Barcelo v Electro-Lytic Zinc Company of Australia Ltd

48 CLR 391

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(Judgment by: Dixon J)

Barcelo
vElectro-Lytic Zinc Company of Australia Ltd

Court:

Judges: Rich J
Starke J

Dixon JEvatt 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

Hearing date: 27-29 September 1932
Judgment date: 21 November 1932

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Judgment by:
Dixon J

The order under appeal declares that debentures issued by the respondent Company are mortgages within the meaning of the word "mortgage" in Part III. of the Victorian "Financial Emergency Act 1931," but that the Act operates to bring about a reduction of interest payable under the debentures only when the interest is payable in Victoria under and by virtue of the terms of the debentures, and that payment of the reduced interest is a discharge of the Company's liability to those debenture-holders who at the date of payment are on the Melbourne register of debentures, but not those who are then on the London register. Place of registration was adopted as a discrimen because the debentures contain a condition which makes the place of payment Melbourne in the case of debentures upon the Melbourne register, and London in the case of the debentures upon the London register. The order further declares that, notwithstanding the provisions of the "Financial Emergency Act 1931," the Company has power to pay to all debenture-holders the whole of the interest covenanted to be paid to them respectively, but that it is for the Company to determine whether such power should be exercised.

The appellant is a shareholder who was sued and authorised to defend on behalf of himself and all other shareholders in the Company. He is aggrieved by the order, because it declares that no reduction has been effected in the rate of interest payable upon debentures for the time being on the London register, a register to which it is competent to every debenture-holder to transfer his debentures, and because it declares that it is open to the Company out of moneys which might otherwise be available for distribution among shareholders to pay to debenture-holders the full rate of interest named in the debentures, notwithstanding the statutory reduction of the amount for which the Company is liable.

The correctness of these two declarations depends upon quite independent considerations. Whether interest payable in London is reduced depends upon the meaning and application of some provisions of the Victorian "Financial Emergency Act 1931." Whether the Company may pay interest for which its liability is discharged by Statute is altogether a question of ultra vires. But a question preliminary to both these questions is whether the debentures are at all within the operation of the provision reducing interest. This provision is s 19, the first sub-section of which enacts that, except as thereinafter provided, every mortgage shall for a period of three years from the date of coming into operation of the division, viz, 1st October, 1931, be construed and take effect as if it were a term of the mortgage that, on and from the coming into operation of the Part the interest payable under the mortgage should be reduced at a rate equivalent to 4s. 6d. in every £1 of such interest. By s 22 (1) payment of the reduced amount is given the effect of a full discharge of the mortgagor's liability for interest under his mortgage in respect of the period to which such payment relates. By s 14 (1) the word "mortgage" is defined to mean any deed, memorandum of mortgage, instrument or agreement whereby security for payment of money is granted (whether by virtue of such deed, memorandum, instrument, or agreement or of any Act) over real or personal property. The definition proceeds to extend this description by including by express reference some other contractual documents. The first category which it so includes is "any debenture, inscribed stock, or mortgage issued created or given by any public or local authority."

The respondent Company is not a public or local authority, but a trading Company. In 1922, of a series of registered debentures ranking pari passu, it issued an amount of £400,000, bearing interest at 8 per cent. per annum. The series was secured by a trust deed which contained covenants by the Company to vest in the trustee for debenture-holders, on demand, specified property in land, and it created a floating charge over the remainder of the Company's property and undertaking. It conferred wide powers upon the trustee in case of default, but it imposed a qualified restraint upon the right of individual debenture-holders to pursue their remedies without the consent of the trustee or the authority of a meeting of debenture-holders. By the debentures themselves the Company charged its undertaking and property in terms of the trust deed. Further, every debenture was expressed to be issued subject to and with the benefit of the conditions contained in the trust deed, all of which were to be deemed to be part of the debenture. The charge over the interests in land in Tasmania appears to be specific, but over the remaining property of the Company, including that in Victoria, a floating charge only is created. The Supreme Court considered that in the definition of "mortgage" the general statement of what that word means is not satisfied unless the real or personal property over which the security is given includes property situated in Victoria. Upon this hypothesis as the charge over Victorian property is not specific, the question arises whether a floating charge over an undertaking given to secure the payment of a series of registered debentures falls within the meaning of the word "mortgage" in s 19.

