U.G.S. Finance Ltd v National Mortgage Bank of Greece and National Bank of Greece S.A.
Jurisdiction | England & Wales |
Judge | LORD JUSTICE HARMAN,LORD JUSTICE PEARSON |
Judgment Date | 02 July 1963 |
Judgment citation (vLex) | [1963] EWCA Civ J0702-2 |
Date | 02 July 1963 |
Court | Court of Appeal |
[1963] EWCA Civ J0702-2
In The Supreme Court of Judicature.
Court of Appeal
From Mr Justice McNair
The Master of The Rolls
(Lord Denning)
Lord Justice Harman and
Lord Justice Pearson
MR JOHN FOSTER, Q.C., MR MARK LITTMAN, Q.C. and MR P. LEWIS (instructed by Messrs Herbert Smith & Co.) appeared as Counsel for the Appellants.
THE HON T.G. ROCHE, Q.C. and MR H. LEVER (instructed by Messrs Stibbard, Gibson & Co.) appeared as Counsel for the Respondents.
THE MASTER OF THE ROLLS (read by LORD JUSTICE HARMAN): We are here concerned with yet another case about the Greek Bonds. I need not recite again the history of them. It will be found in the reports of the ( Netliss case 1958 A.C., 509) and the ( Adams case 1961 A.C., 255). As a result of those cases, many of the bondholders have obtained judgments against the guarantors and have succeeded in getting paid the principal on the bonds and also the interest for the last six years. Since those cases an enterprising company called U. G. S. Finance Limited., in October and November 1960 bought up a number of the unpaid bonds with coupons attached. They have recovered payment of the principal on the bonds and interest on the coupons for the last six years (from 1st December, 1954, to 1st December, 1960) just as the other bondholders have. But they now seek in this action to recover interest on the coupons more than six years old, that is, those from 1st June, 1941, to 1st June, 1954. The company have also bought up a lot of old coupons which were detached from the bonds when the previous holders were paid off. They bought these loose for a song, ls.0d. apiece. And they now seek to recover interest on those old detached coupons. These fell due from 1st June, 1941, to 1st June, 1950.
The simple answer made by the defendants to these claims is that the bonds were subject to a special condition that coupons would be forfeited if not presented within six years of their due date. I will refer to the conditions but before doing so I must say that it is common ground that the bonds, with the coupons attached, are negotiable instruments and are governed by the law of England. Each series of the bonds was in the same form. I will set out the material terms of the first series and underline the most important parts of them: "The Mortgage Bank for value received hereby unconditionally promises to pay in sterling to the bearer of the bond on the 1st day of December 1957 or such earlier day as the principal moneys hereby secured shall become payable in accordance with the conditions endorsed hereon on presentation or surrender of this bond the principal sum of one hundred pounds and also in the meantime until such principal moneys shall be fully paid off to pay in sterling interest on the said principal moneys at the rate of 7 per cent. per annum half yearly on the 1st day of June and the 1st day of December in every year upon presentation and surrender of the coupons attached thereto as they severally become due.
" Payment of principal and interest will be paid in sterling …… at the offices of Hambros Bank Limited. or Erlangers (hereinafter collectively called 'the bankers') in London, England or at the option of the holder at National Bank of Greece by cheque on London.
" This bond is issued subject to and with the benefit of the conditions endorsed hereon which are deemed part of it. The National Bank of Greece hereby unconditionally guarantees the due payment of the principal money and the due performance of this bond. Dated this 1st day of December 1927". The bond was duly signed on behalf of the National Mortgage Bank of Greece and the National Bank of Greece.
Among the endorsed conditions the following are or may be relevant:
"(Condition 4: The Mortgage Bank will pay regularly the coupons and drawn bonds whether in time of peace or war and whether the holders be subjects of a friendly or hostile country without requiring any declaration or evidence as to the present or former nationality, domicile or residence of such holders or any previous holder or as to the length of time such holders have held such bonds or coupons.
"(Condition 10): The bonds are to be redeemed on or before the 1st day of December 1957 by means of an accumulative amortisation fund payable in half yearly instalments the first repayment taking place on the 1st day of June 1928. Thisamortisation fund is to be applied by half yearly drawings at par in accordance with the amortisation table endorsed hereon.
