Bonython v Commonwealth
[1948] HCA 2(1948) 75 CLR 589
[1948] 1 ALR 185
(Decision by: Rich J)
Bonython
v Commonwealth
Judges:
Latham CJ
Rich JStarke J
Dixon J
McTiernan J
Judgment date: 31 May 1948
Decision by:
Rich J
The substantial question which arises in the case stated is whether the plaintiffs are entitled to the payment of certain monies in English or Australian currency. The facts giving rise to this question can be stated in brief outline. In 1895 the Queensland Government decided to raise a loan by the issue of debentures secured upon the Consolidated Revenue of Queensland. The principal monies were payable on the 1 day of January 1945 either in Brisbane, Sydney, Melbourne or London at the option of the debenture holder and the holders were entitled to the amount payable thereunder in "pounds sterling." One further term of these debentures should be mentioned. While the principal sum was made payable in various places at the option of the holder, it was provided that notice should be given to the Treasurer of the Colony on or before the 1 day of July 1944 of the place at which it was intended to present the debentures for the payment of such sum.
The debt of the then Colony of Queensland under these debentures was taken over by the Commonwealth pursuant to the Financial Agreement Act 1928, and the debenture holders received in place of their debentures Commonwealth inscribed stock maturing on the 1 January 1945. The plaintiffs now claim that they are entitled to be paid the amount of the stock held by them in London in English currency while the defendant claims to be entitled to repay this amount in Australian currency.
The question for our consideration is one of the construction of this particular contract. When the contract was made in 1895 between the Colony and the debenture holders there was then both in England and Australia a common unit of account and a common unit of payment. The unit of payment ie, pound sterling, was the same in England and Australia and it was obviously assumed that throughout the currency of the contract this state of affairs would remain. Between the date of the contract in 1895 and the date of repayment in 1945 changes occurred whereby the common unit of payment became disparate -- in other words there came into existence two units of payment -- an English pound and an Australian pound.
In these circumstances little importance can be given to the use of the words "pounds sterling" in the original debentures. If the words "pounds sterling" had been used in a contract made after the time when Australian pounds were different from English pounds, it would be good ground for holding that the parties intended that the pounds sterling should be English pounds: cf De Bueger v J Ballantyne & Co Ltd (1938) AC 452
The position is that a situation has developed which the parties to the debentures never envisaged and the question to my mind which must be considered is whether any and what implication as a matter of law can be made in the new situation as to the form and means of payment to the plaintiffs. This rather suggests the problem relating to the question of frustration of contracts.
In my opinion such an implication can be made depending substantially on the circumstances in which the debentures were issued. The original contracts between the Colony and the debenture holders were made pursuant to the statutory law of Queensland: the moneys repayable by these debentures to the holders were secured on the Consolidated Revenue of Queensland and the moneys so repayable were repayable in a currency which was the then currency of Queensland, as well as the currency of other parts of the Empire. Having regard to these considerations it should, I think, be implied that the proper law of these contracts was the law of Queensland and that the moneys repayable thereunder should be repaid in the then currency of Queensland. The implication of law to which I have referred entitled the State of Queensland, when the Australian pound came into existence, to pay the debenture holders in Australian pounds, and as the rights of the holders of the inscribed stock are agreed to be the same as or similar to the rights of the original debenture holders, the Commonwealth in my opinion is entitled to repay the holders of the inscribed stock in Australian currency. This conclusion substantially disposes of this case.
Another matter was argued on behalf of the defendant, viz, that as the plaintiffs had not exercised the option mentioned in the debenture on or prior to 1 July 1944 they could not exercise an option requiring payment in London. The clause relating to this option could never have been intended to affect the rights of the debenture holders to receive payment of their principal sums whether in English or Australian currency and must be regarded as machinery for the convenience only of the borrower, and as not affecting the rights of the lenders to receive repayment of these sums in accordance with their substantial rights under their contract.
I may add that on the facts of this case the plaintiffs are not entitled to interest.
For these reasons I answer questions (a), (c) and (d), No and question (b), the principal sums are payable at the places mentioned in the debentures upon presentation of the inscribed stock as the rights of the registered holders of the stock "conformed in all respects with the rights conferred by the said Queensland Government debentures" (para 2 of the case stated).