In support of the contention that such debentures are outside the application of s 19 a number of considerations is relied upon in combination. Instruments creating a floating charge do not, it is suggested, grant a security over real or personal property, or at any rate their operation is not aptly described by such language, because, until the floating charge becomes specific, no estate or interest in any item of property contained in the undertaking is vested in the debenture-holders or their trustee. Then the specific reference to debentures issued, created, or given by any public or local authority is relied upon as evidence supporting this view of the language, notwithstanding the prohibition expressed in the words occurring before this reference, viz, "without affecting the generality of this definition." These words are said to be grammatically detached from the expressions which include debentures. Further, it is argued that the trust deed creates whatever security is given, but the debentures confer the right to payment, and "mortgagee" is defined as the person entitled to receive payment of any moneys payable under a mortgage. In addition to these considerations which arise in the definition clauses, reliance is placed upon difficulties felt to exist in applying ss (3) and (4) of s 19 to a large body of persons holding debentures and upon the suggested improbability of marketable securities of such a character being dealt with by a provision primarily directed to fixed mortgages. This argument logically must be founded upon the nature of a floating charge, but it does not appear justly to describe its character. A floating charge is commonly regarded as a security over property.

In Evans v Rival Granite Quarries Ltd ., ( 1910) 2 KB 979, at p 999, Buckley, LJ, said --

The nature of a floating security has been discussed and described in 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, and other cases. The outcome of the decisions may be thus summarised. A floating security is not a future security; it is a present security, which presently affects all the assets of the Company expressed to be included in it. On the other hand, it is not a specific security; the holder cannot affirm that the assets are specifically mortgaged to him. The assets are mortgaged in such a way that the mortgagor can deal with them without the concurrence of the mortgagee. A floating security is not a specific mortgage of the assets, plus a licence to the mortgagor to dispose of them in the course of his business, but is a floating mortgage applying to every item comprised in the security, but not specifically affecting any item until some event occurs or some act on the part of the mortgagee is done which causes it to crystallize into a fixed security.

Although some degree of abstraction is involved in this description of the operation of a floating charge as a present security over assets, it makes it clear that in legal understanding it is a security over property for the payment of money, and answers the description contained in the definition of "mortgage." Nor can the attempt to distinguish between the debentures and the trust deed be supported. The provisions of the trust deed form part of the agreement contained in the debentures because they expressly adopt them. When s 19 is interpreted in the light of definitions which primá facie include such debentures and debenture-holders in the expressions "mortgage" and "mortgagee," it is impossible to find in the remaining considerations enough to exclude them from its operation. Accordingly, except in so far as the territorial restrictions adopted by the Supreme Court may bring about a different result, the debentures are within the application of s 19. The court (consisting of Cussen, A.-CJ, Mann and Lowe, JJ) was of opinion that a territorial limitation should be implied in the material part of the definition of "mortgage"; that is in the expression "instrument whereby security for payment of money is granted over any real or personal property." Their Honours considered that to give these words the meaning which was intended there should be understood after the words "payment of money" and also after the words "real or personal property" the words "in Victoria." In applying this interpretation of the definition to instruments such as the debentures in this case which enable one of the parties to change the place of payment, the court decided that payments of interest which in the event fell to be made in Victoria were reduced by the Statute, and payments which fell to be made elsewhere were not so reduced. It does not appear whether, in the case of movable property, their Honours would regard the application of s 19 as dependent upon the situation of the property in Victoria at the time of the grant of the "mortgage," or on 1st October, 1931, the date of the coming into operation of the provision, or at the time when interest accrued or is deemed to accrue, ie, from day to day -- s 14 (3) -- or at the time when it becomes due and payable, but it is necessarily involved in the decision that the situation in Victoria of some only of the property covered by the security is sufficient for the application of the Statute. The language of ss 19 and 22 (1) is universal --

Every mortgage shall ... be construed and take effect as if it were a term ... that interest should be reduced ... . Every payment of interest made in pursuance of the provisions of this division ... shall be a full discharge of the mortgagor's liability ...