"(Condition 11): Any of the bonds which shall not have been previously redeemed as aforesaid shall be paid off at par on 1st day of December 1957 with such interest as is properly payable thereon.
"(Condition 13): Payment of interest in respect of drawn bonds will cease on the date upon which the bonds become payable out of the amortisation moneys in the hands of the bankers. Drawn bonds when presented for payment should be accompanied by all unmatured coupons. The equivalent of any missing unmatured coupons will be deducted from the amount of the bond. Coupons not presented for payment within six years of their due date and bonds not presented within 20 years of the date of redemption are prescribed and void ". (The last sentence is "the time-bar clause" which figures largely in this case).
"(Condition 17): Should the bond or any coupon be destroyed for any cause the Mortgage Bank will forward to the bankers for delivery to the owner a new bond and/or coupons upon payment of the expenses occasioned by such substitution after having received satisfactory evidence of the destruction…"
Attached to each of the bonds were 59 half-yearly interest coupons identified by the number of the bond covering the thirty years life of the bonds (unless drawn) in the following form: "National Mortgage Bank of Greece 7 per cent. Sterling Mortgage Bonds. Coupon payable on "(here is set out the relevant half yearly due date) " for £3. 10s.0d." On the back of each coupon the following appears: "This coupon is payable in sterling in London at the offices of Hambros Bank Limited. or Erlangers or in Athens at the offices of the National Bank of Greece by cheque on London. This coupon will be forfeited if not presented within six years from due date".
In 1935 the provisions of the bonds were modified by reduction of the interest rate from 7 per cent. to 4 3/4 per cent. and by modification of the cumulative sterling fund provisions and by the following provisions: "Bond holders permanently resident in Greece to be paid only in drachma. Bondholders permanently resident outside Greece to be paid in sterling upon presentation by such holders of a declaration; (a) that coupons presented for payment are detached from bonds belonging to persons permanently resident outside Greece, and (b) that bonds presented for payment belong to persons permanently resident outside Greece." These modifications were superimposed in print upon the bonds and the coupons were overprinted as follows: "Rate of interest reduced to 4 3/4 per cent"., and £2. 7s.6d. was substituted for £3. 10s.0d. The second series of bonds was in the same form but ran from 1st December, 1930, instead of 1st December, 1927.
Up till the year 1941 the National Mortgage Bank of Greece duly honoured the bonds. They provided their agents in London (Hambros and Erlangers) with the funds to pay the coupons as they fell due. Thereupon a notice was inserted on the Stock Exchange, in The Times and financial papers saying that payment would be made on the due date. The bearers of the bonds, through their banks, presented the coupons to the agents in London and obtained payment. The last such notice was on 19th November, 1940, saying that payment would be made of the coupon falling due on 1st December, 1940.
Since 1941 the National Mortgage Bank of Greece have not honoured the bonds. They have not provided their agents in London with any funds with which to pay the coupons. No notice has ever been put up in the Stock Exchange or in the papers saying that payment would be made. So the bearers of the bonds did not present the coupons and the interest was never paid from 1941 onwards. The reason was, of course, due to the war. Greecewas invaded and occupied. The consequences on the National Mortgage Bank were adverse and prolonged. They have not had the money with which to pay the interest: or at any rate they have not had the sterling for the purpose. They could only pay in sterling with the permission of the Greek Government and this has never been forthcoming.
On 6th December, 1955, one of the bondholders in England, Mr Metliss, brought an action against the guarantors for interest from 1st June, 1941, to 1st June, 1955, inclusive. It was tried before Mr Justice Sellers, who held that the interest could only be recovered for the six years prior to the issue of the writ (6th December, 1955) and no more (see 1957, 2 Queen's Bench at p. 37). Mr Metliss did not appeal from the decision of Mr Justice Sellers limiting the claim to the six years before writ. The present action is an attempt by the plaintiffs to upset the decision of Mr Justice Sellers on this point. They seek to recover interest right back to 1941.
Upon the true construction of these bonds there were two conditions which qualified the obligation to pay interest: First: Upon the face of the bond it was a condition precedent that the coupons should be presented for payment. They were not payable until presented. And the Statutes of Limitation would not run against the holder, or in favour of the Mortgage Bank, until presentation of the coupon. At least, that is how I construe the condition, rather like an account at a bank which is only payable on demand (see Joachimson v. Swiss...
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