Barcelo v Electro-Lytic Zinc Company of Australia Ltd
48 CLR 391(Decision by: Rich J)
Barcelo
vElectro-Lytic Zinc Company of Australia Ltd
Judges:
Rich JStarke J
Dixon J
Evatt J
McTiernan J
Case References:
Ashbury v Ellis - (1893) AC 339
Attorney-General v Cain and Gilhula - (1906) AC 542
Croft v Dunphy - 48 TLR 652
Robtelmes v Brenan - 4 CLR 395
Semple v O'Donovan - (1917) (NZ) LR 273
Ellis v McHenry - LR 6 CP 228
Spiller v Turner - (1897) 1 Ch 911
Pass v British Tobacco Co (Aust ) Ltd - 42 TLR 771
Metropolitan Gas Company v McIlwraith
&
c Ltd - (1932) ALR 16; (1932) VLR 88
British South Africa Company v De Beers Ltd - (1910) 2 Ch 502
Hamlyn v Talisker Distillery - (1894) AC 202
Hutton v West Cork Company - 23 Ch D 654
Cyclists' Touring Club v Hopkinson - (1910) 1 Ch 179
Evans v Rival Granite Quarries Ltd - (1910) 2 KB 979
Re Florence Land and Public Works Company - 10 Ch D 530
Simultaneous Colour Printing Syndicate v Foweraker - (1901) 1 KB 771
Governments Stock Investment Company v Manila Railway Company - (1897) AC 81
Illingworth v Houldsworth - (1904) AC 355
Bloxam v Favre - (1883) LR 8 P D 101
Niboyet v Niboyet - (1878) LR 4 P D 1
Forster v Forster - (1907) 13 ALR 33
Cope v Doherty - (1858) 4 K
&
J 367
Delaney v Great Western Milling Co Ltd - (1916) 22 CLR 150; 22 ALR 357
Gibbs v La Societe Industrielle et Commercielle des Metaux - 25 QBD 399
Krzus v Crow's Nest Pass Co Ltd - (1912) AC 590
Maclcod v The Attorney-General for New South Wales - (1891) AC 455
Tomalin v S Pearson and Son Ltd - (1909) 2 KB 61
Bartley v Hodges - 1 B
&
S 375
Harding v Commissioners of Stamps for Queensland - (1898) AC 769
Cooke v Charles H Vogeler Company - (1901) AC 102
Colquhoun v Heddon - 24 QBD 491
Thomson v Advocate General - (1845) 12 Cl
&
Fin 1
Wallace v Attorney-General - LR 1 Ch 1
Winans v The Attorney-General - (1910) AC 27
Commissioner of Inland Revenue v Maple and Co (Paris) Ltd - (1908) AC 22
R v Jameson - (1896) 2 QB 425
Huber v Steiner - 2 Bing (NC) 203
Phillips v Eyre - LR 6 QB 1
Potter v Brown - 5 East 124
Gardiner v Houghton - 2 B
&
S 743
Judgment date: 21 November 1932
Decision by:
Rich J
The main question in this case is whether the Victorian "Financial Emergency Act 1931" reduces the interest on certain debentures given by a Victorian Company, irrespective of the place where the debentures are situate or where they are payable. This depends on the true construction of the actual terms of the Act. The second or subsidiary question only arises if the court is of the opinion that the Victorian Act does apply to all the debentures. The question then is whether, notwithstanding the relief conferred upon it by the Act, the Company would be entitled to pay debenture-holders the full rate of interest. This is a question of ultra vires under the Victorian company law.
The debentures in question were issued by the respondent Company -- a Company registered under the Victorian "Companies Act." They were secured by a trust deed, the object of which was no doubt to create a fixed charge on certain specified property, the remainder of the Company's property, and its undertaking being subject to a floating charge. Registers of debentures were kept by the Company in London and Melbourne. Some of the debentures have been transferred from the Melbourne to the London register. Moneys are payable in London or Melbourne, according to the place of registration of the debenture.
The provisions of the Victorian Act are expressed in wide and general terms. "Every mortgage shall be construed and take effect" -- s 19. "Every payment of interest shall be a full discharge" -- s 22 (1). Read as a whole it is plain that the intention of the Legislature was to contribute to the general reduction of interest rate by giving a certain measure of relief to debtors who were liable to pay interest to their creditors by enacting that the payment of a certain lower rate should satisfy the obligation. The Act itself does not give any indication that the Legislature intended to differentiate between the rights of local and foreign creditors. It concentrates on the relief of the local debtor, and whatever else it may do it prevents the enforcement in Victoria of a claim for interest made by a foreign creditor no less than by a local creditor.
