A.
scheme is sanctioned by the Supreme Court interest a t a rate not
1950-19.51.
exceeding 4 |% per annum shall be payable by the Bank half-
N ational
yearly in respect of so much of the said sum of £360,000 for the
B a n k of
A ustralasia
time being remains due and owing.
L t d .
V.
6. Save as herein otherwise provided, and excepting Her Majesty’s Government (for whom provision is made by the last
Scottish
Un io n
preceding clause), and the holders of the bank-notes of the Banlc,
AND
N ational
and preference creditors not hereinbefore mentioned (who shall
I n s u r a n c e
be paid in full as early as is practicable), every creditor of the
Co.
Bank shall, for such of his claims and demands against the Banlc as are not represented by negotiable deposit receipts or inscribed deposit stock as hereinafter provided, accept twelve deposit receipts of the Bank, each for one-twelfth of the balance of principal moneys now due to him by the Bank ; the first of which deposit receipts shall become payable a t the expiration of six years from the time when this scheme is sanctioned by the Supreme Court, and the remaining eleven at intervals of six calendar months ; and each of such deposit receipts as represents debts now bearing interest shall bear interest up to the time when the existing deposits are now payable, a t the rate of interest now payable in respect thereof ; and thereafter a t the rate of per annum, payable half-yearly, on the same days as the interest is now payable under the existing debts ; and each of such deposit receipts as represents debts not now bearing interest shall bear interest from the time when this scheme is sanctioned by the Supreme Court at the rate of 4^% per annum, payable half-yearly. The interest now due, and accruing due, on deposits of the Bank now bearing interest, shall be paid as regards interest which has accrued, or shall accrue due on or before the time when this scheme is sanctioned by the Supreme Court, on the day after the Bank recommences business ; and, as regards interest which shall accrue after that date, on such day as the same would have become due under the existing deposits; and all payments of principal and interest shall be made at the places where the same are now payable.
7. If any of the creditors of the Bank shall so desire, the Bank shall be at liberty to issue to such creditors, either in lieu of or in exchange for the deposit receipts to be issued pursuant to the last preceding clause ; (A) negotiable deposit receipts payable to bearer, with interest coupons attached payable to bearer, and repre senting a similar amount and payable in the same manner, and at the same times as such deposit receipts ; or (B) inscribed deposit stock repayable only at the option of the Bank, on six calendar
182 HIGH COURT
[1950-1951.
months’ notice after all the instalments of the substituted deposit ’ receipts shall have been paid, and bearing interest at the rate of N ational annum payn,ble half yearly. All such negotiable deposit
B a n k
of
A u S T H A L A y i A
receipts and inscribed deposit stock shall be issued subject to
Ltd .
such conditions as may be imposed by the directors of the Bank.
V.
S cottish9. Save as herein otherwise provided, the creditors of the Bank,
Un io n
except as aforesaid, shall accept the provisions made for them in
AND
N ationalthis scheme in satisfaction and discharge of all claims and demands
J nsurancjcagainst the Bank and shall at the time of their application for new Co.deposit receipts, negotiable deposit receipts, or inscribed deposit
stock as aforesaid, deliver up to the Bank all deposit receipts and drafts or other similar documents issued to them by the Bank to be cancelled.”
At the date when the old scheme of arrangement was sanctioned by this court the Bank owed the Government of Queensland approximately £2,186,000 and owed creditors in respect of deposits in Queensland, New South Wales and London, respectively, approximately £1,860,000, £110,000, and £2,897,000.
On 29th June 1893 the Parliament of Queensland enacted The Queensland National Bank, Limited, Agreement Act of 1893, which authorized the Treasurer of the Colony to enter into an agreement with the Bank for the repayment of the money due and owing from the Bank to the Government of Queensland at the date of the Bank’s suspension of payment in the terms set out in clause 5 of the old scheme of arrangement quoted above, and on 20th Sep tember 1893 an agreement was entered into between the Treasurer of Queensland and the Bank in pursuance of the provisions of the last-mentioned Act for the repayment by the Bank to the Govern ment of Queensland of the moneys owing by the Bank to the Government on the terms set out in the old scheme of arrangement. In pursuance of the old scheme of arrangement the Bank duly issued to its creditors deposit receipts, negotiable deposit receipts payable to bearer or inscribed deposit stock in accordance with the provisions of clauses 6 and 7 of the old scheme of arrangement. In the main deposit receipts were issued. So far as can be ascer tained no inscribed deposit stock was issued in Australia. Such stock to the amount of approximately £50,000 was issued in London as against deposit receipts for approximately £4,050,000 and negotiable deposit receipts for approximately £198,000 issued to creditors of the Banlc in England and in Australia other,than the Government of Queensland.
As at 31st December 1894 the Bank owed on fixed deposit to the Government of Queensland £1,340,000 in Queensland, and
84 C.L.R.] OF AUSTRALIA.
183
£660,000 in London, and to private creditors approximately
H. C. OF A.
£1,516,000 in Queensland and New South Wales and approxi
1950-1951.
mately £2,534,000 in London.
N ational
The forms of deposit receipt issued by the London branch of the Bank are in the following terms :—
B a nk of
A ustralasia
L t d .
“ Receive fro m ............................... the sum o f ................................. as a Fixed Deposit to be accounted for to the depositor
V.
Scottish
U n io n
hereinbefore named repayable in London o n ....... ........................
AND
N ational
bearing interest fro m ................................at the rate of 4|- per
I n s u k a n c j s
centum per annum payable half yearly on the thirtieth June
Co.
and the thirty-first December ” .
And the form of deposit receipt to bearer issued by the London branch of the Bank in pursuance of the old scheme of arrangement was in this form :—
“ The Queensland National Bank Limited hereby acknowledges to have received from
the sum of
as a deposit to be repayable in London at the Office of the Bank to the bearer thereof on and to bear interest from the 30th June, 1893, at the rate of 4^ per centum per armum payable half yearly on the First January and First July.”
Each of the interest coupons attached to the form of deposit receipt payable to bearer specifies that the interest is payable at the office of the Bank in London.
The liquidator of the Bank has been unable to find any copy of a form of inscribed deposit stock certificate issued under the old scheme of arrangement. The Bank found itself unable to carry out the provisions of the old scheme of arrangement.
On 6th March 1896 the acting general manager of the Bank reported to the chairman of directors that in his opinion without materia] assistance from the depositors of the Banlc under the old scheme of arrangement it would be impossible for the Bank to carry on beyond the date when the first deferred payments were due as the Bank would not be able to meet them without calling in liquid advances to an extent that would so contract its earnings as to be absolutely ruinous and from the effects of which the Bank could never recover and that attempting such a course could only result in ultimate liquidation.
The Government of Queensland appointed a committee to ascertain the position of the affairs of the Bank and the report of this committee, which is dated 12th November 1896, was presented to both Houses of Parliament of Queensland. From this report it appears that in the opinion of the committee the liabilities of
184 HIGH COURT
[1950-1951.
H. C. OK A. exceeded its assets by approximately £2,435,42.3 ; that,
i.).)(MJ.)i. treating the whole of the paid-up capital as lost, there was
N ationat, deficiency of £1,252,810, and that if the Bank had to go into
15aNK OK liipiidation this deficit would of necessity be largely increased
" Lt d .
because their estimates of values had been made on the basis
V.
Scottishthat tlie assets should be realized judiciously and not by forced
U nion
sales.
AND
N ationalOn 9th February 1897 the Bank submitted another scheme of
J nsukan cearrangement for the sanction of this court, and the court directed
Co.that a meeting of creditors in respect of deposit receipts, negotiable
deposit receipts and inscribed deposit stock issued in pursuance of the old scheme of arrangement be held in Brisbane on 22nd March 1897 for the purpose of considering the said scheme of arrangement. This meeting of creditors was duly held and the said scheme of arrangement, with certain amendments, was duly approved by the creditors at the meeting. The said scheme of arrangement as so amended (which is hereinafter referred to as the new scheme of arrangement) was on 12th May 1897 finally sanctioned by this court and declared to be binding upon all creditors of the Bank in respect of deposit receipts, negotiable deposit receipts and inscribed deposit stock and upon the Bank and its contributories.
In passing, it should be mentioned that it was not necessary in Queensland that winding-up proceedings should be taken against the Bank to clothe the court with jurisdiction to sanction and make binding the scheme of arrangement. See The Companies Act Amendment Act of 1889, s. 35 ; The Companies Act of 1893,
to be held in Sydney for the purpose of considering and if thought fit of agreeing to the new scheme of arrangement. This meeting was duly held, the new scheme of arrangement was duly agreed to thereat, and on 15th April 1897 it was, by order of the Supreme Court of New South Wales in Equity, sanctioned and approved.
s.
2 ; and The Companies Act of 1896, s. 2.
On 31st March 1897 the Supreme Court of New South Wales
On 17th May 1897 the Bank presented a petition to Her Majesty’s High Court of Justice in England praying that the Bank might be wound up by the court under the provisions of the Companies Acts 1862 to 1890 (Imp.) (25 & 26 Viet. c. 89—53 & 54 Viet. c. 63). There was attached to this petition a copy of the new scheme of arrangement. The petition disclosed that the new scheme of arrangement had been sanctioned by the Supreme Court of Queens land, tha t the adoption of the new scheme of arrangement was the
84 C.L.R.] OF AUSTRALIA.
185
only means of averting banl^ruptcy, and that in order to have it C. of A.
sanctioned by the court in England it was necessary that the Bank
should first be wound up.
N ational
B a nk of
On 27th May 1897 the said High Court of Justice ordered that the Bank should be wound up, continued the appointment of a
A ustralasia
L t d .
provisional liquidator, and ordered tha t no steps or proceedings
V.
Sc ottish
should be taken under the order without the sanction of the court. On the same day it ordered the provisional liquidator to convene
U n io n
AND
N ational
a meeting of the creditors of the Bank in respect to deposit receipts,
I n s u r a n c e
negotiable deposit receipts and inscribed deposit stock of the
Co.
Bank for the purpose of considering and, if thought fit, approving the new scheme of arrangement. This meeting of creditors was duly held, and the new scheme of arrangement was approved by a majority considerably in excess of three-fourths in value of the creditors attending the meeting.
