Schorsch Meier G.m.b.H. v Hennin

JurisdictionEngland & Wales
JudgeThe Master Of The Rolls,Lord Justice Lawton,THE MASTER OF THE ROLLS
Judgment Date26 November 1974
Judgment citation (vLex)[1974] EWCA Civ J1126-1
Date26 November 1974
CourtCourt of Appeal (Civil Division)
Between:
Schosch Meier G. M. B. H.
and
A. R. Hennin

[1974] EWCA Civ J1126-1

Before:

The Master of the Rolls (Lord Denning),

Lord Justice Lawton and

Mr. Justice Foster.

In The Supreme Court of Judicature

Court of Appeal

Appeal by plaintiffs from judgment of His Honour Judge Perks on 11th February 1974 at West London County Court.

Mr. LOUIS BLOM COOPER, Q. C., and Mr. DEREK HENE (instructed by Messrs. Buckeridge and Braune) appeared on behalf of the Appellant Plaintiffs.

The Defendant, Mr. Hennin, did not appear and was not represented. His name was called inside the Court and outside the Court, but there was no reply.

The Master Of The Rolls
1

I. INTRODUCTION

2

Here we see the impact of the Common Market upon our law. No one would have thought of it before. A German company comes to an English Court and asks for judgment not in English pounds sterling, but, if you please, in German Deutschmarks. The Judge offered a sterling judgment. But the German company said "No. Sterling is no good to us. It has gone down much in value. If we accepted it, we would lose one third of the debt. The debt was payable in Deutschmarks. We want Deutschmarks. We will accept no other." The Judge refused their request. He had no power, he said, in English law to give any judgment but in sterling. The German company appeal to this Court.

3

These are the facts: Schorsch Meier GmbH are motor manufacturers. They have offices and workshops in Munich in the Federal Republic of Germany. Mr. Hennin lives in England. He is engaged in the motor car trade. In 1970 and 1971 he ordered spare parts and accessories from the German company. Some of the orders he gave himself when he called at the German company's offices at Munich. Other orders he gave by telephone from England. The company invoiced the goods to him, giving the price in Deutschmarks, and despatched them to him in England. He made some payments in cash when he was in Munich. He made those payments in Deutschmark bank notes. He also gave two cheques in sterling; but they were dishonoured. On 3rd February 1972 the German company rendered a statement of account to him. It was for DM.3756.03 for goods sold and delivered.

4

The currency of the contract was clearly German. The money of account and the money of payment was German Deutschmarks. At the time when the sum became due the rate of exchange was£1 DM,8.30 At that rate the sterling equivalent of DM.3756.03 was £452 sterling.

5

Some" time later sterling was devalued. As a result £1 sterling was only worth DM,5.85.

6

On 13th July, 1973, the German company issued a summons in the West London County Court for the sum of DM.3756.03. They claimed the sum in Deutschmarks. They did not claim payment in sterling and for a very good reason. Sterling had gone down in value. If they had claimed in sterling, they would have had to convert the Deutschmarks into sterling at the date the payment should have been made, i.e., 3rd February 1972, see In re United Railways of Havana (1961) A.C. 1007. They would have got judgment for only £452, which would at that time have only produced DM.2664; whereas if they were able to claim in Deutschmarks and get judgment in Deutschmarks for DM.3756.03, the sterling equivalent would be £641. In other words, by getting judgment in sterling, they would loss one third of the money due to them: whereas by getting judgment in Deutschmarks they would recover the full amount.

7

When the case came before the County Court Judge, the German company proved the debt owing in Deutschmarks, that is, DM.3756.03. They gave no evidence of rates of exchange. They asked for judgment in Deutschmarks. They relied on the Treaty of Rome. They submitted that the rule of English law (by which an English Court can give judgment only in sterling) is incompatible with Article 106 of the Treaty. They asked the Court to refer the matter to the European Court under Article 177(1)(a) of the Treaty. The Judge refused. He held that, applying English canons of construction, Article 106 had no bearing on the rule of the common law: and that this was so clear that no reference to the European Court was required under Article 177(1)(a). The case is reported in Current Law 1974 3 C.L. Case 24.

