Miliangos v George Frank (Textiles) Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON |
| Judgment Date | 10 February 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0210-4 |
| Date | 10 February 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J0210-4
The Master Of The Rolls (Lord Denning),
Lord Justice Stephenson and
Lord Justice Geoffery Lane,
In The Supreme Court of Judicature
Court of Appeal
Revised
Appeal by plaintiff from judgment of Mr. Justice Bristow on 4th December 1974
Mr. STUART McKINNON and Mr. DAVID HUNT (instructed by Messrs. Gosling & Lewis Barnes) appeared on behalf of the Appellant Plaintiff.
Mr. JOHN PEPITT (instructed by Messrs. Bower Cotton & Bower) appeared on behalf of the Respondent Defendants.
We have further considered this case and we consider we are bound by the earlier decision. So we do not wish to hear further argument.
At one time it was thought that judgments and awards could only be given in sterling. That was when sterling was a stable currency. Now that it floats we have had to think again. 18 months ago we held that arbitrators could make an award in a foreign currency, see Jugoslovenska Ocsanska v. Castle Investment Co. (1974) 1 Q.B. 292. Two months ago we held unanimously that the Courts could give judgment in a currency of a Common Market country: see Schorsch Meier G.m.b.H. v. Hennin (1974) 3 W.L.R. 823. In the same Court we held by a majority that judgment could be given in a currency of other foreign countries. Those decisions have, I believe, been welcomed in the City of London. But in this case a challenge has been made. I will state the facts.
The plaintiffs are a Swiss firm who produce yarn at Zurich in Switzerland. The defendants are an English company who buy yarn to make knitted garments. In May 1971 the two firms made an agreement in writing by which the defendants agreed to buy from the plaintiffs 90,718 kilogrammes of textured polyester yarn. The price was 12.56 Swiss francs per kilogramme to be paid within 30 days of invoice, delivery to be free of charge at the defendants' works. Any dispute could be referred, at sellers' option, to the Tribunal of Arbitration at Zurich. So clearly the contract was governed by Swiss law. The money of account and money of payment was Swiss francs.
In the autumn of 1971 the goods were duly delivered in five consignments. The five invoices stated the quantities in kilogrammes and the price in Swiss francs. Each invoice stated: "Conditions of payment: within 30 days date of invoice to be paid to Union Bank Swiss, Lausanne."
I regret to say that the defendants, that English company, did not honour the contract. They did not pay the Swiss francs to the bank at Lausanne as they should have done. Not within 30 days or at all. In November 1971, in order to gain time, the defendants accepted two bills of exchange drawn in Switzerland for a total of 300,000 Swiss francs payable two months later on 31st January 1972. The plaintiffs duly presented them for payment but they were dishonoured.
On 20th April the plaintiffs issued a writ in the High Court here claiming payment of the price for goods sold and delivered or alternatively the sums due on the bills of exchange, in each case converted into the sterling equivalent. On 29th December 1972 the defendants put in a defence alleging that the yarn was defective and making a counterclaim. Much time was taken up thereafter in interlocutory matters, such as particulars, and so forth. Eventually the action was set down for trial and was due to come on for hearing on 2nd December 1974. But then, nine days before, on 22nd November 1974, the English company wrote a letter saying that they abandoned their defence and counterclaim and would submit to judgment. Then, four days later, this Court, on 26th November 1974 gave its decision in the Schorsoch Meier case. It was held that, where the currency of a contract was a foreign currency, the English Courts could give judgment in that currency. Next day that case was reported in The Times. The plaintiffs saw that it would operate to their advantage. Five days later, when this case came into the list on Monday, 2nd December, 1974, the plaintiffs applied to amend the statement of claim so as to claim in Swiss francs. The Judge allowed the amendment. The statement of claim was amended so as to claim 415, 522.45 Swiss francs, which was the contract price.
Since 1971 sterling had been devalued. At the time whenpayment became due in 1971 the rate of exchange was 9.9 Swiss francs to the £. But sterling was afterwards allowed to float. At the time when the case was heard in December 1974 it was about 6 Swiss francs to the £. So the it made a great difference. It the plaintiffs could get judgment only in sterling, they would recover some £41,000. But if they could get judgment in Swiss francs, they would recover the equivalent in sterling of over £60,000. It would seem very hard on the Swiss suppliers that, instead of receiving Swiss francs worth over £60,000, as the contract required, they should only get sterling worth £41,000. It would mean that the English company would be taking advantage of their own wrong. They had made default in their contractual obligations (not paying Swiss francs as they agreed to do). They had put forward an allegation of defective goods (which they afterwards withdrew). Yet when it came to payment, they would be paying in depreciated sterling. Their delay would operate to their own advantage and to the loss of the Swiss suppliers.