On 4th June 1897 the said High Court of Justice sanctioned the new’' scheme of arrangement and declared it to be binding on all creditors of the Bank in respect of deposit receipts, negotiable deposit receipts and inscribed deposit stock issued by the Bank in pursuance of the old scheme of arrangement and on the con tributories of the Bank. I t further ordered that all further proceedings relating to the winding up of the Bank be stayed except for the purpose of carrying out the order and the new scheme of arrangement into effect.
I t is on the construction of the new scheme of arrangement that the questions submitted to the court fall for determination. I t is therefore necessary to refer in some detail to several provisions of the scheme.
Clause 1 provided that certain terms should have certain mean ings in the scheme and in the schedule thereto unless there was something in the subject or context inconsistent therewith, namely, “ The Government”—Her Majesty’s Government of Queensland. “ Court ”—The Supreme Court of Queensland. “ Stock ”—Inter minable inscribed deposit stock of the Bank created in pursuance of clause 3 of the scheme. “ The said securities ”—deposit receipts, negotiable deposit receipts, with the coupons appertaining thereto, and inscribed deposit stock issued or given to creditors of the Bank under or in pursuance of the old scheme of arrangement or held by the Bank on behalf of such creditors as security for any advances made to them by the Banlc, and all other similar docu ments held by creditors of the Bank a t the date of the last-mentioned scheme which have not been surrendered in exchange for any
186 HIGH COURT
[1950-1951.
H. C. OF A.
of the said securities under or in pursuance of the terms of such
1960-1951.
scheme.
N ational
Clause 2 provides ;—“ Subject to the provisions of this scheme,
B ank of the Government (without prejudice to any preferential rights
A ustkalasta
Lt d .which it may jiossess) shall accept in full satisfaction and discharge
V
of all principal moneys and interest owing or to become owing by
Sc ottish
U nionthe Bank to the Government under the terms of the old agreement—
AND
(a) A sum equal to fifteen shillings in the pound upon the amount
N ational
I n s ur anc eof such principal moneys, which said sum of fifteen shilhngs in
Co.the pound (unless sooner paid at the option of the Bank as here
inafter provided) shall be payable in five equal annual instal ments commencing on the 1st day of July 1917, and shall carry interest from and after the 31st day of March 1897, at the rate of 3^% per annum, provided that the amount for the time being payable for interest shall never be less than the minimum amount prescribed by The Queensland National Bayik, Limited {Agreement) Act of 1896 with reference to an agreement made under the authority of that A c t; and {h) A further sum equal to five shillings in the pound upon the amount of such principal moneys as aforesaid, which said sum of five shillings in the pound shall be payable out of such part of the half-yearly profits of the Bank as hereinafter provided, and shall not carry any in terest: Provided that, if the .
said sum of five shillings in the pound should not be sooner paid out of such profits as aforesaid or otherwise at the option of the Bank as hereinafter provided the same or so much thereof as for the time being remains unpaid shall become and be payable on the 1st day of July 1921. The interest on the said sum of fifteen shillings in the pound or on so much thereof as for the time being remains unpaid, shall be payable on the 30th day of June and the 31st day of December in each year, and the Bank shall pay any interest payable under the terms of the old agreement up to the end of the 31st day of March, 1897.”
Clause 3 provides:—“ As soon as may be, and within six months after this scheme is finally sanctioned by the court, the Banlc shall create and allot to and amongst the registered holders of the said securities respectively stock to an amount equal to 75% of the principal moneys secured or represented by their said securities after deducting from such principal moneys any fractional part of £1 owing to such registered holders respectively. The said stock shall carry interest from and after the 31st day of March, 1897, at the rate of 3J% per annum.”
Clause 4 provides ;—“ Subject to the provisions of this scheme, each of the registered holders of the said securities shall accept,
84 C.L.R.] OF AUSTRALIA.
\87
in satisfaction and discharge of his said securities and of all principal
H. C. OF A.
moneys and interest secured or represented thereby, an amount
1950-1951.
of the said stock equal to fifteen shillings in the pound upon the N ational
principal moneys secured or represented by his said securities B a nk of
Australasia
after deducting from such principal moneys any fractional part
L t d .
of £1. Any such fractional part of £1 shall be paid by the Bank
V.
Scottish
in cash.
Upon receiving notice of the allotment of such stock, the
U n io n N ational
allottee shall forthwith surrender to the Bank his securities afore
AND
said, together with any coupons appertaining thereto, and shall
I n s ur anc e
be entitled in exchange therefor to a certificate of the stock so
Co.
allotted to him as aforesaid. The interest on the said stock shall be payable half-yearly on the 30th day of September, and the 31st day of March in each year a t the respective offices of the Bank in Queensland, Sydney, and London, at which such stock is registered ; and the Banlc shall pay any interest due in respect of the surrendered securities up to the end of the 31st day of March, 1897, upon such surrender. In addition to such interest as aforesaid, registered holders of stock shall be entitled by way of bonus to such part of the half-yearly profits of the Bank as hereinafter provided.”
Clause 5 provides :—“ The principal moneys payable to the Government under the terms of this scheme, and the principal moneys secured or represented by the said stock shall immediately become payable—(a) If the Bank makes default for a period of six months in the payment of any interest payable thereon at the times and in the manner hereinbefore provided, and if after such default the Government or registered holders of stock to an amount equal to two-thirds of the stock for the time being un redeemed, calculated at its par value, by notice in writing to the Bank, call in such principal moneys; or (6) If an order is made, or an effective resolution is passed, for the winding up of the Bank.”
Clause 6 provides :—“ The said stock shall be issued and held subject to the provisions of this scheme and to the conditions set forth in the schedule hereto, and such provisions and con ditions shall be binding on the Bank and the registered holders of stock and all persons claiming through or under them respectively.” Clause 7 provided for the application of the profits of the Bank and in particular provided that the balance of profits arising from the business of the Bank in each half year after setting aside an amount for contingencies should be dealt with by paying 25% of the balance to the Government until the sum of five shillings in the pound in clause 2 referred to had been duly p a id ;
188 HIGH COURT
[1950-1951.
balance, or, after payment to the Government of the ' snm of five shillings in the pound, 75% of the balance was to
N ational carried to a special fund to be paid and distributed in the
Hank iuo discretion of the directors amongst the registered holders of stock
LTur
ratably until an aggregate amount or bonus equal to five shillings
r.
Scottishin the pound upon “ the principal moneys secured or represented
by the said securities ” has been made good out of such balance ANDof ]>rofits, and thereafter is to be applied in payment to the
N ational
I n s i ' kanceGovernment of any moneys payable to the Government under this
Co.scheme. After these payments had been made such 75% of the
balance of profits was to be dealt with in any manner authorized by the regidations of the Bank for the time being in force ; the remaining 25% of the balance of profits was for a period of at least ten years from 31st March 1897 to be carried to the ordinary reserve fund of the Bank ; thereafter it might be dealt with in any manner authorized by the regulations of the Bank.
Clause 8 gave the Bank an option at any time after the expira tion of five years from the date when the scheme was finally sanctioned by the court to pay off the Government subject to certain conditions.
Clause 10 gave the Bank an option after payment of the amount due to the Government to give the registered holders of the said stock, or any of them, six calendar months’ notice of its intention to redeem the stock held by them, or any portion thereof, “ at its market value, but at not less than its par valae ” , together with five shillings in the pound upon the amount of the principal moneys secured or represented by the said securities in exchange for which such stock was allotted, or so much of such five shillings in the pound as had not been previously paid. At the expiration of the notice every registered holder of stock to whom the notice was given was bound to surrender to the Bank to be cancelled the amount of his stock which was to be so redeemed and to deliver up his certificate of stock for cancellation ; and the Banlr thereupon pay to the registered holder of such stock the redemption money therefor calculated at the price aforesaid together with all interest for the time being due in respect of such stock. Such surrender delivery and payment shall be made at the office of the Bank at which such stock is registered.
Clause 12 provided :—“ As soon as proper provisions in that behalf can be made in the articles of association, and so long as stock to the amount of £500,000 is unredeemed, one member of the London board of directors shall be appointed by the registered holders of stock and need not be a member or shareholder of the
84 C.L.R.] OF AUSTRALIA.
189
Bank, and the board of directors of the Bank at Brisbane shall
H. C. OF A.
consist of five persons, three of whom shall be elected by the
1950-1951.
registered holders of the said stock, and need not be members or N a tional
shareholders of the Bank ; and for the purpose of electing such B ank of
A ustralasia
last-mentioned directors the registered holders of stock shall be
L t d .
entitled to have notice of and to attend meetings of the Bank at
V.
Scottish
which such directors are to be elected, and to vote in person or U n io n
by proxy according to the following scale, that is to say :—
AND
N ational
Registered holders of stock for an amount
I n su r a n c e
of not less than £500 .. . . . .One vote.
Co.
Registered holders of stock for an amount
of not less than £2,000 . . . . . .
Two votes.
Registered holders of stock for an amount
of not less than £5,000 .. . . . .
Three votes.
Registered holders of stock for an amount
exceeding £5,000 . . . . . . ..
Four votes.
Provided that all proxies given by registered holders of stock shall be deposited a t the office of the Bank a t which such stock is registered not less than three days before the date of the meeting a t which siich proxies are intended to be used. Particulars of all proxies so deposited at any office other than the head office of the Bank at Brisbane, sufficient to enable such proxies to be used at such meetings may be sent by telegram to the general manager of the Bank in Brisbane.”
Clause 13 provided :—“ As soon as conveniently may be after this scheme is finally sanctioned by the court, the nominal capital of the Bank shall be reduced from £1,600,000 divided into 200,000 shares of £8 each to £1,000,000 divided into 200,000 shares of £5 each. The reduction shall be effected by cancelling paid-up capital to the extent of £3 per share upon each of the 160,000 shares which have been issued, and by reducing the nominal amount of all shares in the Banlc’s capital from £8 to £5 per shares ; but shall not involve the diminution of any liabihty in respect of unpaid capital or the payment to any member of the Bank of any paid-up capital.”
Clause 14 provided :—“ The Bank shall, as soon as practicable, after this scheme has been finally sanctioned by the court, amend or alter its articles of association so far as may be necessary for the purpose of giving effect to the provisions of this scheme.”
