Treseder-Griffin v Co-operative Insurance Society
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DENNING,LORD JUSTICE MORRIS |
| Judgment Date | 20 March 1956 |
| Judgment citation (vLex) | [1956] EWCA Civ J0320-1 |
| Docket Number | 1954 T. No. 1009 |
| Court | Court of Appeal |
| Date | 20 March 1956 |
[1956] EWCA Civ J0320-1
In The Supreme Court of Judicature.
Court of Appeal
Lord Justice Denning
Lord Justice Morris and
Mr. Justice Harman
Mr. EUSTACE ROSKILL, Q.C. and Mr. HUGH GRIFFITHS (instructed by Messrs. Wrentmore & Sons, Agents for Mr. Ewan G. Davies, Cardiff) appeared on behalf of the Plaintiffs, Respondents.
Mr. NEVILLE GRAY, Q.C. and Mr. R.J.S. THOMPSON (instructed by Mr. N.C. Wright) appeared on behalf of the defendants, Appellants.
By a lease dated the 28th July, 1932, Mr. H.A. Griffin and others (the trustees of the estate of Mr. H.A. Griffin, deceased) lot to Montague Burton, Limited., two shops, Nos. 4 and 6, Queen Street, Cardiff, for 34 years from the 24th June, 1930. The lease contained a special clause about the rental. The lessors demised the premises to the lessees to hold for the term of 34 years "paying either in gold sterling or Bank of England otes to the equivalent value in gold sterling the yearly rental of £1600 for the first seven years, £1800 for the next seven years, and £1900 for the remainder of the term to be payable by equal quarterly payments on the usual quarter days." The lessees covenanted "to pay the reserved rent -it the timer, and In manner aforesaid". The lessors covenanted that "the lessees paying the rent hereby reserved" should quietly enjoy the premises The lessors (who only held a lease themselves) further covenanted to use their best endeavours to get an extension or renewal of their own lease; and in the event; of their obtaining it, covenanted that they would, if required, grant to the lessees a lease for an equal term to their own "up to a total of 99 years from the date of the commencement of the term hereby granted subject to the payment of the yearly rent of £1800 per annum and to the same covenants and conditions" as were contained in the lease.
It appears that the lessors did not obtain an extension or renewal of their own lease. They bought the freehold, and then granted to the lessees a new lease. By this new lease made the 30th December, 1938, the lessors let to Montague Burton Ltd. the same two shops for 99 years from the.24th June, 1930. The lease contained a similar special clause about the rental. The lessors demised the premises to the lessees to hold for the term of 99 years "Paying therefore yearly during the said term either in gold sterling or 3ank of England notes to the equivalent value, in gold sterling the rent of One thousand nine hundred Pounds to be paid without any deduction except for landlords property tax land tax and tithe redemption amounts by equal quarterly payments on the25th March, 24th June, 29th September and the 25th December in each year, the proportionate part of the first payment calculated as from the 5th November, 1937, to be considered as having become due on 25th December, 1937". The lessees covenanted "to pay the reserved rent at the time? and in manner aforesaid". The lessors covenanted with the lessees that "this lessees paying the rent hereby reserved" should quietly enjoy the premises. There was a proviso for re-entry "if the ront hereby reserved or any part thereof shall be in arrear for 21 days after the sane shall become due (whether demanded or not)".
Despite the special clause about mid, the lessors for many years right up to June 1953 demanded of Monteque Burton Limited. only £475 a quarter, that is £1900 a year; but they always guarded the demand by these words: "the Executors of the late Mr. H.A Griffin would accept a cheque for £475 in full settlement of the quarter's rent without prejudice to claim for future quarter's rent under the clauses of the lease with you relating to payment in gold or the equivalent in Bank of England notes". They have a receipt in the same words. The result was that they accepted £1900 year until 1953 and cannot re-open those payments, but the kept open the position for the future.
On the 23rd June, 1953, Monteque Burton Limited. assigned the lease to the Co-operative Insurance Society Ltd. Thenceforward the lessors have demanded of the Co-operative Society a rental of £5,000 or £6,000 a year, saving that that was the amount due under the special clause. The Co-operative Society says that the amount due is only £1900 a year.