8

II. ENGLISH LAW APART FROM THE TREATY

9

So far as I can discover, no one has ever before asked an English Court to give judgment in a foreign currency. It has always been assumed that it cannot be done. As long ago as 1605 a merchant sold some cloth to another for 60 Flemish pounds. He brought an action of debt in which he claimed the English equivalent, namely, £39 sterling. The defendant said he was not indebted in English pounds. The Court overruled his objection, and said: "The debt ought to be demanded by a name known, and the Judges are not apprised of Flemish money: and also then the plaintiff has his judgment, he cannot have execution by such name; for the sheriff cannot know how to levy the money in Flemish". See Rastell v. Draper (1605) Yelverton 80. A few years later this was re affirmed In 1626 it was agreed by all the Judges that "in the case of foreign coins, such as Flemish, one must declare the value in English", see Ward v. Kidsim (1626) Let. 77, reported in Norman French but translated in 1961 A.C. at page 1044.

10

From that time forward it has always been accepted that an English Court can only give judgment in sterling. Judges and textwriters have treated it as a self evident proposition. No advocate has ever submitted the contrary. The modern cases start with Manners v. Pearson in which Sir Nathaniel Lindley, Master of the Rolls, said at page 587: "Speaking generally the Courts of this country have no Jurisdiction to order payment of money except in the currency of this country." In 1961 I was myself quite confident about it. In the Havana case (1961) A.C. at pages 1068 9 I said: "if there is one thing clear in our law, it is that the claim must be made in sterling and the judgment given in sterling." In 1969 Lord Justice Salmon was equally confident, and he extended it to awards by arbitrators. In The Teh Hu 1970 P. at page 129 he said: "It is well settled that an English Courtcannot give judgment for the payment of an amount in foreign currency, Nor, in my view, can an arbitrator make an award in foreign currency, except, perhaps, by agreement between the parties."

11

In several other countries they have no such rule. Dr. Mann in his book gives a list of many countries, including Germany, in which a plaintiff can claim payment of a sum of money in a foreign currency and get judgment for it.

12

Why have we in England insisted on a judgment in sterling and nothing else? It is, I think, because of our faith in sterling. It was a stable currency which had no equal. Things are different now. Sterling floats in the wind. It changes like a weathercock with every gust that blows. So do other currencies. This change compels us to think again about our rules. I ask myself: why do we say that an English Court can only pronounce judgment in sterling. Lord Reid thought that it was "primarily procedural": see 1961 A.C. at page 1052. I think so too. It arises from the form in which we used to give judgment for money. From time immemorial the Courts of common law used to give judgment in these words: "It is adjudged that the plaintiff do recover against the defendant £X in sterling." On getting such a judgment the plaintiff could at once issue out a writ of execution for £X. If it was not in sterling, the sheriff would not be able to execute it. It was therefore essential that the judgment should be for a sum of money in sterling: for otherwise it could not be enforced.

13

There was no other judgment available to a plaintiff who wanted payment. It was no good his going to a Chancery Court. He could not ask the Lord Chancellor or the Master of the Rolls for an order for specific performance. He could not ask for an order that the defendant do pay the sum due in the foreign currency. For the Chancery Court would never make an order for specific performance of a contract to pay money. They would not make itfor a sterling debt, see Crampton v. Vana Railway Co. (1872) L. R. 7 Ch. A. C. 562, and Halsbury's Laws of England 3rd edition (1961) volume 36 page 279. Nor would they make it for a foreign currency. In the Havana case Lord Reid said ( 1961 A.C. at page 1052): "A plaintiff cannot sue in England for payment of dollars, and he cannot get specific performance of a contract to pay dollars it would not be right that he should."

14

Those reasons for the rule have now ceased to exist. In the first place, the form of judgment has been altered. In 1966 the common law words "do recover" were dropped. They were replaced by a simple order that the defendant "do" the specified act. A judgment for money now simply says that: "It is this day adjudged that the defendant do pay the plaintiff" the sum specified: see the notes to Order 42, r. 1 and the appendices. That form can be used quite appropriately for a sum in foreign currency as for a sum in sterling. It is perfectly legitimate to order the defendant to pay the German debt in Deutschmarks. He can satisfy the judgment by paying the Deutschmarks: or, if he prefers, he can satisfy it by paying the equivalent" sum in sterling, that is, which is the equivalent at the time of payment.

15

In the second place, it is now open to a Court to order specific performance of a contract to pay money. In Beswick v. Beswick (1966) Ch. 538: 1968 A. C. 58, the House of Lords held that specific performance could be ordered of a contract to pay money, not only to the other party, but also to a third party. Since that decision, I am of opinion that an English Court has power, not only to order specific performance of a contract to pay in sterling, but also of a contract to pay in dollars or Deutschmarks or any other currency.

16

Seeing that the...

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