Clause 15 provided :—“ All such other provisions as by The Queensland National Banlc, Limited (Agreement) Act of 1896 are prescribed in the case of an agreement made under the authority of that Act shall be deemed to be incorporated in this scheme.”
]90 HIGH COURT
[1950-1951.
H. (. oi. A.
schedule to the new scheme of arrangement contained,
'
alia, tlie following provisions :—
N ati onal ^^^S'f^ters of stock will be kept by the Banl< at its head ^ M ank of office in Brisbane, or at its branch offices in Queensland, Sydney
l/i'i). London (as the case may be), at which the securities in exchange
V. for which such stock was allotted were at the time of such allotment payable, or at the office of the Rank to which such stock may be
AND
transferred in manner hereinafter provided.
Jn s u r a w ^ 2.
In every register of stock so kej)t by the Bank aforesaid there
Co. will be entered—
.
~
(a)
The names, addresses and description of the registered holders for the time being of such stock ;
(6) The particulars and amount of the stock held by every
such registered holder ; and
(c) The date at which every such registered holder was entered in the register in respect of the stock standing in his name, or any part thereof.
Any change of name or address on the part of any registered holder of stock shall forthwith be notified to the manager of the office at which such stock is registered, who, upon being satisfied thereof, shall alter the register accordingly.
3. The registered holder of any stock may, upon application in writing addressed to the manager at the office where such stock is registered, require that the registration of such stock shall, at his cost and expense, be transferred to the register kept at any other office ; and upon such transfer being effected the said stock shall be deemed to be registered at the last-mentioned office.
4. No notice of any trust, expressed, implied, or constructive, shall be entered on the register in respect of any stock.
5. Every registered holder of stock will be entitled to a certificate of his title to such stock, which certificate shall be in the form or to the effect following, that is to say :—
‘THE QUEENSLAND NATIONAL BANK LIMITED.
Interminable Inscribed Deposit Stock.
■No.
£
Bearing interest at the rate of 3 | per cent, per annum, payable on the 31st day of March and the 30th day of September in each year.
This is to certify tha t
of
is the registered holder of of the above stock, which stock is constituted pursuant to the provisions of the scheme of arrangement sanctioned by the Supreme Court of Queensland on the 12th day of May, 1897, and is issued subject
84 C.L.R.] OF AUSTRALIA.
191
to the provisions and conditions therein, and in the schedule thereto
H. C. OF A.
respectively contained.
1950-1951.
N o te :— The Bank will not register a transfer of any stock without the production of the certificate relating to sucli stock, which
N ational
B ank of
A ustralasia
certificate must be surrendered before any transfer, whether of
L t d .
the whole or any portion thereof, can be registered, or before a
V.
S cottish
new certificate can be issued in exchange.
U nion
AND
A fee not exceeding 2s. 6d. will be charged on the registration of any transfer.’
N ational
I n s ur anc e
Co.
10. Every registered holder of stock shall be entitled to transfer the same or any part thereof by an instrument in writing in the form following, or as near thereto as the circumstances will ad m it;—-
THE QUEENSLAND NATIONAL BANK LIMITED.
I,
of
in consideration of the sum of £
paid
to me by , of
, do
hereby transfer to the said
(hereinafter
called the transferee)
of the stock of the above-named Bank, to hold the same unto the
transferee subject to the several conditions on which I held the
same immediately before the execution hereof ; and I, the trans
feree, do hereby agree to take the said stock subject to the same
conditions.
As witness our hands this
day of
WITNESS
12. Every instrument or transfer must be left a t the office of the Banlc at which the stock to be transferred is registered for registration, accompanied by the certificate of the stock for cancellation and such other evidence as the Bank may require to prove the title of the transferor or his right to transfer the stock.
13. All instruments of transfer which shall be registered shall be retained by the Banlc.
14. A fee not exceeding 2s. 6d. will be charged for the registration of each transfer, and must, if required by the Bank, be paid before the registration of the transfer.
19. The interest on stock and all other moneys payable in respect thereof may be paid by cheque or warrant sent through the post to the registered address of the holder, or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register in respect of such stock. Every such cheque or warrant shall be made payable to the order of the
192 HIGH COURT
[1950-1951.
H. C. OF A. person to wliom it is sent, and payment of the cheque or warrant,
U.)0-i.),)l. indorsed, shall be a satisfaction of the interest and such
N ational
other moneys as aforesaid, and a good discharge to the Bank
I5a nk ok
therefor.”
Australasia
L t d .In pursuance of clause 3 of the new scheme of arrangement the
V.Bank allotted to and amongst the registered holders of deposit
Scottish
Unionreceipts, negotiable deposit receipts and the registered holders of
and
inscribed deposit stock issued to creditors of the Bank in pursuance
N ational
I n s u r a n c eof the old scheme of arrangement interminable inscribed depo.sit
Co.stock of the Bank of a face value of £3,116,621 5s. Od., being an
amount equal to 75% of the principal moneys secured or repre sented by the said deposit receipts, negotiable deposit receipts and inscribed deposit stock. Of this £1,083,097 Os. Od. was issued in Australia and £2,033,524 Os. Od. in London. The 25% of the principal moneys written off was repaid in cash between 1900 and 1918, the repayment amounting to £1,038,874.
The following table shows the amounts of the stock originally issued the registration of which was transferred from an Australian register to the London register, and from the London register to an Australian register, and also the amounts purchased by the Bank from time to time, and the amount outstanding on 30th October 1947, the date of the commencement of the voluntary winding up of the Banff. All the interminable inscribed deposit stock originally registered on the London register of such stock pursuant to the new scheme of arrangement was issued by the Bank in satisfaction and discharge of securities issued by the Bank in 1893 and payable at the London branch of the Bank.
INTERMINABLE INSCRIBED DEPOSIT STOCK.
Australia.
London.
£
£
Original amount . . . . . • 1,083,097
2,033,524
Transfers—London to Australia . . 754,662
754,662
£1,837,759
£1,278,862
Transfers—Australia to London . . 731,720
731,720
£1,106,039
£2,010,582
Less Purchases by the Q.N. Bank .. 376,770
180,765
£729,269
£1,829,817
Present Total (Face Value) ..
£2,559,086
. .
:84 C.L.R.] OF AUSTRALIA.
193
Six photostatic copies of interminable inscribed deposit stock H. C. o f A.
certificates issued by the Bank in pursuance of the new scheme of 1950-1951.
arrangement in Brisbane, London, Sydney and St. George are
N atioh-al,
exhibited to the affidavit of the liquidator. In two of these, B a n k
o r
A ustralasia
one issued in London and one issued at St. George in Queensland,
L t d .
the letters “ stg ” appear after the wording of the amount specified
V.
Sc ottish Un io n
in the certificate.
In my opinion nothing turns upon the use of
the word “ sterling ” or the letters “ stg ” in some of the certificates
AND
N ational
issued by the Bank up to the year 1931, and I did not understand
I n su r a n c e
that any of the parties placed any reliance upon the use of these
Co.
words in some of the certificates.
The affidavit of the liquidator states, and it was not disputed, that it was common practice in Australia prior to the year 1931 for persons to insert frequently the letters “ stg ” or the word “ sterling ” in cheques issued by them after the wording of the amounts for which the cheques were drawn.
Up to about the year 1931 the rate of exchange between England and Australia varied from time to time, sometimes in favour of England, and sometimes in favour of Australia. In 1931 the rate of exchange between Australia and England was fixed by the Commonwealth Bank of Australia a t £130 Australian to £100 English and later in that year at £125 Australian to £100 English, which latter rate is still in force. In consequence, the Bank, in common with other trading banks, issued instructions to its officers to refrain from using the letters “ stg ” or the w^ord “ sterling ” on all documents with the exception of drafts on London or on foreign agents where recoupment was to be effected through the Bank’s London office. Further, a search by the liquidator of seventy-four cancelled interminable inscribed deposit stock certificates issued by the London branch of the Bank since 1931 and which are now in the liquidator’s possession disclosed that in no case did the letters “ stg ” or the word “ sterling ” appear therein.
Prior to the year 1919 the Banlc repaid to the Government of Queensland the whole of the moneys owing by the Bank to the Government referred to in clause 2 of the new scheme of arrange ment. In pursuance of clause 1 of the schedule to the new scheme of arrangement, the Bank has kept at its head office in Brisbane and at its branches in Queensland, Sydney, London and Melbourne, registers of stock issued in pursuance of the new scheme of arrange ment, and in pursuance of clause 3 of the said schedule registered holders of stock have from time to time transferred the registration of their stock from one register to another.
VOL.
L X X X I V . -
194 HIGH COURT
[1950-1951.
JI. t . OF A. examination of the registers of the holders of deposit receipts ' ’ issued by the Bank which were opened in Brisbane immediately
N a tional old scheme of arrangement was sanctioned and of the
Ba nk of
registers of interminable inscribed deposit stock issued in pursuance
A ustralasia
Ltd.of the new scheme of arrangement shows that in many instances
V.the address of the holder of such stock was not in the State or
Sc ottish
Un io n
country in which the stock was registered.
AND
The sum of five shillings in the pound upon “ the principal
National
I n su r a n c emoneys secured or represented by the said securities ” referred
Co.to in clause 7 (2) of the new scheme of arrangement was paid to
the holders of interminable inscribed deposit stock by instalments from time to time in the currency of the country in which such stock was for the time being registered, a final payment being made in 1918.
At all times after the date of the adoption of the new scheme of arrangement until the date of liquidation of the Bank as hereinafter referred to when application was made to transfer the registration of interminable inscribed deposit stock from the register a t one branch of the Bank to another register the applicant was required to surrender for cancellation his existing certificate for interminable inscribed deposit stock and after the transfer of the registration of interminable inscribed deposit stock from the register of one branch of the Bank to the register a t another branch of the Bank had been completed the cancelled certificate for the interminable inscribed deposit stock the registration of which had been so trans ferred was retained by the Banlc and a new certificate was issued to the holder of the interminable inscribed deposit stock showing the branch to which the registration of such interminable inscribed deposit stock had been transferred.
Where the registration of stock was transferred from one branch to another the stock the registration of which was so transferred ceased to be shown as a liability in the books of the transferor branch and the face value of such holding of the stock was thereafter shown as a liablity in the books of account of the transferee branch.
