Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society [1934] HCA 3

Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society [1934] HCA 3 - HCA 1934 case summary — Zoe

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The question for determination is whether the operation of sec. 5 of the Act extends to the obligation to pay interest arising under the deeds and debentures already mentioned. That depends upon the interpretation of the section. The words of the enactment are general, and in themselves suggest no limitation, unless the words "deemed to be satisfied ' - not " satisfied ' - indicate that the Legislature contemplates satisfaction within its territory, whatever happens in other States and countries. But it is contended that the Act must receive some limitation, to avoid conflict with the rules which govern the extraterritorial recognition of rights, and the choice of the law with reference to which the rights of the parties are determined. Thus, according to the law administered in English Courts, that which measures and defines " the rights and liabilities of the parties to a contract " is the law or laws to which the parties intended, or may fairly be presumed to have intended, to submit themselves, or the proper law of the contract (Foote, Private Inter- national Law, 5th ed. (1925), p. 423; Hamlyn & Co. v. Talisker Distillery (3) ). The validity of the discharge of a contract therefore depends upon this law. A discharge in accordance with the proper law of the contract is accordingly said to be valid, whilst a discharge not in accordance with that law is invalid (Dicey, Conflict of Laws, 4th ed. (1927), p. 637). But, as Dicey says at p. 637, "all that can be absolutely laid down is that when a contract is made and to be performed in the same country, anything which discharges the liability under the law of that country will be held a good discharge by our Courts." (Cf. Story, Conflict of Laws, 1834 ed., pp- 280, 480; Foote, Private International Law, 5th ed. (1925), p. 483.) Again, it is said that the performance of a contract, when a special place for performing it is expressly or impliedly agreed upon, is regulated as to mode, time, and condition by the law of that place (Chatenay v. Brazilian Submarine Telegraph Co. (4); Jacobs v.

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acts, must be used with some care, and not elevated into rules of law for the construction, of statutes. If the statute is explicit, the statute must prevail. " Sometimes, though not often," says Dicey (Conflict of Laws, 4th edg{1927), p. 593), "an Act of Parliament lays down a positive rule as to the validity or invalidity of a contract, wherever made." Every State has a right to regulate persons and things within its own territory according to its will and policy. In each case, the language of the Act, the object of the Act, and the mischief to be remedied must be considered. It is not unimportant to remember the circumstances in which the present Act was passed, At a conference in Melbourne between Ministers of the Common- wealth and of the States for devising measures for meeting the grave financial emergency existing in Australia, and thereby averting disastrous consequences, a plan was agreed upon for re-establishing the financial stability of the Commonwealth and the States and restoring industrial and general prosperity by means involving a common sacrifice. (See Commonwealth Year Book 1932, pp. 840-851 ; Financial Emergency Act 1931 (Vict.) (No. 3961).) It is known as the Premiers' Plan. The measures agreed upon included a conversion of the internal debts of the Governments on a basis of twenty-two and one-half per cent reduction of interest, a reduction of bank and Savings Bank rates of interest on deposits and advances, and relief in respect of private mortgages. Again, as already observed, the Interest Reduction Act is general in its terms and in itself suggests no limitation. The obligation to pay interest, under the deeds and debentures before mentioned, is an obligation to be performed within the territory of New South Wales; the object of the Act was to relieve the interest burden in New South Wales which threatened, or was thought to threaten, the financial stability of the Commonwealth and the States. Why then should not the Act extend to the performance of an obligation to pay interest in cases in which New South Wales was expressly agreed upon as the place of payment, or of performance of the obligation? It was conceded at the Bar, and rightly, we think, that the Act applied to all obligations to pay interest made and to be performed in New South ¥ Wales; but whether that was so because the law of New South -

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H.C.orA. Dixon J. The respondent Society derives its corporate existence 1933-1934. fom the laws of New South Wales, and its head office is in Sydney. anur- It lent three large sums of money to the appellant Board which is Eu ong constituted under statutes of the Dominion of New Zealand. The poN2® sums were provided in New Zealand and each was secured over an iit annual recurring special rate to be levied upon the ratable property puenuee in the district of the appellant Board. The security in each case Socrery. was composed of a trust deed and debentures. These were given ~~ under the provisions of statutes of New Zealand applying to the Board. The respondent Society obtained under the statutes and the instruments elaborate powers exercisable in New Zealand under New Zealand law in respect of property or rights there situated. But the place at which the appellant Board is required to pay principal and interest is Sydney. Because of this circumstance, the appellant Board contends that the proper law of the obligation to pay is the law of New South Wales. In my opinion this contention is ill-founded. The whole transaction is intimately bound up with New Zealand and rests upon an elaborate structure of New Zealand statute law. Except that the lender has its principal seat in New South Wales, and requires payment to be made there, the transaction has no connection with Australia. There is no trace of any actual intention that the governing law of the obligation shall be that of - New South Wales, and the circumstance that the place of payment - is there is, in my opinion, quite insufficient to overcome the effect of the considerations which identify the transaction with New Zealand. It was suggested that, as the debentures are separate instruments payable to bearer in Sydney, they were issued as transferable securities marketable in New South Wales, and should, therefore, be considered as prima facie governed by the law of that State. This suggestion is met, I think, by the circumstance that the debentures appear ex facie to be dependent upon the New Zealand statutes and the respective trust deeds. Regarded as an obligation ex contract, , the liability to pay interest appears to me to arise from the law of | New Zealand as the proper law of the obligation. But the liability is not merely contractual. Sec. 32 of the New Zealand Local Bodies' 4 Loans Act (No. 30 of 1913), which applies to the transaction, makes this provision: "The sum of money named in any debenture F