The lessors say that under the special clause the rent here consists of 1,900 gold sovereigns or their equivalent in notes. They point out that 1,900 gold sovereigns arc nowadays worth far more than £1,900. Their value changes from day to day and from hair to hour according to the state of the bullion market. If 1,900 gold sovereigns were melted down and the gold content's Id in the bullion market, they would be worth, for example, -as at the 29th September, 1955, £5,610. 6s. Id. If they were not melted down out sold just as they are, simply as coins, theywould be worth oven more; because there are some parts of the world today whore sovereigns are much sought after, sometimes by people who wish to hoard them, and at other times by rulers who wish to have thon as a backing for their own currency. This hoarding value too changes from day to day. The value of 1,900 sovereigns, as coins, for example, as at the 29th September, 1955 was £6,412.10s.Od. That is the value which the lessors claim on, to which the Order of the Lord Chief Justice entitles them.
This is the first case, so far as I know, to come before our Courts whore the parties have inserted a "Void clause" in a domestic contract where all the parties arc within our own country, In external transactions it is, of course, quite common for parties to protect themselves against a depreciation in the rate of exchange by means of a gold clause. But in England we have always looked upon a pound as a pound whatever its international value. We have dealt in pounds for more than a thousand years - long before there were gold coins or paper notes - in all our dealings we have disregarded alike the debasement of the currency by kings and rulorsor the depreciation of it by the March of tine or events. This is well shown by the ( Case of Money (1604) Navies 48). Creditors and debtors have arranged for payment in our sterling currency in the sure knowledge that the sum they fix will be upheld by the law. A man who stipulates for a pound must take a pound when payment is made, whatever the pound is worth at that time. Sterling is the constant unit of value by which in the eye of the law everything else is measured. Prices of commodities may go up or down, other currencies mav go up and down, but sterling remains the same.
This principle is strikingly illustrated by what happened in 1811 when there was severe depreciation of the pound. A landlord named Lord Kino: then sought to get his tenants to pay their rents at figures which went up according to the price of gold, but he failed. The occasion is thus described by Sir Albert Feavearyear in his book on "The Pound Sterling", at page 190: "King announced that he would no longer receive from his tenants in payment of their rents Bank notes at face value. Heproposed to calculate for each tenant, the quantity of gold which would have boon purchased at the date of that tenant's agreement with the rent stipulated therein, and', to require from his the same quantity of gold now, or the amount of paper money which would be required to purchase it at the present price". Note the similarity to what the landlords here sock to do, But Lord King did not succeed in his plan. His opponents, says Sir Albert Feavearyear, were not "prepared to accept the view that a pound was a definite quantity of gold bullion. They held, to the time honoured principle that a man who contracted to receive a pound. whether his contract were a long or a short one, must take whatever was by general consent called a pound when payment made. This was the principle which had been followed for a thousand years in spite of all the many changes of from and value, some of then very rapid, which the pound he undergone". Parliament immediately passed an Act which affirmed this principle. They put a stop to Lord King's plan. Bank notes were made legal tender for rent equal to gold currency of their face value. (Sec Statute George III, c. 127, Q. 3.)
The principle which I have stated is so well established that it is disturbing to find a creditor inserting a gold clause in a domestic transaction. I am not alto-ether sure that it is lawful. In the United States gold Clauses arc declared by the Joint Resolution of Congress to be contrary to public policy. (See The Bondholders Case. 1937 A.C. 500). In Canada they are rendered inoperative by the Gold Clause Act, 1937, (Sec The New Brunswick Case. 1939, A.C.I). Many other countries have like legislation. In France, over since the Franco-Prussian war, the Court do Cassation has ruled that -old clauses are invalid in the case of internal contracts for payments in France by the French people; but they arc valid in the case of international payments, that is, which involve a traffic across international frontiers. Those countries do it I suppose to protect their own currencies. If we are now to hold gold clauses valid in En-landfor internal payments we may be opening a floor through which lessors and mortgagees, debenture helgore and, preference shareholders, and many others, may all pass through. We might find every creditor stipulating for payment according to the price of gold: and every debtor scanning the bullion market to fine, out how much he has to pay. What then is to be cone of sterling It would, become a discredited currency unable to look its enemy inflation in the face. That...
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