The register of stock kept at each branch of the Banlc was complete in itself and no duplicate of the register kept at any branch was held at the head office of the Bank.
No distinction was made in the payment of interest and bonus between stock originally registered on any such register and stock the registration whereof was subsequently transferred thereto.
The practice of the Brisbane branch of the Bank was to charge residents in England the prevailing rate of exchange Australia
84 C.L.R.] OF AUSTRALIA.
195
on London when remitting interest payable on stock registered
H. C. OF A.
on the register of stock kept by the Bank in Brisbane.
1950-1951.
The affidavit of the hquidator states that in some instances it may be impossible to ascertain the place of original issue of certain
N ational
B ank of
A ustralasia .
holdings of the stock and that in cases where the registration of
L t d .
the stock has been transferred from London to Australia or vice
V.
Sc ottish
versa, some of the stock will undoubtedly be found to have been U n io n
intermingled so as to make it impossible to determine the place
and
N ational
of original issue of all or portion of an individual stock holder’s
I n s u r a n c e ,
present holding.
Co.
In 1947 an agreement was made between the Bank, its share holders, and the National Banli of Australasia Limited (hereinafter referred to as the National Bank) whereby, inter alia, the shares of the shareholders of the Bank were exchanged for shares in the National Bank and the National Bank became the holder either in its own name or in the names of its nominees of all the shares in the Bank.
On 30th October 1947 an effective resolution was passed at a meeting of members of the Bank tha t the Bank be wound up voluntarily and tha t Mr. Fred Pace be appointed liquidator for the purposes of the winding up. The liquidator has sufficient assets out of which to pay all the interminable inscribed deposit stock of the Bank irrespective of the currency in which the same is to be paid and the costs of any proceedings taken to determine the questions arising herein. The winding up of the Bank is a members’ voluntary winding up.
Defendants to the summons (some of them in a representative capacity pursuant to orders of the court, the nature of the represen tation being indicated so far as here relevant in conjunction with the statement in the report of argument hereunder of the respective appearances of counsel) were the Scottish Union and National Insurance Co. Ltd., the National Mutual Life Association of Australia Ltd., Robert Edward Crouch and the National Bank of Austraha Ltd.
The questions submitted by the summons and the answers of Macrossan C.J. as subjoined to the respective questions were as appears hereunder.
Question 1. Whether the registered holders of interminable inscribed deposit stock issued by The Queensland National Banlc Limited pursuant to a scheme of arrangement made between the said Bank and certain of its creditors and sanctioned by the Supreme Court of Queensland on the twelfth day of May 1897, whose stock was at the date of the commencement of the voluntary winding up
IDO HIGH COURT
[1950-1951.
■H. C. OF A. of gaid Bank and was at all times prior thereto registered on
London register of the said Bank, are entitled to be paid or
N ational [>rove in the winding up of the said Bank for the principal and/or
Bank, of
interest moneys secured or rej)resented by or payable in respect
A ustralasia
-Btu.of such stock on the basis that they receive the equivalent of the
V.face value of the said ])rincipal and/or interest moneys in English
Scottish
L ' n i o n
or Australian currency.
A NDAnswer.
The registered holders of the stock referred to in this
N ational
,1n s UK AN CIOquestion are entitled to be ])aid in the winding up of the Bank the
Co.])rincipal and interest moneys secured or represented by or payable
in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and interest moneys in English currency.
Question 2. Whether the registered holders of such stock whose stock was at the date of the commencement of the voluntary winding up of the said Bank registered on the London register of stock kept by the said Bank and whose stock was at the date of issue thereof on a register of stock kept by the said Bank in Australia and the registration of which was subsequently trans ferred to the London register are entitled to be paid or to prove in the winding up of the said Bank for the principal and/or interest moneys secured or represented by or payable in respect of such stock the registration of which was so transferred on the basis that they receive the equivalent of the face value of the said principal and/or interest moneys in English or Australian currency.
Answer. The registered holders of the stock referred to in this question are entitled to be paid in the vdnding up of the Bank the principal and interest moneys secured or represented by or payable in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and interest moneys in Australian currency.
Question 3. Whether the registered holders of such stock whose stock was at the date of the commeiicement of the voluntary winding up of the said Bank and was at all times prior thereto registered on a register of stock kept by the said Bank in Australia are entitled to be paid or to prove in the winding up of the said Bank for the principal and/or interest moneys secured or repre sented by or payable in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and/or interest moneys in English or Australian currency.
Answer. The registered holders of the stock referred to in this question are entitled to be paid in the winding up of the Bank the principal and interest moneys secured or represented by or payable
84 C.L.R.] OF AUSTRALIA.
197
in respect of such stock on the basis tha t they receive the equivalent
H. C. OF A.
of the face value of the said principal and interest moneys in
1950-1951.
Australian currency.
N ational
B a nk A ustralasia
of
Question 4.
Whether the registered holders of such stock whose
stock was at the date of the commencement of the voluntary
L t d .
winding up of the said Bank registered on a register of stock kept
V.
S c ottish
by the said Bank in Australia and whose stock was at the date of U n io n
issue thereof on the said London register and the registration of
AND
N ational
which was subsequently transferred to a register of stock kept by
I n s u r a n c e
the said Bank in Australia are entitled to be paid or to prove in
Co.
the winding up of the said Bank for the principal and/or interest moneys secured or represented by or payable in respect of such stock the registration of which was so transferred on the basis tha t they receive the equivalent of the face value of the principal and/or interest moneys in Enghsh or Austrahan currency.
Answer. The registered holders of the stock referred to in this question are entitled to be paid in the winding up of the Bank the principal and interest moneys secured or represented by or payable in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and interest moneys in English currency.
Question 5. Whether the registered holders of such stock whose stock was at the date of commencement of the voluntary winding up of the said Bank registered on a register of stock kept by the said Bank in Australia and whose stock was at the date of issue thereof on a register of stock kept by the said Bank in Australia but had been at an intermediate period registered on the said London register are entitled to be paid or to prove in the winding up of the said Bank for the principal and/or interest moneys secured or represented by or payable in respect of such stock the registration of which was so transferred on the basis that they receive the equivalent of the face value of the said principal and/or interest moneys in English or Australian currency. Answer. The registered holders of the stock referred to in this question are entitled to be paid in the winding up of the Bank the principal and interest moneys secured or represented by or payable in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and interest moneys in Austrahan currency.
Question 6. Whether the registered holders of such stock whose stock was at the date of the commencement of the voluntary winding up of the said Bank registered on the said London register and was at the date of issue thereof on the said London register
198 HIGH COURT
[1950-1951.
H. c. OR A. intermediate period registered on a register of
' stock kept by the said Bank in Australia are entitled to be paid N.ATIONAL ])rove in the winding up of the said Bank for the principal
B a n k of
aiid/or interest moneys secured or represented by or payable in
A ustralasia
Ltd .
respect of such stock the registration of which was so transferred
V.
SCOTTISU on the basis that they receive the equivalent of the face value of
the said 23rincipal and/or interest moneys in English or Australian
^ U n io n
| ANDcurrency. |
N ational
Answer.
The registered holders of the stock referred to in this
I n su r a n c e
Co.question are entitled to be paid in the winding up of the Bank
the principal and interest moneys secured or represented by or payable in respect of such stock on the basis that they receive the equivalent of the face value of the said principal and interest moneys in English currency.
Question 7. Whether, if any registered holder of such stock is entitled to be paid the principal and/or interest moneys secured or represented by or payable in respect of such stock on the basis that such holder receive the equivalent of the face value of the said principal and/or interest moneys in English currency, such equiva lent is to be ascertained as of the date of the commencement of the winding up or as of the date of payment or as of any other and if so what date
Answer. The equivalent of the face value of any principal or interest moneys payable in Enghsh currency is to be ascertained as of the date of the commencement of the winding up of the Bank.
From this decision the defendant National Bank of Austraha Ltd. appealed to the High Court, and the National Mutual Life Assurance Association of Austraha Ltd. cross-appealed.
G. E. Barwick K.C. (with him R. M. Eggleston K.C. and C. K. Lucas), for the appellant. The second or “ new ” scheme of arrangement is the matter of primary importance. The “ proper law ” of that document or scheme is the law of Queensland. The principal order approving the scheme was that of the Supreme Court of Queensland. The orders of the High Court of Justice in England and the Supreme Court of New South Wales were ancillary, their functions being to bar any right on the part of creditors in their respective jurisdictions over and above those which would result from the Queensland order. In this regard it is significant that clauses of the scheme approved by the courts of the various jurisdictions confer certain functions on “ the Court ” . The scheme is divided into two Parts. The First Part may be
84 C.L.R.] OF AUSTRALIA.
199
H. C. OP A. 1950-19.51.
described as the scheme itself, while the Second Part is the schedule
thereto.
The clauses it is proposed to refer to in the first instance
are those of the First Part. Clauses which require or refer to the
N ational
sanction of “ the Court ” are clauses 3, 8, 13, 14. In all these, by B a n k
op
A ustralasia
reason of the definition in clause 1, the Supreme Court of Queens
L t d .
land is meant. These clauses go a long way towards giving the
V.
Sc ottish
scheme what may be called the “ local colour ” of Queensland. U n io n
Macrossan C.J. seems to have assumed that clause 3 contemplated
AND
N ational
the creation of two amounts of stock, one amounting to 75% of
I n su r a n c e
the £E and the other 75% of the £A. I t is not a practicable result
Co .
because, it is submitted, clause 3 contemplates a fixed sum of stock and clause 4 must have the same meaning if the clauses are to be workable. His Honour seems in this connection to have confused the meaning of the words “ principal moneys ” in clauses 3 and 4 on the one hand with their meaning in clause 5. In clauses 3 and 4 they necessarily mean the principal sum under the old scheme, whereas under clause 5 they must mean the principal sum under the new scheme. In any event there is nowhere in the document a reference to two different lots of stock. There is no such reference in clause 3, and thereafter the reference is to “ the said stock ” . Another point as to clause 5 is that to find “ two-thirds of the stock for the time being unredeemed, calculated a t its par value ” necessarily means tha t the stock is expressed in one currency, not two. Clause 6 contains a single set of conditions undifferentiated according to type of debt or place of registration. In clause 7 (1) the symbol necessarily refers to the £A. Like wise in clause 7 (2) in the first mention of “ 5s. in the £ ” ; but which, on the judgment under appeal, the expression means where it secondly appears it would be difficult to say. This clause would need amendment to fit in with the judgment. I t is obvious that this clause presents other serious difficulties unless it is read as referring, and referring only, to the £A. In clause 8 the expression “ 5s. in the £ ” necessarily refers to the £A. Some difficulty seems to have been found in the words “ market value ” in clause 10 ; apparently as to whether there could be an Australian and an Enghsh market value. This, however, can have no bearing on the question of the currency in which the face value of the stock is expressed. The computations which might have to be made under the ensuing words of the clause could only be made in one currency—Australian, it is submitted. In clause 12 there are two expressions which show that the scheme would not be workable if, when Austrahan and Enghsh money differed in value, the scheme had to be treated as
200 HIGH COURT
[1950-1951.