Considered with the general language of the definition, the enactment is expressed in terms which literally construed would apply to all instruments whatsoever of the required description, however foreign the transaction might be to the State of Victoria. Proceeding from the acknowledged necessity of confining the meaning of the provisions to transactions which in some way concerned Victoria, the Supreme Court implied the double limitation by which the place of payment and the situation of some of the property are required to be within the State. In adopting these implications the learned Judges were guided by what Cussen, A.-CJ, calls "such light as is afforded by other provisions of Part III." They found confirmation in the preamble of the Statute, which speaks of restoring prosperity by

means involving a common sacrifice and including among other things certain reductions in the expenditure of the Commonwealth and State Governments and the conversion of the internal debts of the Commonwealth and the States on the basis of the reduction of the interest payable,

and they obtained some further assistance from s 37 which excludes from the operation of Part III. any mortgage given as a security for moneys raised by any public or local authority by way of loan outside Australia.

I have been unable to find in these sources matter which upon examination affords a satisfactory support for the inference that the words "in Victoria" are understood in the definition of mortgage so as to qualify both the expressions "payment of money" and "real or personal property." Indeed, as soon as this restriction is applied to one of these expressions, the primá facie need for a territorial limitation is met, and to that extent there is less reason for the other. The light obtainable from the other provisions of Part III. is very small. The reference in subs (5) of s 19 and subs (6) of s 28 to "the court of Petty Sessions held nearest to the location of the property which is the subject of the mortgage" appears to me to supply very weak evidence of an intention to exclude securities over real and personal property out of Victoria, if it is remembered that it is dealing with no more than an alternative tribunal in cases where the principal is less than £1000. But whether on general grounds it is right to make such an implication the further restriction, which concerns this appeal, viz, the restriction by reference to the locality of payment, is an implication for which I cannot find any firm support. The exception contained in s 37 at best suggests that no part of what may be considered public liability shall be impaired if it is owing abroad, and from this I do not see that an inference any more arises that private indebtedness is to be in the same category, if owing abroad, than that the opposite inference that indebtedness owing abroad is deliberately excluded from the exception if private. Nor do I think that any real indication of such legislative intention is provided by the reference in the preamble to a conversion of the internal debts of the Commonwealth and States.

On the other hand, the partial and haphazard operation of such a definition so restricted is illustrated by the facts of this case, an operation which does not accord with the general policy upon which the legislation seems to have proceeded. The truth appears to be that general words were employed because the enactment, which formed part of the execution of a general plan agreed upon by the seven Australian Governments was framed without any advertence or conscious regard to any territorial discrimen.

The operation of s 19 (1) is upon the debt or obligation, and although the policy of the Legislature was to reduce interest upon secured debts only, yet it is the obligation to pay interest and not the property over which the debt is secured that is the object of legislative concern. Locality is not a natural attribute of obligations, and, in varying their tenor, a Statute might be expected to disregard it as a criterion of its application. The introduction into the definition of "mortgage" of references to real and personal property is not for the purpose of distinguishing between Victorian property and that situated in another State or country, but for the purpose of differentiating between secured and unsecured debts. I have come to the conclusion that in such a situation the only safe course to pursue is to apply the settled, if artificial, rule of construction for confining the operation of general language in a Statute to a subject-matter under the effective control of the Legislature. "Every statute is to be interpreted and applied, as far as its language admits, as not to be inconsistent with the comity of nations or with the established rules of international law" -- per Hannen, J, in Bloxam v Favre, ( 1883) LR 8 P D. 101 at p 107, adopting Maxwell on Statutes.

