Adelaide Electric Supply Company Ltd v Prudential Assurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Atkin,Lord Warrington of Clyffe,Lord Tomlin,Lord Russell of Killowen,Lord Wright |
| Judgment Date | 15 December 1933 |
| Judgment citation (vLex) | [1933] UKHL J1215-1 |
| Court | House of Lords |
[1933] UKHL J1215-1
House of Lords
Lord Atkin.
Lord Warrington of Clyffe.
Lord Tomlin.
Lord Russell of Killowen.
Lord Wright.
After hearing Counsel, as well on Thursday the 2d, as on Friday the 3d, Monday the 6th, Tuesday the 7th, Thursday the 9th, and Friday the 10th, days of November last, upon the Petition and Appeal of the Adelaide Electric Supply Company, Limited, whose registered office is situate at 27/28 Finsbury Square, in the County of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 26th of April 1933, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed case of the Prudential Assurance Company, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 26th day of April 1933, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Action be dismissed: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants, the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
I have had the opportunity of reading the opinion which is about to be given by my noble and learned friend Lord Wright and agreeing as I do with much of his reasoning, subject to the qualification I am about to express, I do not propose to discuss at length the question before the House. I desire however to add a few words on the topic whether there are or were two different "pounds" the Australian and the English. We do not seem to get very far by describing the "pound" as an unit of account. Its essential use is to denote a measure of value expressed in a specific currency or currencies. I say currencies for it seems to me that it may well happen that the recipient of an obligation expressed in pounds may be indifferent as to the currency denoted by "pound" in which the obligation is discharged and is prepared to accept the currency which is legal tender in the country where performance is made: and that the legal rights of the parties accord with that position. It is in that sense that the "pound" can be said to be the "same" in the two countries. I think myself that this was the position for years while both England and Australia were on the gold standard, during the time when the "pound" in either country expressed a value measured in gold sovereigns or in promises contained in notes by whatever institution issued which were as good as gold. Of course notwithstanding that the pound was the same the contract might expressly or impliedly state the place for performance. In such a case the pound denoted value expressed in the currency of that place. The question of construction would then be not which pound was intended but in what place the obligation to pay a common pound was to be enforced. I think however that where values in one currency or another show a substantial difference there is every reason for concluding that the recipient is not indifferent to the currency in which the obligation is performed, and that the pounds then become different, so that there will be an English and an Australian pound. I apprehend that at the present day when an Australian farmer sells so many bales of wool in Australia for so many pounds he will ask for and receive quite a different number of pounds in accordance with the place Australia or England in which the obligation is to be performed. No doubt ordinarily in such cases the place of payment is expressed: but if not it would seem improbable that the parties intended different values varying with the country of performance. Without expressing a final opinion I incline to think that at the present day the English pound and the Australian pound are not the same. In the application of this view to the present case I should prefer to say that at the material times the pound English and Australian was the same: and that therefore when the articles validly provided for payment in Australia the law of legal tender in Australia governed performance. If however they were different I do not dissent from the construction that as altered the articles provided for payment in Australian pounds. I should add that I also agree with the criticism of the decision in Broken Hill Proprietary Company v. Latham, 1933: 1 Ch. 373 which must be considered to be overruled. I move your Lordships that the Appeal be allowed and the Action be dismissed with costs.
My Lords,
The Appellants are a Company registered in England under the Companies Acts and the Respondents are registered in the Appellants' English Register as holders of preference stock in the Appellant Company, carrying the right to fixed preferential dividends, some of the shares now represented by such stock having been issued before 1921 and others after that date. By a special resolution of the Appellant Company, confirmed in 1921, all dividends are to be declared in Australasia and are to be paid in and from Australasia. The question between the parties is whether (as the Appellants contend) such dividends may be satisfied by payment in Australia of Australian legal tender to the nominal amount of the dividends, or whether (as the Respondents contend) preferential dividends payable to stockholders registered in the English Register can be satisfied only by payment in England of English legal tender to the nominal amount of the dividends or by payment in Australia of an amount in Australian legal tender sufficient, at the rate of exchange ruling for the time being, to purchase that amount of English legal tender in England.
This question was decided by Farwell, J., and by the Court of Appeal in favour of the Respondents, both Courts being of opinion that they were bound by the judgment of the Court of Appeal (Lord Hanworth, M.R., dissenting) reversing a decision of Maugham, J., in Broken Hill Proprietary Company, Limited v. Latham, 1933, 1 Ch., 373.
The solution of the question depends upon the true construction and effect of the contract between the Appellants and the several classes of shareholders having regard to the monetary conditions prevailing in England and Australia respectively.
The relative obligations of the Company and its stockholders are of course derived from and depend upon the Memorandum and Articles of Association and the resolutions under which the several denominations of shares (now converted into stock) were issued and taken up. In this case, the Company being an English Company registered under the Companies Acts, the contract between the Company and its members is an English contract, and the law of the contract is English.
Until the confirmation of the special resolution of 1921 hereinafter mentioned the business of the Company was managed from England, and dividends were declared in England and payment thereof was made in England and in English currency. This was in strict accord with the lex loci solutionis at that time applicable.
The practical business of the Company, viz., that of supplying electrical energy in the City of Adelaide, was however conducted and its profits made in that place, and in 1931 it was determined, obviously with a view to escaping from liability to English Income Tax, to transfer the entire business to Adelaide, leaving only mere formal business connected with the English register and so forth to be conducted here. This transfer was carried into effect by the special resolution confirmed in February, 1921, already referred to.
It is only necessary to refer to that part of the resolution relating to dividends, which runs as follows:—
"All dividends that may be declared by the Company in general meeting shall be declared only at a general meeting held in Adelaide or elsewhere in Australasia, and shall be paid in and from Adelaide or elsewhere in Australasia, and all preference and interim dividends declared by the Board shall be declared only at meetings of the Board held in Adelaide or elsewhere in Australasia and shall be paid in and from Adelaide or elsewhere in Australasia, and no part of the profits of the Company shall be transferred to the United Kingdom except in payment of dividends to members ordinarily resident there."
It cannot on the admitted facts be successfully contended that this resolution was otherwise than an effective special resolution under the Companies Acts, and binding on the Respondents, and, if this be so, it has the effect of modifying the original contract between the Company and its members whether the latter became such before or after its date. The particular modification material in the present case was the change of the locus solutionis as regards dividends from England to Australia.
The general rule I think is well settled, viz., that in such cases monetary obligations are effectually discharged by payment of that which is legal tender in the locus solutionis and, unless there is something in this case to take it out...
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