H. C. OF A. referring indiscriminately to both. The first is the reference to
i.).)0^ol. “ g|3ock to the amount of £500,000 being unredeemed” ; the
N ationat. second relates to the rate of voting and presents the like difficulty. B ank; of Likewise as to clause 13 ; the capital of the Bank is necessarily
expressed in Queensland—or Australian—money. The Second ̂ V. Part of the scheme is the schedule. The most important provision ^I'^Nu^ here is clause 5, which provides the form of stock certificate. I t AND will be seen that it is headed with the £ symbol, which is followed
I nsuhancts
^ space meant obviously for a statement of the amount in
is the registered holder of
of the above stock, which stock is constituted pursuant to the
provisions of the scheme of arrangement sanctioned by the Supreme
Co.
figures.
Then the body of the certificate certifies that “
of visions and conditions therein ” &c. One point here is that the scheme sanctioned by the English court is that sanctioned by the Queensland court. Another point is that, as one would expect at the date of the scheme, there is no express reference either to English or Australian currency. Further, the certificate makes no provision for the statement of a place of registration, though no doubt this could be ascertained so long as clause 6 was observed. I t is submitted, therefore, that where, as here, there is an order of a Queensland court readjusting all the rights in a Queensland company of the Government of Queensland, the shareholders and creditors, its proper law is that of Queensland ; it is none the less so because of the ancillary orders in other jurisdictions. The case is in all material features the same as that upon which this Court founded its decision in Bonython v. The Commonwealth (1). The two cases differ in that the latter had a consensual element which is, or may be, absent from the present case ; but contracts are not the only documents or transactions the proper law of which must be ascertained. Accordingly the £ symbol must be given the same meaning throughout—that of the £A.
A. D. G. Adam K.C. (with him N. S. Stable), for the Scottish Union and National Insurance Co. Ltd., representing the holders of stock originally issued and at all subsequent times registered in London. I t is submitted that so far as the stockholders we represent are concerned, the decision of Macrossan C.J. was right. We are not affected by the difficulties, if any, which may affect other stockholders. We rely on the reasons given by Macrossan
(1) (1948) 75 C.L.R. 589.
84 C.L.R.] OF AUSTRALIA.
201
C.J. for his conclusions so far as they affect us. Our rights are
H. C. OF A.
those of the original stockholders, who deposited money with, or
1950-1951.
extended credit to, the Bank in England. When the Bank was
N ational
a going concern—before the first scheme of arrangement—no-one
Bank of
A ustralasia
would have supposed tha t a depositor or other creditor would
L t d .
not have been entitled to payment in English money, and nothing
V.
Scottish
that has occurred since alters that position. That is certainly so as
Un io n
regards the first scheme of arrangement. As to the second scheme,
AND
N ational
the difficulties which the appellant professes to find if regard is
I n su r a n c e
had to English or Australian currency according to circumstances
Co.
are apparent rather than real. The Bank for some considerable time after the divergence of the currencies paid interest to English stockholders on the basis tha t they were entitled to be paid the equivalent in Austrahan money of the appropriate number of English pounds, and it kept its books and prepared its balance- sheets on th a t basis. I t apparently did not see any of the diffi culties which the appellant finds.
D. I. Menzies K.C. (with him J. F. Lynam), for the National Mutual Life Association Ltd., representing holders of stock originally issued in Australia but subsequently transferred to the London register and still on th a t register a t the date of the winding up and also for holders of stock originally issued and registered in London, transferred to Austraha and subsequently transferred to London. This case is not covered by Bonython’s Case (1). There the court was not concerned with English stockholders. The only question in that case—which, otherwise, was an “ all- Australian ” case—was created by the option of payment (to Australians) in London. I t does not follow that the decision would have been the same if the court had had to consider the rights of Enghsh stockholders. Goldsbrough Mart d Co. Ltd. v. Hall (2) turned on the fact that the moneys in question were repayable to Enghsh trustees and there was, therefore, only one loan. In the present case there is not merely one loan. There are as many loans as there are creditors, and there is no reason why, as a matter of law, all creditors should be paid at the same rate—in Australian currency—despite the fact that what was lent was a different thing altogether. There could not possibly be any rule of law or con struction to the effect tha t because the symbol in a document is found in one place to mean the £A it must have tha t meaning throughout the document. Of course the parties could have resolved the difficulty by saying which was m ean t; but, obviously,
(1) (1948) 75 C.L.R. 589.
(2) (1949) 78 C.L.R. 1.
202 HIGH COURT
[1950-1951.
H. C. OF A. parties did not contemplate a divergence of currency, and thus
I9;)0^r)l. difficulty is left as one of construction. The appellant has
N ational largely on the fact that in some provisions of the new scheme
B ank of pounds must mean Australian pounds (e.g., in clause 13, the
Australasia L t d .capital of the Bank must be expressed in Australian currency)
V.and has sought to use this fact in aid of the argument that in all
Scottish
X'nionother provisions of the scheme any reference to a pound must
AND
necessarily be to an Australian pound. As to this particular
N ational
I n su r a n c ematter, the capital of the Bank, the position is precisely the same
Co.as it was in Goldsbrough Mort & Co.’s Case (1), and Latham C.J. in his dissenting judgment founded himself upon the fact that the capital of the company there and some other items must neces sarily be Australian. Nevertheless, Fullagar J. and the majority of this Court on appeal from him had no difficulty in concluding that the debt in question was payable in English money. [He referred to Broken Hill Ply. Co. Ltd. v. Latham (2); Adelaide Electric Supply Co. Ltd. v. Prudential Assurance Co. Ltd. (3);
City of Auckland v. Alliance Assurance Co. Ltd. (4).]
In clause 14
of the Second P art of the scheme—the schedule—there is reference to a fee of 2s. 6d. for the registration of a transfer. Surely this must mean in the case of an English transfer 2s. 6d. in English money. The appellant has not suggested otherwise. This is perhaps a trivial matter in itself, but it precludes any allegation by the appellant that all references to money in the new scheme are references to Australian money. I t is trite that the new scheme must be read in the light of the circumstances in which it came into existence; and when this is done the difficulties suggested by the appellant tend to resolve themselves. I t has not been disputed that the original indebtedness to English creditors would in ordinary circumstances have had to be paid in English money ; in other words, the rights of the creditors in England were what may be called English rights. These were not altered in character by the old scheme, and it is for the appellant to show some point of time at which they changed in character. This the appellant has failed to do. There is no substantial difficulty in reading the references in the new scheme to money as meaning English money where Enghsh creditors are concerned and Australian money where Australian creditors are concerned. I t is not so much a matter of “ reading words into ” the scheme—as the appellant suggests-—as of reading the words of the scheme aptly in relation
(1) (1949) 78 C.L.R. 1.(3) (1934) A.C. 122.
(2) (1933) Ch. 373, particularly at
(4) (1937) A.C.. 587.
p. 388.
84 C.L.R.] OF AUSTRALIA.
203
to. the facts. The next question, if some stockholders are to be
H. C. OF A.
paid in English money, is how they are to be ascertained. On
1950-1951.
this m atter Macrossan C.J. was in error. In the events which N a t i o n a l
happened the earliest time a t which the stockholders became B ank ob'
A ustralasia
entitled to payment of principal was the winding up, and it is
L t d .
logical tha t payment should be made in accordance with the
V.
S cottish
registers a t tha t time ; that is to say, those then on the English Un io n
register in English money and those on the Australian register
AND
N ational
in Austrahan money.
I n su r a n c e
Co.
G. L. Hart, for E. R. Crouch, representing holders of stock originally issued in London, subsequently transferred to Australia and stiU on an Australian register. We accept the argument of Mr. Menzies to the extent to which he contends that the new scheme refers in some places to Australian money and in others to Enghsh money ; tha t in substance adopts the judgment of Macrossan C.J. In so far, however, as Mr. Menzies rejects the view of his Honour as to the date at which the various classes of creditors are to be ascertained, we submit tha t his Honour reached the logical conclusion. Mr. Menzies" own argument was that the rights of those we represent were what he called English rights and had not lost their character in the new scheme. If so, it is submitted, they retained those rights even on transfer to an Austrahan register a t a subsequent date.
A. D. McGill KrC. and B. F. Fahey, for the liquidator.
Cur. adv. vult.
The following written judgments were delivered :—
19.'’)l, March 19.
L a t h a m C.J. This is an appeal from an order of the Supreme Court of Queensland {Macrossan C.J.) made under s. 258 of The Companies Acts 1931 to 1942 (Q.) in order to determine questions arising in the winding up of the Queensland National Bank Ltd. The bank suspended payment in 1893 and a scheme of arrangement was authorized by the Supreme Court but the scheme failed. In 1897 another scheme of arrangement was authorized by the Supreme Court of Queensland and was adopted also by the Supreme Court of New South Wales and the High Court of Justice in England. Under this scheme there were special provisions for paying the debt due to the Government of Queensland. There were other creditors who were depositors in the bank in Australia and in Great Britain. Under the earlier scheme they had been given.
204 HIGH COURT
[1950-1951.
H. c . OF A. been compelled to accept in discliaree of their debts,
'
' Other deposit receipts, or negotiable deposit receipts payable to
N a tional w inscribed deposit stock. The scheme of arrangement
Bank of
which was approved by the courts in 1897 provided for the creation
A iintkai.asia
of interminable inscribed deposit stock.