It is always to be understood and implied that the legislature of a country is not intending to deal with persons or matters over which according to the comity of nations, the jurisdiction properly belongs to some other sovereign or state

-- per James. LJ, in Niboyet v Niboyet, ( 1878) LR 4 P D. 1 at p 7; and see, too , per Brett, LJ, at p 20, whose judgment has prevailed. Thus the Victorian "Marriage Act"

is to be construed so as to harmonise with the rules of international law. General words, such as 'any wife,' 'any husband,' are to be construed as 'any wife (any husband) domiciled in Victoria at the time of the institution of the suit,' and perhaps in the case of the wife, as meaning also 'any wife who has been deserted by her husband and who at the time of the desertion was domiciled in Victoria.' It seems probable that an English or Victorian court would, apart from any express statutory provision, claim jurisdiction in such a case of desertion, and would recognise a decree of a foreign court given in similar circumstances. In construing the Act, therefore, the general words would be held to cover such a case which would produce no conflict with the rules of international law

-- per Cussen, J, for the Full court in Forster v Forster, ( 1907) 13 ALR 33 at p 35. Again, s 9 of the English "Wills Act 1837" says -- "No will shall be valid unless it shall be in writing and executed in manner hereinafter mentioned."

Notwithstanding this language, it is the practice of the Probate Division, on the principle just stated, to admit to probate or otherwise recognise as valid the wills of persons domiciled abroad, although not executed as prescribed by the Act

-- per Stirling, J , Re Price, ( 1900) 1 Ch 442 at p 451. That principle is the rule of private international law that a will of movables, valid according to the law of the domicil, is valid in England, from which it follows that the provisions of the English Statute prescribing formalities with reference to wills do not apply to wills disposing of movables made by persons not domiciled in England -- cf., per Stirling, J , ibid.

In Cope v Doherty, ( 1858) 4 K. & J 367 at pp 383-4, 70 ER 154 at p 161, Page Wood, V-C., said by way of illustration --

It would be a presumption of a most singular character to suppose that the Legislature intended to frame a contract contrary, as Lord Stowell expresses it, to the natural law to be binding upon two foreigners, neither of whom it could have a right in any way to affect, by interfering either with the general law of nations, or with the peculiar municipal law, if I may so term it, to which the foreigners in question would have recourse in their dealings with each other.

These principles of construction should apply to limit the operation of the general words of s 19 (1) and s 22 (1) to debts or obligations which, according to the rules for the extra-territorial enforcement of rights recognised and administered by British Courts, are governed by the law of Victoria. These enactments amount to a variation and partial discharge of a pecuniary obligation.

According to the rules of private international law which we ourselves administer, a discharge to be good must be considered so by the law which gives rise to the obligation.

In the first place, there is no doubt that a debt or liability arising in any country may be discharged by the laws of that country, and that such a discharge, if it extinguishes the debt or liability, and does not merely interfere with the remedies or course of procedure to enforce it, will be an effectual answer to the claim, not only in the Courts of that country, but in every other country. This is the law of England, and it is a principle of private international law adopted in other countries ....

Secondly, as a general proposition, it is also true that the discharge of a debt or liability by the law of a country other than that in which the debt arises, does not relieve the debtor in any other country

-- per Bovill, C.J , Ellis v McHenry, ( 1871) LR 6 C.P 228 at p 234.

A debt which arises under the municipal law of Victoria is considered proper to be discharged by or under Victorian law, and, if the general words are confined in their operation to such debts, the particular rule of construction is satisfied. It is true that the Victorian Parliament is empowered only to make laws in and for Victoria, and from this circumstance a territorial limitation of a constitutional character arises. But there is no reason to doubt the competence of the State Legislature to discharge obligations flowing from Victorian law. Speaking of the Canadian Legislature, Lord Tomlin says, in Croft v Dunphy, ( 1932) 48 T.L.R 652 at p 654 --

It may be that legislation of the Dominion Parliament may be challenged as ultra vires on the ground that it is contrary to the principles of international law, but that must be because it must be assumed that the British North America Act 1867 has not conferred power on the Dominion Parliament to legislate contrary to these principles.