If the Judge had followed the decision of this Court in the Schorsch Meier case, he would have given judgment in Swiss francs and thus avoided this result. But he felt unable to do so. He thought that the Schorsch Meier case was wrongly decided and that he must apply the previous law and give judgment in sterling for £41,000.
Two days later, on 6th December 1974, another Judge, Mr. Justice Brandon, thought better of the Schorsch Meier case. He used it so as to do something which had never been done before. The owners of a ship called. "Halcyon the Great", had mortgaged it to secure a loan in U.S. dollars of over $20 million. The mortgagees brought an action for the money. The Judge ordered the ship to be sold for dollars and for the money to be paid into Court in dollars and be placed to a dollar deposit account out of which judgment in dollars, if given, could be satisfied directly.
That was an eminently sensible and reasonable course which would probably have never been taken but for the Schorsch Meier case.
Coming back to our present case, Mr. Justice Bristow held that he could only give judgment in sterling. From his decision the Swiss firm appeal to this Court. On their behalf Mr. McKinnon put the case in two ways: First; That the Schorsch Meier case was rightly decided. Second, That in any case it was binding on this Court.
On the first point, Mr. McKinnon put forward a telling argument based on much research. He said that, prior to the Schorsch Meier case, there was only one reported case in which an English Court had even given judgment in a foreign currency; and that was 380 years ago. It was Bagshaw v. Playn (1595) 1 Croke Eliz. 536. The Court then said that judgment for the plaintiff "ought to have been quoad recuperet the 47 Flemish money; and a writ have been awarded to enquire of the value thereof", that is, the equivalent in sterling. But that was an isolated case. In all other cases for 380 years the Courts had only given judgment in sterling. The contrary was never disputed. Everyone assumed that judgment could not be given in foreign currency. Everyone, that is, save Sir Nathaniel Lindley, Master of the Rolls, who suggested that a Court of Chancery might make an order that a defendant do specifically perform his contract to pay in a foreign currency, see Manners v. Perarson (1898) 1 Ch. at page 587. That suggestion was not taken up by anyone until the Schorsch Meier case itself, when it was made one of the grounds of the decision. Meanwhile, however, the common law Courts had proceeded on the antiquated rule dating from Ward v. kidsim (1626) 27, Latch, that when a defendant did not pay his debt in foreign currency, as the contract required, it was just as if he had refused to deliver a cow or a piece of plate. The remedy was not in debt but in damages. It was for the jury to assessthose damages and they could only do it in sterling. So they judgment had to be in sterling, and the writ of execution could only be expressed in sterling. In assessing the damages, the rate of exchange was to be taken as at the date of the failure to deliver the foreign currency. This line of reasoning culminated in the decision of the House of Lords in the Havana case (1961) A.C.1007. But in none of those cases was there any issue about judgments having to be in sterling. It was assumed or conceded. So Mr. McKinnon submitted that none of them formed a binding precedent. And in none was there considered the possibility of an order for specific performance. Not in the Volturno (1921) 2 A.C. 544, which was an action for damages for tort. Nor in the Havana case (1961) A.C. 1007, which was a proof in the winding up of an English company which had to be in sterling. The first time that specific performance was seriously canvassed was in the Schorsch Meier case itself. It should be made available, said Mr. McKinnon, in these cases because damages would not be an adequate remedy. He relied on a passage by Dr. F.A. Mann in his book on Money at page 372:-
"The root of the evil lies in the rule of English law of procedure that an English Court cannot pronounce judgment otherwise than in pounds sterling. If an English Court is given power to order the defendant to pay at his option either a sum of foreign currency or the sterling equivalent at the date of payment (or to pay the latter sum, if therefore, conversion is deferred to the stage of execution) then, following the continental example, and the ...
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Re Lines Brothers. Ltd
...was, and has been in this court, that the old practice has been invalidated by the decision of the House of Lords in Miliangos v. George Frank (Textiles) Ltd. (1976) AC 443. Since that case, it was submitted, all liquidators, whether acting under a winding-up order of the court or a resolut......
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