The creditors of the bank
Lt d .
r.
who held the securities issued under the old scheme were required ANDfaction of their debts. The new scheme provided for stock regis
Scottish
Onion
to accept such stock bearing interest a t 3^% per annum in satis
N ational
I nsiirancictries in Queensland, Sydney and London. The original holders
Co.have in many cases transferred their stock to other persons, and Latham C.J.stock has also been transferred from an original registry to another
registry and sometimes transferred again to its original registry. The bank is now in liquidation and the question has arisen whether a holder of, e.g., £100 stock, is entitled to be paid £A100 or £E100. Macrossan C.J. has held that the answer to the question depends upon the place of original issue and registry of the stock, with the result that stock which was originally registered in England must be paid off a t its face value in English currency, whereas the liability of stock which was originally issued and registered in Austraha will be discharged by payment in Australian currency. There are now practical difficulties in ascertaining the original place of registry of much of the stock, but this fact cannot affect the legally ascertained liability of the bank. The questions submitted to the Supreme Court of Queensland inquired as to the currency in which the deposit receipts were to be paid off in six separate cases. I propose to tabulate the various classes of stockholders, to state how they are represented upon this appeal and to state the decision of the Supreme Court in each case as to the liability to pay the face value of the stock (1).
The hquidator also asked the advice of the court as to the date at which the equivalent in English currency of Australian money (whether principal or interest) should be ascertained. I t was held that the relevant date was the date of the commencement of the winding up of the bank, and there is no appeal as to this matter.
The other parties to the proceedings are the appellant the National Bank of Australasia Ltd., which now owns or controls through its nominees all the shares in the Queensland National Bank Ltd., and the liquidator of the latter bank.
The appellant the National Bank contends that all payments in redemption of the interminable inscribed deposit stock should be made in Australian currency. The respondents other than the liquidator, who has not argued exclusively for any particular
(1) /See p. 205 (post).
oo
o
Decision
ir'
Classes of Stockholders Represented byof Supreme
Remarks
Court
1. Stock originally issued and at all subsequent times Scottish Union & Payable in English
This party supports judgment
registered in London.National Insurance currency.of Supreme Court.
Co. Ltd.
2. Stock originally issued and registered in Australia but National Mutual Life Payable in Australian
This party has cross-appealed
subsequently transferred to London registry and Association of Auscurrency.against this decision, con
O
now on that registry.tralasia Limited.
tending that such holders
are entitled to payment in
English currency because
they are now on the London
cl
registry.
w.
3. Stock which at all times has been on the Australian — Payable in Australian There is no appeal against this
>
registry.currency.decision.
tc
4. Stock originally issued and registered in London, subseE. R. Crouch .. Payable in English
This party supports this de
quently transferred to Australia and still on the currency.cision.
Australian registry.
0 . Stock originally issued and registered in Australia, then E. R. Crouch .. Payable in Australian
No appeal.
transferred to London and then to Australia.
currency.
6. Stock originally issued and registered in London, transNational Mutual Life Payable in English
This party supports this de
ferred to Australia, then to London.Association of Auscurrency.cision.
tralasia Limited.
GO
c/o \>
I
c s
C § M S
I
>
§ o o 3 '
? ^ ' ^ § \ S 2
o
2$ c/2
'O >
to
h
S® r r >
o
P> ■
ox
200 HIGH COURT
[1950-1951.
H. 0. OF A. view, support the order as made by the learned Chief Justice, ] 950-1951.except that the National Mutual Life Association contends that
N ational
in the case of stock now on the London registry, whatever may
Ha nk of have been its previous history, payment should be made in English
Australasia
L t d .
currency.
V.The Queensland National Banlc Ltd. was incorporated in 1872
Scottish
U n io nunder
The Companies Act of 1863 (Q.). I t was registered in
AND
England as a foreign company under the Companies Act 1907
N ational
(Imp.) (7 Edw. 7 c. 50), s. 35, on 25th September 1908.
The bank
J nsiikancis
Co .
had shareholders in Queensland, elsewhere in Australia and in
Great Britain. I t accepted deposits in all those places. Registers
Latliam C.J.
of shareholders were kept in Australia and in England.
On 15th May 1893 the banlc was unable to meet its liabilities and suspended payment. A petition for winding up was presented to the Supreme Court in Queensland and a provisional liquidator was appointed. Ultimately, after meetings of creditors and shareholders had been held in Brisbane, Sydney and London, a scheme of arrangement was sanctioned by the Supreme Court in Queensland, by the Supreme Court in New South Wales and by the High Court of Justice in England. The amount due to depositors in July 1893 in respect of deposits in Queensland was £1,860,628, in New South Wales £110,322, and in respect of deposits in London £2,897,619. A special agreement (authorized by a Queensland statute—The Queensland National Bank, Limited, {Agreement) Act of 1893) was made with the Government of Queens land, which was a creditor for £2,000,000. The capital of the company was reduced and capital was called up in accordance with the scheme approved by the court, but the bank was unable to carry on under the terms of that scheme. Accordingly another scheme of arrangement was devised and was approved by the three courts mentioned after meetings of creditors had considered and approved it.
By the order of the Supreme Court of Queensland made on 12th May 1897 the new scheme of arrangement was declared to be binding upon all creditors of the bank in respect of deposit receipts, negotiable deposit receipts and inscribed deposit stock (the securities issued under the old scheme) and upon the bank and its contributories. Under the new scheme it was provided that interminable inscribed deposit stock should be issued to the creditors who held those securities.
On 15th April 1897 the new scheme of arrangement was sanc tioned and approved in identical terms by the Supreme Court of New South Wales.
84 C.L.R.] On 27th May the High Court of Justice in Great Britain ordered
OF AUSTRALIA.
207
H. C. OF A. 1950-1951.
tha t the bank should be wound up by that court.
On 4th June
1897 the High Court of Justice sanctioned and approved the new N ational
scheme of arrangement in identical terms and it was ordered B a n k of
A ustralasia
that all further proceedings in the winding up should be stayed
L t d .
except for the purpose of carrying the order and the new scheme of
V.
S cottish
arrangement into effect.
U n io n
AND
The amount of interminable inscribed deposit stock issued under the new scheme amounted originally to £3,116,621. The
N ational
I n su r a n c e
amount now outstanding is £2,559,086.Co.
-
The following is the form of certificate of title to interminable inscribed deposit stock prescribed by the scheme of arrangement. (I have filled in a number for the certificate, an amount in pounds and a name of a holder) :—
Latham C.J.
“ THE QUEENSLAND NATIONAL BANK LIMITED
Interminable Inscribed Deposit Stock.
No. 150
£100
Bearing interest a t the rate of per cent, per annum, payable on the 31st day of March and the 30th day of Sep tember in each year.
This is to certify that John Smith o f .. ....... ......... ..... ............. is the registered holder of £100 of the above Stock, which Stock is constituted pursuant to the provisions of the Scheme of Arrangement sanctioned by the Supreme Court of Queens land on the 12th day of May, 1897, and is issued subject to the provisions and conditions therein, and in the Schedule thereto respectively contained.
N o t e .—The Bank will not register a transfer of any Stock without the production of the certificate relating to such Stock, which ■ certificate must be surrendered before any transfer, whether of the whole or any portion thereof, can be registered, or before a new certificate can be issued in exchange. A fee not exceeding 2s. 6d. will be charged on the registration
of any transfer.”
In the certificates as actually issued there appeared before the “ Note ” in some cases the following—“ Given under the Common Seal of the Company this day of by order of the Board ” &c. In other cases the place of issue was stated—“ Given under the Common Seal of the Queensland National Bank Limited a t London ” or Sydney or a t a place in
208 HIGH COURT
[1950-1951.
H. C. OF A. Queensland. There is no evidence that any certificate specified
1950-19.51.
any place for payment.
N .\tio nal
1 proceed to examine the details of the scheme of arrangement
Bank of for the purpose of ascertaining the meaning of the symbol for the
Austhala .sia
L t d .
word “ pounds ”■—“ £ ”—in such a certificate.
V.This is a question of interpreting the terms of the certificate in
Scottish
order to ascertain the rights and obligations of the bank and of ANDthe holder of a certificate. 1 do not ap^ily the principles relating
LTnion
N ational
I nsukan ceto the interpretation of contracts in order to answer this question.
Co.The obligation created by the issue of the certificate and its
subsequent transfer to other persons is not in my opinion con tractual in character. I t is true that the scheme was adopted by the Supreme Court of Queensland and by the courts in New South Wales and Great Britain only after meetings of creditors had been held at which consent, in some cases unanimous, but in others by a majority, was given to the proposed scheme, but the operation of the scheme was not and is not dependent in any way upon the consent of any particular creditor and therefore it is not contractual in character. If the obligation were held to be an obligation of a contractual nature it is in my opinion plain that the governing law of the contract would be the law of Queensland. The obligation represented by the certificate was, however, created by the order of the Supreme Court of Queensland to which the certificate refers, and an order of a Queensland court must be interpreted in accord ance with the law of Queensland. That order was adopted in identical terms by the Supreme Court of New South Wales and the High Court of Justice in Great Britain. The order did not change its meaning when it was so adopted. Accordingly, whether the obligation is regarded as contractual in character or as arising independently of any consent of the parties from an order or orders made by a court or courts of competent jurisdiction, the law of Queensland is the law which determines the interpretation of the scheme of arrangement and the interpretation of certificates issued in pursuance of that scheme. In the present case the result will be the same whether it is held that the construction of the contract is to be determined according to the law of Queensland, of New South Wales or of Great Britain, for the principles of interpretation of documents in all three countries are the same.
Lii^ham C.J.
The ascertainment of the law in accordance with which the scheme of arrangement is to be construed does not in itself determine the currency to which reference is to be made to measure the extent of an obligation to pay money. The ascertainment of that law only introduces the inquirer to the principles of interpretation
84 C.L.R.] 0 ^ AUSTRALIA. ■
239
H. C. OF A.
like, the stock should be taken at its nominal value.
The interest
and principal and other moneys payable in respect of the debt
1950-1951.
to the Government of Queensland were plainly intended to be N ational
repayable in Queensland currency, and the fact that the GovernB ank of
A ustralasia
ment was included in the new scheme does not appear to me to
L t d .
throw any real light on the substance of the obligation to the
V.