He had already said that "their Lordships see no reason to restrict the permitted scope of such legislation by any other consideration than one applicable to the legislation of a fully Sovereign State."

The real difficulty which these principles involve lies in the somewhat unsettled condition of our law in reference to the true or final test by which the proper or governing law of an obligation should be ascertained. Possibly this consideration contributed to the adoption by the Supreme Court of another mode of interpreting the enactment. But in truth the difficulty is more theoretical than practical, more apparent than real. Little doubt usually exists as to the governing law of an obligation, perhaps less than in determining the place of payment. In the multitude of transactions affected by s 19, no doubt there will be many in which there is uncertainty. Of the three cases before the Supreme Court two did present difficulties in ascertaining the governing law, and in this court one should be careful not to allow the fact that the third, which is now under appeal, does not do so to lessen the weight to be attached to this consideration. But, on the other hand, a failure to give effect to the rule of construction which restrains general words from an operation upon foreign rights would lead to the undesirable consequence that a right which the Victorian Legislature purported to discharge partially might be enforced in any other forum. If the limitation of the place of payment to Victoria were supported, it would be unlikely that such cases would arise, but otherwise they would be common. In the case of securities over Victorian immovables which do not include property situate elsewhere, it is not probable that the governing law of the obligation should be other than Victorian, whether the mortgage debt be accounted a movable or an immovable -- Ex parte Ralston, ( 1906) VLR 689 , 12 ALR 365 at pp 366-7; and Re Hoyles, ( 1911) 1 Ch 179.

The rule of construction confining general words to an operation which accords with the principles adopted in our Courts for the exterritorial recognition of rights would, I think, be applied to a Statute of the Sovereign British Parliament, containing provisions expressed as those of the Victorian enactment. There is no reason to consider it less applicable to the Statute of a subordinate Legislature. The circumstance that the power of the subordinate Legislature is territorially restricted affords, if anything, rather more than less reason for applying the primá facie rule. The Statute contains no express or implied indication of any fact, matter or thing in or connected with the territory which it adopts as a criterion of its operation. A Statute discharging obligations might be considered a law in and for Victoria if its operation were expressly based upon any one of a great number of things which touch and concern Victoria. It might be enough if it were based upon some connection of the obligee or of the obligor with Victoria, such as domicil, residence, or presence there, or perhaps even upon a remoter connection such as official employment in or out of the State under the Government, or liability to the State in respect of taxes or other Crown debts. The connection might suffice if the enactment were based upon some fact occurring in Victoria affecting the creation of the obligation, such as the delivery of an instrument, the communication of an offer or of an acceptance, or the presence of one of the parties there when any of these things took place anywhere; or upon some circumstance or event affecting the existence of the obligation considered as property, such as the local situation of a bond or negotiable instrument, or affecting its performance considered as a contract, such as payment in Victoria. Again, the Legislature might fasten upon the situation within the State of property over which the obligation is secured. But if any such enactment were considered a law in and for Victoria, the reason would be that it is a law made with respect to the matter upon which its operation is based, and that the matter is one of Victorian concern. Where the enactment relates to or deals with no matter involving a connection with Victoria, and indicates no intention of conditioning its operation on any fact, circumstance, or event, in or connected with Victoria, but is expressed in general terms, and deals with a subject-matter which is independent of locality, like the discharge of private obligations, the constitutional restriction, while it reinforces the need of a restrictive interpretation, gives no further assistance in determining upon what connection with Victoria the operation of the enactment must be understood to depend. To ascribe to it an operation defined as co-extensive with the power of the Legislature may, perhaps, appear a possible, even an attractive, alternative to applying the rule of construction which presumes consistency with the principles of private international law. But the extent of the power to legislate in and for Victoria cannot provide a definition of the extent of the operation of a general enactment relating to the discharge of obligations, because the power includes authority to adopt any fact or matter or thing concerning Victoria as the ground of exercising legislative jurisdiction over any right or obligation affecting such fact, matter or thing; and this is precisely what the Legislature has not done. In short, the operation of an enactment dealing with personal obligations irrespective of any ascertainable territorial consideration remains indeterminate except for the presumption that the Legislature is dealing with rights and duties over which it has an effective authority, and not with those acquired under foreign law.