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constitutional power over every interest transaction connected in any way with that State. It is quite correct that, if this view were accepted, the Courts of New South Wales (and this Court exercising appellate jurisdiction therefrom) would regard the Legislature of New South Wales as being constitutionally competent to deal with every interest transaction so long as there was any relevant connection between New South Wales and the transaction. According to this view, the residence or domicile of a borrower in New South Wales, the residence or domicile of a lender in New South Wales, the making of the contract of loan in New South Wales, the fact that the proper law of the contract was that of New South Wales, the fact that the interest was payable in New South Wales, and the fact that the interest was actually paid in New South Wales, each and all of these circumstances would be sufficient to attract and found the juris- diction of its Legislature, and so might bring the provisions of the Interest Reduction Act into operation in each and every instance. But, in my opinion, sec. 2 (1) of the Act provides no warrant for adopting this construction. That sub-section only seeks to guard against the risk that provisions otherwise valid may be infected by the presence of provisions which are invalid. It requires the Court so to exercise its function of interpretation that in the result the Legislature will "not . . . exceed" its jurisdiction, having regard to the overriding provisions of the Commonwealth Constitu- tion. It is not justifiable to infer from such a provision that the Legislature was intending to exercise to the full its constitutional authority over every interest transaction. On the contrary, as I have endeavoured to show previously, the subject matter to which it was addressing itself was that of obligations to pay interest; and I reach the conclusion that, in so dealing with obligations to pay interest, the Legislature was intending to confine its attention to obligations which were " in and of " the State of New South Wales. I therefore ask myself this final question, was the obligation of the appellant to pay interest to the A.M.P. Society in the manner previously described, an obligation "'in and of" the State of New Sonth Wales? Clearly it was not an obligation " of" New South Wales. It came into existence by virtue of the statute of the

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the place, within or out of New Zealand, named in the debenture, and at the time named therein, being not longer than fifty years from the issue thereof." | The appellant's obligation to pay interest to the respondent is therefore the creature of the New Zealand law and legislation which authorized the loan at interest, regulated the rate of interest, "constructed security for the due payment of principal and interest -oyer local funds in New Zealand, bound the appellant to pay the sum which included interest named in each debenture as a debt due _to the holder, and made that sum payable at the place, whether in or out of New Zealand, and at the time, named in the debenture. hb determining what is the proper law of the obligation, there is to _ be set against these matters a condition in the instruments that the ' moneys due thereunder were to be paid in Sydney, and particularly a condition in each debenture that the amount thereof, which includes interest, was to be paid on its due date in Sydney, and that "upon receipt thereof each debenture was to be surrendered by the ; holder. But this circumstance is quite insufficient to justify the view that the parties intended to submit themselves to the law of New South Wales. The condition as to payment in Sydney loses 'some of its weight as a factor to be taken into account, when it is noticed that although the money was to be repaid in Sydney it was provided for the appellant in New Zealand, and that although the debentures provide for payment of the amount thereof in Sydney on the due date, there is a further condition that whenever default 'is made in the payment of any debenture the holders of the others are at liberty to demand payment of them before the due date from the appellant Board in New Zealand. The law of New South Wales not, in my opinion, the proper law of the obligation. The Interest Reduction Act of New South Wales, therefore, does not apply as "part of the law to which it is to be presumed that the parties Submitted themselves. But the appellant also contends that, apart from any question as _to the proper law of the obligation to pay interest, it is retrenched by the operation of sec. 5 of the Interest Reduction Act. This section 'is in these terms: "Subject to this Act an obligation to pay it shall be deemed to be satisfied by payment of a sum equal

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thing with New South Wales. The phrase is a composite one and perhaps should not be divided. But it is unnecessary in the present: case to inquire whether upon any technical view the obligation to _ pay interest can be said to be "in" New South Wales. There is not, in my opinion, any association between the obligation to pay interest expressed by the instrument in suit and New South Wales which would justify the view that it was "in and of" New South Wales. Its only association with New South Wales is that the borrower remits the money which is necessary to discharge it from New Zealand to Sydney, where the head office of the lender is situated. This circumstance in the present case is not of sufficient weight to determine the territorial connection of the transaction, and does not detract from its complete association with New Zealand or its complete dependence on New Zealand law. The obligation cannot, in my opinion, be said to be " in and of " New South Wales. It has these characteristics : - (1) It is the creature of legislation passed in another country. (2) Its peculiar nature is determined by that legislation. (3) Its payment is secured by that legislation on "local funds" in New Zealand. (4) The legislation expressly makes it payable in or out of that country, as a debt. (5) That legislation provides for its enforcement in that country. (6) It is the obligation of a corporation rooted in that country. (7) The activities of that corporation are restricted to that country. (8) In the event of default payment can be demanded, in that country, of the obligation contained in the outstanding debentures. Sec. 2 of the Interest Reduction Act shows that the Legislature -adverted to the danger of exceeding the limits of its jurisdiction. But it does not exhibit any intention that the ambit of the Act Should on all sides be exactly coincident with those limits. Sec. 2 is not, in my opinion, the expression of a contrary intention within the meaning of sec. 17 of the Interpretation Act. The appeal should, in my opinion, be dismissed.

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Judgment (219 paragraphs)