S cottish
stockholders. For these reasons I am of opinion that the appeal should be
Union
AND
N ational
allowed as to question 4 and otherwise dismissed, the cross-appeal
I n s ur anc e
allowed, and the questions for the Court answered as suggested by Co . ,
Dixon J.
Webb J. I think Bonython’s Case (1) is distinguishable. There the Queensland Government borrowed money under the authority of a Queensland statute, and because the borrower was the Queensland Government acting under the authority of a Queens land statute, it was held that the loan contracts which resulted were within the framework of the Queensland monetary system. There had never been any monetary system in operation under those loan contracts other than the Queensland system. There were loan registers in Queensland, and elsewhere in Australia, and in London, and transfers could be made from one register to another ; but as there was only one monetary system, i.e., the Queensland system, the money of account was always Queensland money ; although the money of payment in London was English,
This case is different. The obligations which finally resulted in 1897 in interminable inscribed deposit stock originated in ordinary bank deposits in Queensland, New South Wales and England. These deposits were not moneys lent to a government under the authority of a statute ; they were ordinary loan contracts, Queens land, New South Wales and English, within the framework of the Queensland, New South Wales and English monetary systems, respectively. This position was not altered by the 1893 deed of arrangement. Under that arrangement the new deposit and negotiable deposit receipts and inscribed deposit stock were still within the framework of the three monetary systems, according to place of registry. And, in my opinion, no change of monetary systems was brought about by the 1897 deed of arrangement. As far as I can see the only provisions of the 1897 deed which might be taken to suggest the contrary are clauses 7 and 12 of Part 1 ; but 1 do not think that those clauses had the effect of eliminating the English and New South Wales monetary systems. In clause 7
(1) (1950) 81 C.L.R. 486.
24t) HIGH COURT
[1950-1951.
H. C. OF A. provision was made that a percentage of a profits fund should be 1950'-] 951. 1paid and distributed “ ratably ” among the stockholders ; and by
N ational
clause 12 voting for directors was based on the amount of stock
Hank of
held.
A iisthai.asia
Lt d .As to clause 7 : when the 1897 deed of arrangement was sanc
V.tioned by the Queensland, New South Wales and English courts,
>SC0TTIS]|
Un io nand for many years before and after 1897, the currencies of
AND
Queensland, New South Wales and England were substantially the
N ational
I n s i 'kancesame ; but still there were three monetary systems, as Bonython’s ('o.Case (1) decided. I see nothing to warrant the conclusion that
^\T‘llb ,T.any of the courts in sanctioning the 1897 deed intended by clauses 7
and 12 that the deed of arrangement should come within the frame work' of a single monetary system. The deed of arrangement did not provide for that, or for one or more money systems operating from time to time according to exchange fluctuations. I t was to be expected that the courts, in giving their sanction to the deed of arrangement, would insist on a ratable distribution of the profits under clause 7 : they could never approve of the directors being put in a position to discriminate in making the distribution. A ratable distribution ensured equal treatment of the stock holders. But equality of treatment might be defeated if all stockholders were brought under a single monetary system. In that event some stockholders might have received more or less than equahty of treatment if the exchange position altered, perhaps at the whim of a government bank fixing exchange rates as a matter of policy. I do not think that any of the three courts subjected stockholders to that risk. Clause 7 is not inconsistent with a ratable distribution according to the nominal value of the stock after allowing for exchange.
As to clause 12 : I think that it was intended that voting should be according to the nominal value of the stock, without regard to the exchange position at the time of voting. Voting power fluctuating with exchange rates would be unusual, if not im practicable. Moreover, the voting for directors for substantial periods should not, I think, be assumed to have been regulated according to the exchange position at the time of the voting.
The fact that the Queensland Government was a party to the schemes did not, I think, have the effect of substituting the Queensland monetary system for the English and New South Wales systems. The special provision for the payment of that Government’s debt did not call for any change in that regard ;
(1) (1950) 81 C.L.R. 486.
84 C.L.R.] OF AUSTRALIA.
241
and I think that none can properly be implied in the absence of
H. C. OF A.
any need for it.
1950-1951.
Then, as the registries of this interminable inscribed deposit stock in Queensland, New South Wales and England, were in
N a t i o n a l
B a n k o f
A i j s t e a l a .s i a
countries with different monetary systems, a transfer of stock
L t d .
from one registry to another brought the stock within the monetary
V.
SC O TT I.SH
system of the country to which the transfer was made. The
U n i o n
position would have been different if, as in Bcmython’s Case (1),
A N D
N a t i o n a l
there had been only the one monetary system throughout.
I n s u r a n c e
I think then that all holders of stock on the English register a t the date of commencement of the liquidation are entitled to be paid in English currency the nominal value of their stock ; and that all holders of stock on the Australian registers at such date are entitled to be paid in Austrahan currency the nominal value of their stock.
Co.
The questions submitted by the liquidator should be answered accordingly.
I agree with the order proposed by Dixon J.
F u l l a g a r J.
The facts of this case are stated in full detail in
other judgments, and it is not necessary for me to repeat them.
The Privy Council in Bonython v. The Commonwealth (1) has now approved of the principles adopted and apphed by this Court in Bonython's Case (2) itself and in Goldshrough Mort & Co. Ltd. V. Hall (3). I t may be taken, therefore, as settled that in cases of this class the question which arises is correctly propounded by asking whether the obligation of the debtor company is to be measured by reference to English pounds or Australian pounds, considered as two different moneys of account. The question is one of the substance of the obligation, and is to be answered as a matter of construction of the contract. The relevant law is, therefore, to be found in the proper law of the contract. In a case in which the possibly relevant monetary systems were different at the date of the making of the contract, the question would generally be a question of construction in the sense that it would depend on the interpretation of the actual language of the contract. Where, as here, the parties at the time of the making of the con tract assumed that there was only one relevant monetary system, and the question arises only because that system appears, so to speak, to have divided itself into two before the date of performance arrived, the question is likely to be a question of construction in
(1) (19.50) 81 C.L.R. 486.(3) (1949) 78 C.L.R. 1.
(2) (1948) 75 C.L.R. 589.
VOL. LXXXIV . -16
242 HIGH - COURT
[1950-1951.
H. V. OF A. the somewhat different (but very familiar) sense that what we
19r)()-l!)51.are seeking is a presumptive intention to be gathered from the
N ational
nature of the terms of the contract and the circumstances under
Hank of wliich the parties contracted. In each class of case, however,
A ustralasia
L t d .the ultimate question will be as to the meaning of a word—the
V.word “ ])ounds ” or “ dollars ” or “ francs ” or whatever it may be.
Sc ottish
U nion
“ The actual intention of the parties, if expressed, is prima facie
a n IIdecisive of the qiiestion. In all cases it is a question of the inten
N ational
In s ur anc e
tion, actual or presumed, of the parties” {Bonython v. The Com
Co.
monwealth (1), per Latham C.J.).
There is a presumption that the money of account intended is the money of the place of payment. But the presumption may be of greater or less weight according to the circumstances of the particular case, and in some cases it may have no weight a t all. In particular, the presumption is likely to have little or no weight where alternative places of payment are stated or provided for in the contract. This is because it is prima facie likely that the parties had in mind only one money of account, by reference to which they contracted. An option of place of payment may be given either to creditor or to debtor, and it is unlikely that either party would intend the other to have power to determine ex mero motu the extent or substance of the obligation. The presumption that the money of account intended is the money of the place of payment is, so to speak, counterbalanced by another presumption. This is not, of course, to say that there can never be two moneys of account, either of which may, at the option of one party, exercised by direct or indirect nomination of the place of payment or by some other means, provide the measure of the obligation. But, when nothing more appears than that one party has an option as to place of payment, I would certainly thinli that there was no justification for saying that alternative moneys of account were intended. In other words, it is, in my opinion, true to say that an option de place is prima facie an option de place only and not an option de change. I respectfully agree with what Dixon J. said in Bonython v. The Commonwealth (2). His Honour said : “ Options of place are given for the convenience of the payee who may thus obtain the money where he desires and in the form appropriate to the place. They are not directed to a different quantification of the substance of the obligation. Something much more definite is needed to warrant an interpretation ascribing an intention to the parties that there shall be alternative moneys of account for the measurement of the obligation.” Parallel considerations will, of
Ji'iiilagar J.
(1) (1948) 75 C.L.R., at p. 602.
(2) (1948) 75 C.L.R., at p. 623.
84 C.L.R.] OF AUSTRALIA.
243
course, apply where the option is given to the debtor. In this
H. C. O F A.
connection it is, of course, very important to observe what is said
1950-1951.
by their Lordships in Bo7iython v. The Commonwealth (1) with
N ational
reference to City of AucJdand v. Alliance Assurance Co. Ltd. (2).
Bank of
A ustralasia
In the present case no option of place of payment as such is given by the contract either to debtor or to creditor.
Ltd .
But stock
V.
Scottish
holders are given a right of transfer from one register to another,
U n io n
and N ational
and I do not think there can be any doubt that under the contract
the place of payment to each stockholder is the place at which he
I n s u r a n c e ;
is registered. I have felt some difficulty in the course of my
Co.
consideration of the case, but in the end I have felt satisfied that
Fullagar
this is a case in which the place of registration determines not only the money of payment but the money of account by reference to which the obligation of the debtor to each of its creditors is to be measured. I think that “ something much more definite ” appears here than the mere fact that the creditor has been able by his own act to determine the place of payment.
In considering this case the first thing to observe is, I think, that there is not here one obligation between a single debtor and a single creditor, but a large number of obligations between one debtor and each of many creditors. Although each contract embodies a common set of conditions, there is a separate contract in each case. The ultimate question in the present case is not, therefore, answered by saying that the word “ pounds ” must have one and the same meaning for all the purposes of one instru ment. Here there are many instruments, each evidencing a separate contract.