In the present case the governing or proper law of the obligation is clearly Victorian. The respondent Company incorporated under Victorian law, raised money in Victoria on debentures. The trust deed enables the debenture-holder to convert his debentures into shares within a limited time. It provides for meetings of the debenture-holders in Melbourne, requires a register in Melbourne, with another in London, contemplates the trustees being in Melbourne -- cl 46; refers to Victorian Statutes -- cl 45 and 56; empowers investment under the authority of Victorian and English law, and, to make the matter conclusive, expressly provides that the deed shall be construed according to the law of the State of Victoria. In the face of these considerations, the fact that the deed states that the mortgaged hereditaments will be wholly or for the most part situate in Tasmania, and the operations of the Company in that State are of small importance. Of even less are the register in England and the references to the law of England. For these reasons all the debentures come within the operation of ss 19 and 22 of the "Financial Emergency Act 1931," and in answer to Questions (a), (b) and (c) in the Special Case it should be so declared.

The remaining question is whether the plaintiff Company and its directors have, notwithstanding the provisions of the "Financial Emergency Act 1931," power to pay to the holders of the debentures the whole of the interest covenanted to be paid to the debenture-holders under the debentures or any amount by way of interest in addition to such reduced amount. In Metropolitan Gas Co v McIlwraith, McEacharn Ltd ., ( 1932) ALR 16 at p 19, Cussen, A.-CJ, points out that directors are bound to treat such a security as containing a term that on and from 1st October, 1931, the interest payable thereunder should be reduced at the rate of 4s. 6d. in the £1. The answer to the question must therefore depend on the application to such a condition of things of the powers and objects taken by the Company in its memorandum.

In the present case, apart from objects which show the general character of the Company's undertaking, the material provisions of the memorandum consist of a power of borrowing and a power to do all such things as are incidental or may be thought conducive to the attainment of the other objects or any of them. Such a power enables the Company to expend money in any way which may reasonably be considered to promote the fulfilment of any of its purposes or powers, and is honestly believed to advance such an end. Whether it is reasonably capable of doing so, or of being considered likely to do so, is a question of relevance in determining which the actual situation of the Company and the past and anticipated course of its affairs are of much importance. The simple facts upon which the court is asked to decide this question are that the money was borrowed in 1922 at 8 per cent. per annum, and the debentures are payable on 14th May, 1942, and that every debenture-holder may call upon the Company to repay the amount secured by his debenture earlier by annual payments of 10 per cent.

Upon these bare facts it is difficult to affirm, at any rate with certainty, that payment of the difference between the reduced and the contract rate of interest falls within the incidental power. Additional facts might show it to be within the power, but some facts are conceivable which quite well might lead to the other conclusion. It is therefore undesirable that the question should be answered in the present proceedings.

The appeal should be allowed. The order of the Supreme Court, in so far as it answers the questions in the Special Case, and makes declarations thereon, should be discharged, and, in lieu thereof, it should be declared, in answer to Questions (a), (b) and (c), that all the debentures are within the operation of s 19 (1) of the "Financial Emergency Act 1931," as amended, and that payment to the holders of such debentures of the reduced rate of interest made in pursuance of s 19 is a full discharge of the respondent Company's liability for interest under such debentures in respect of the period to which such payment relates, and it should further be declared that no answer ought to be given to Question (d).

The Company offering no objection, the costs of all parties should be paid by the Company as between solicitor and client.