It is urged, however, that some limitation must be read into the general language of the Act. One possible limitation is that, as under the Victorian Constitution the Legislature is empowered to legislate for the peace, order and good government of Victoria , primá facie its legislation must be taken as intended to refer to transactions taking place within Victoria or at least in some way concerning the peace, order and good government of Victoria. Another possible limitation is that the Legislature must be taken not to have intended to interfere with obligations arising outside Victoria in any case in which those obligations are governed by the law of some other country. I do not see any sufficient reason for holding that the Victorian Legislature intended its enactment to be restricted to transactions which were wholly Victorian in the sense that the obligations involved arose in Victoria, that the instruments evidencing them were locally situate within Victoria, and the obligations were to be performed in Victoria. It appears to be unnecessary to imply any further limitation than that the Legislature was dealing with transactions which in a real and practical sense concerned Victoria.
As to the other limitation there is no occasion in the present case to dispute it, inasmuch as it is clear that the governing law of the obligation arising from the debentures is Victorian.
Whether a court in England would give effect to the Act is a question of English law. Such a court would have to consider whether the obligations are governed by English or by Victorian law. There does not appear to be any hard-and-fast rule on such a question, and the answer really depends upon the true inference to be drawn from all the circumstances -- Dicey ( 5th ed ), 666. The debentures may, I think, fairly be described as Victorian debentures, and the mere fact that they may be transferred from the Victorian register and made payable in London does not, in my opinion, prevent the debentures from being governed by Victorian law.
I have dealt with this question of the proper law to be applied to the debentures, not because I think it is necessary to decide that the Act only deals with debentures which, from the point of view of private international law, are governed by Victorian law, but because the fact that the provisions of the Act extend to such debentures, as well as to the enforcement of claims in Victoria, bears on the question of ultra vires. On the question of enforcement I think some light may be obtained on this question by considering the law with regard to a discharge in bankruptcy under the "Bankruptcy Act 1924-1932." Where a debtor is made bankrupt under that Act a creditor may prove in the bankruptcy and the certificate of discharge releases the bankrupt from all debts and claims subject to those which are expressly excepted by the Act. The Act provides in general terms that, subject to those exceptions, the order of discharge shall release the bankrupt from all other debts provable in bankruptcy -- s 12, "Bankruptcy Act 1924-1932." It has apparently been taken for granted that, where the Legislature is giving relief to bankrupt debtors, it is not giving the relief subject to any implied saving clause in favour of creditors whose debts or claims arose outside the jurisdiction -- Dicey , Conflict of Laws ( 5th ed ), 373, 508-10; nor in that case is the Legislature concerned with the fact that its enactment will not discharge the debt in a foreign country -- that is, will not prevent the creditor from suing the debtor in the foreign country in which the debt arose, if for any reason the debtor should be answerable to its jurisdiction -- Dicey, 506. It seems to me clear that all the debts are substantially connected with Victoria and come within the Act. I see no more reason for implying limitations in this Act, with respect to the locality of the obligation or of its performance than in the "Bankruptcy Act" -- in an Act which grants partial relief than in one that grants general relief.
In my opinion, therefore, all the debentures come within the operation of ss 19 and 22 of the "Financial Emergency Act 1931," and I answer the questions in the Special Case -- (a) and (b), Yes; and (c) ( i), Yes; and (c) ( ii), Yes, so far as enforcement in Victoria is concerned.
With regard to the question whether the Company by its directors is at liberty, notwithstanding the reduction, to pay the full rate of interest reserved by the debentures, I have much difficulty in seeing how a final answer can be given upon the materials contained in the Special Case. In the Full court Mann, J, who delivered the judgment upon this point, appears to have regarded the matter rather as if it were a question whether the Legislature meant to inhibit the payment of the full rate. I cannot so regard it; it appears to me to be wholly a question of the power of the Company in the circumstances to pay money which it is not bound to pay, a question of ultra vires. The Legislature directs that the mortgage shall be construed as if it contained a provision for reduction. This direction must, of course, be implicitly obeyed. What power would the Company have to pay the higher rate if the mortgage did in fact contain such a provision? The answer upon the memorandum of this Company is "no power" unless in all the circumstances the payment can reasonably be considered conducive to the attainment of some object particular or general within the Company's corporate powers. The Special Case does not suggest any facts raising such a case. Of course we know the date upon which the debentures mature, the rate of interest reserved, the options given to the debenture-holders, the general nature of the Statute, but whatever foundation these might afford for a case made up of additional circumstances, they do not, in my opinion, in themselves justify us in giving an answer to the question. In my opinion we should give no answer to the question.