The next correct step is, I think, taken when one observes that the institution of the second “ scheme ” did not create something out of nothing but substituted a new obligation for an old obliga tion which had subsisted between the same parties. I t is necessary, therefore, to proceed step by step. In this connection it will be helpful to bear in mind that in Bonython's Case (3) their Lordships said :—“ Too much emphasis should not be laid upon the fact that the money of account of Queensland and England was the same in 1895 ” (the relevant year here is approximately the same). At the relevant date the moneys of account were the same, as the statement of their Lordships recognizes, but it is useful to bear in mind that there were two legislaLires, each of which had control over the currency of a territory for which it could make laws, and at any moment that control might be exercised by either in such
(1) (1950) 81 C.L.R. 486.(3) (19.50) 81 C.L.R. 486,
a t p. 496.
(2) (1937) A.C. 587.
244 HIGH COURT
[1950-1951.
H. C. OF A. a way as to produce two moneys of account, which were not the separate and distinct for that they denominated their funda-
N ationai unit of money of account by the same name, the name
Bank of which had formerly denoted their common unit.
If we bear this
Austkalasia
Ltd.in mind, we can consider, without danger of confusion, the question
V.of what was the money of account by reference to which the parties
Scott iH II
t ' N l t l N were contracting at each of the three stages of their contractual
| A NDrelations. We can suppose the question arising by reason of a |
N ationai.
I n s u e a n c e
“ divergence ” between the currencies immediately after the forma
tion of the relevant contracts at each stage.
Co. Vullagar J.The vital features of this case are, to my mind, the facts that
the original obligations of the company to its Enghsh depositors were English obligations governed by Enghsh law, and that the nature of those obhgations was not changed either by the institu tion of the first “ scheme ” or by the institution of the second “ scheme ” .
When the Enghsh deposits were originally made, the money of account relevant to the relation of debtor and creditor thereby created was obviously, I should think, Enghsh money of account. The money was Enghsh money lent in England by people in England, repayable in England, and the proper law of the contract between debtor and creditor was English. If, before the institution of the first scheme, a “ divergence ” had taken place between the money of England and the money of Queensland, there could have been no question but that the obhgations of the company to its Enghsh depositors were to be measured in terms of an Enghsh money of account. This position could not in the least degree be affected by the fact that the company had many other separate and distinct monetary obhgations which would have to be measured by the money of account of Queensland—or, for that matter, of Canada or New Zealand.
No change in this position was effected by the institution of the first scheme, which proved abortive.
Nor can I see any reason for supposing that any change in this position was effected initially by the institution of the second scheme. If, the instant after the institution of the second scheme by the initial registration of the stock, a divergence between the currencies had occurred, the position must have been held to be the same as it had been before. The content of the obligations was, of course, radically changed, but the company had had, and still had, three relevant sets of obligations, one to its Queensland depositors, one to its New South Wales depositors, and one to its English depositors. The proper law of the first set was the law
84 C.L.R.] OF AUSTRALIA.
245-
of Queensland, of the second set the law of New South Wales, and H.
C. OF A.
of the third set the law of England. The money of account, as
1950-1951.
well as the money of payment, was in the first case the money of N ational
Queensland, in the second case the money of New South Wales, B ank of
A ustralasia
and in the third case the money of England. I t was because,
L t d .
and only because, some of the obligations of the company were
V.
Scottish
governed by the laws of New South Wales and of England that U n io n
it was necessary that the scheme should have the support of
| AND ' |
N ational
orders of competent courts in New South Wales and England
I n s ur anc e
as well as in Queensland. The order of each court gave sanction
Co .
to the change in content of those obligations the proper law of
FuUagar J..
which was the law administered by it. But each of the three sets of obligations remained subject to its original proper law, and the money of account in each case remained unchanged.
■
The position is thus seen to be radically different from that which subsisted after the adoption of the final “ scheme ” in Goldshrough Mort d Co. Ltd. v. Hall (1). There the scheme substituted a single obligation for a series of obhgations. Whereas before the scheme there was a separate obligation between the company and each of a large number of creditors, the position after the scheme was that there was a single obhgation binding the company to certain trustees in England. This was not perhaps necessarily decisive, because the trustees were trustees for stock holders who would expect to receive payment in various parts of the world, and, though the rights of those stockholders were rights against the trustees only, the fact that they existed might conceivably have thrown light on the question of the money or moneys of account by reference to which the company and the trustees were contracting. But, when it was found not only that a single obligation dischargeable in England was substituted for a number of obligations dischargeable in different places, but that the new single obligation was governed by an instrument which seemed to have been deliberately designed to rely for its binding force on the law of England and to depend for all purposes on the law of England, the conclusion seemed inevitable that for the future there was to be only one money of account and that that money of account was to be the money of England.
Up to this point I would regard the present case as reasonably clear. The considerations which I have mentioned seem to me to exclude the possibility that, as at the moment of the institution of the second scheme, a revolutionary change took place, by virtue of which there was a money of account common to all the relevant
(1) (1949) 78 C.L.R. 1.
'24() HIGH COURT
[1950-1951.
H. ('. OF A, obligations of the company, that money of account being the
jooney of Queensland. The stock of tlie English creditors was
N ati onal oi'ighially entered in the London register, and the stock of the Austkakasia Hank ok Australian creditors in the Australian registers. If there had Lt d .been no transfer to or from the London register from or to an
V.Australian register, the simple result would have been that the
kScOTTlSlI
U ni onmoney of account as between the company and stockholders on
AND
the Jjondon register was English, while the money of account as
N ation A1,
Insuranck
between the company and stockholders on the Australian registers
Co.was Australian. In fact, however, although the aggregate amount FuiluKiU’ J.of stock on the London register at the date of liquidation was not
greatly different from what it was originally, there had been many transfers to and fro. I t is at this point that the question which has caused me difficulty arises. There are, in my opinion, two, and only two, ])ossible answers. One answer is to say that the obligations of the company in respect of stock originally placed on the London register are to be measured in English money, and its obligations in respect of all other stock in Australian money. The other answer is to say that the place of registration at the date of liquidation determines the money of account by reference to which the obligation of the company to each stockholder is to be measured. The first answer was given by Macrossan C.J., and it is, of course, a possible and logical answer. I am of opinion, however, that the second answer represents the presumptive intention which we are seeking, and that it is the correct answer.
For all present purposes it may be taken that there were originally two sets of obligations, for events have created a position in which we do not need to distinguish between Queensland creditors and New South Wales creditors. When the stock was originally registered that which was issued to English creditors was placed on the London register and that which was issued to Austrahan creditors was placed on the Australian registers. At this stage there was merely a preservation of the pre-existing position. The obligations to stockholders on the London register were English obligations, the place of payment to them was England, and the money of account was English. The obligations to stock holders on the Australian registers were Australian obligations, the ])laces of ])ayment were in Australia, and the money of account was Australian. If transfers of stock between the London and Australian registers had not been permissible, that position would have continued up to the date of liquidation. But in fact it was a condition of the issue of the stock that it should be freely trans- ferrable between the London register and the Austrahan registers.
84 C.L.R.] OF AUSTRALIA.
247
Each transfer involved a change in the place of payment, and
H. C. OF A.
I would think it ought also to be regarded as involving a change
1950-19.51.
in the currency by reference to which the obhgation was to be N ational
measured, a change in the relevant money of account.B a n k of
Australasia
I t is perhaps a sufficient justification for this view to say that, in all the circumstances, there is nothing really substantial to
L t d .
V.
Scottish
rebut the presumption that, in the case of each stockholder, the
U n io n
money of account is the money of the place of payment. If there
AND
N ational
must (as, in my opinion, there must) be on any view two sets of
I n su r a n c e
obligations measured by two different moneys of account, the
Co.
reasons which will in many cases serve to rebut or cancel out
Fullagar J.
the presumption are at least greatly weakened. There is no great difficulty in this case in imagining the parties as intending that for the future the distinction between the two sets of obligations was to depend on place of payment, and, as I have said, I am clearly of opinion that, for the purposes of this case, place of payment is place of registration. But I think that the strictly correct view of this case is that an intention is to be inferred tha t place of registration as such is to determine the money of account. In other words, place of registration is significant not because it is the place of payment but simply because it is the place of registra tion. The fact that the place of registration is also the place of payment may serve to reinforce the conclusion as to what is the money of account, but the actually decisive factor is place of registration itself. Before the institution of the scheme there were those two sets of obhgations. The distinction between them rested on the making of the original contract between company and depositor, the money of account being in the one case English and in the other Australian. I t was, one would suppose, possible for a creditor in one set to change over, so to speak, into the other set. If, for example, an English creditor had emigrated to Queensland, he could (though not, I suppose, as a matter of right) have had his credit transferred into the Queensland books of the company. The transfer would be effected at the rate of exchange current at the time, and thenceforth there woidd be an Australian debt instead of an English debt. Nor need he, for that matter, have emigrated. When the scheme was inaugurated, the distinc tion between the two sets of obligations was preserved, but it depended now on the place of registration and not on the place of the making of a contract. When there was superadded a free right to transfer from one register to another, the only proper inference seems to me to be that what was really intended, or what must be presumed to have been intended, was that a stockholder
248 HIGH COURT
[1950-1951.
H . ('. OF A.in either “ set ” should be at liberty to leave his own “ set ” and
enter the other “ set ” , and that, if he did so, the money of account
N ational thenceforth relevant to his contract should be the money of account
liANK OF
relevant to the “ set ” which he was entering.
A ustralasia
Lt d .
I agree with the form of order proposed by Dixon J., including
r.
the provision for costs.
tSCHlTTISII
U nion
AND
Appeal allowed in respect of answer to Question 4 in
N ational
I n su r a n c eoriginating summons. Answer to Question 4 amended
by substituting “ Australian ” for “ English ” therein.
Co.
Appeal otherwise dismissed.
Cross-appeal allowed. Answer to Question 2 amended by
substituting “ English ” far “ Australian ” therein.
Costs of all parties of appeal and cross-appeal to be paid by respondent liquidator out of the assets of the Queensland National Bank Ltd.
Solicitors for the appellant, Thynne & Macartney, Brisbane, by
Malleson, Stewart & Co.
Solicitors for the respondents, Henderson & Lahey, Brisbane, by Arthur Robinson tb Co. ; Crouch d Paterson, Brisbane; Flower & Hart, Brisbane, by Moule, Hamilton <& Derham.
E. F. H.
Key Legal Topics
Areas of Law
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Commercial Law
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Insolvency
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Contract Law
Legal Concepts
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Breach
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Remedies
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