See

• Jurisdiction: Papua New Guinea
• Court: High Court
• Judge: Evatt J:
• Judgment Date: 31 August 1933
• Citation: (1934) WN (Eng) 129
• Judgment Number: Jolley v Mainka (1933) 49 CLR 242; 7 ALJ 214; 39 ALR 506; [68/1932]. Special leave to appeal granted by Privy Council, but not proceeded with
• Year: 1934

High Court: Rich J, Starke J, Dixon J, Evatt J

Judgment Delivered: 31 August 1933

1 Currency—Debt—Territory of New Guinea—Contract—Mortgage—Payment of moneys secured—"In gold, or in currency equivalent thereto"—Interest due, 900 pounds—Nine hundred Australian pound notes paid by mortgagor—Satisfaction of debt—Legal tender—Treaty of Peace Act 1919 (9 & 10 Geo V c33)—The Constitution (63 & 64 Vict. c. 12), s51(vi), (xxxix), (xxxix), s122—New Guinea Act 1920–1926 (No 25 of 1920—No 15 of 1926), s13, s14 —Commonwealth Bank Act 1911–1931 (No 18 of 1911—No 6 of 1931,) s60H(1)(b), s49

2 Constitutional Law (Cth)—Mandated Territory of New Guinea—Authority of Commonwealth Parliament.

The Commonwealth Bank Act 1911–1931 provides, by s60H(1), as follows:—"Australian notes may be issued in any of the following denominations, namely, five shillings, ten shillings, one pound, five pounds, ten pounds or any multiple of ten pounds, and shall . . . (b) be a legal tender throughout the Commonwealth and throughout all territories under the control of the Commonwealth."

In pursuance of an agreement for the sale and purchase of land situate in the Mandated Territory of New Guinea, mortgages, executed in 1926 at Rabaul by the appellant in favour of the respondent, provided that all payments thereunder "shall be made in gold or in currency equivalent thereto at the market or exchange rate current at the time when every such payment is actually made." The principal sums secured by the mortgages were expressed in pounds. On 1 May 1931 the appellant paid to the credit of the respondent's account with a bank at Rabaul nine hundred Australian one pound notes in full payment of £900 interest falling due under the mortgages on 30 June 1931. At all material times the equivalent of £900 in gold in Rabaul was eleven hundred and seventy–two Australian pound notes.

Held that the provisions of s60H(1)(b) of the Commonwealth Bank Act 1911–1931 applied to the Territory of New Guinea and, therefore, the payment of nine hundred Australian one pound notes satisfied the debt of £900 due under the mortgages.

The nature and extent of the authority of the Commonwealth Parliament over the Mandated Territory of New Guinea discussed.

Decision of the Central Court of the Territory of New Guinea reversed.

APPEAL from the Central Court of the Territory of New Guinea.

The plaintiff, Karolina Charlotte Mainka, was the owner of two freehold blocks of land, Livuan and Londip Plantations, which latter included what was known as Londip Reserve, situate in the Kokopo District in the Territory of New Guinea. An agreement for the sale of these lands by the plaintiff to the defendant, Frederick Reidy Jolley, was made between the parties at Rabaul in the Territory of New Guinea on 26 November 1926. In pursuance of the agreement, mortgages over the properties sold were executed by the defendant in favour of the plaintiff for the purpose of securing the payment of the balance of purchase money together with interest thereon. The mortgages were a first mortgage and a second mortgage over Livuan for £6,000 and £9,600 at 6½ per cent per annum and 8 per cent per annum respectively, and a first mortgage and a second mortgage over Londip for £4,000 and £6,400 at 6½ per cent per annum and 8 per cent per annum respectively. Two of the mortgages contained a provision, similar in terms to a clause in the agreement, as follows: "It is hereby expressly agreed that all repayments of principal or payments of interest due and payable hereunder shall be made in gold or in currency equivalent thereto at the market or exchange rate current at the time when such payment is actually made." The other two mortgages were, at the hearing of the action referred to hereunder, rectified by Chief Judge Wanliss, so as to include a similar provision, his Honor finding that its omission arose from mutual mistake. No appeal was made from this finding.

On 30th June 1931, a sum of £900 became due, being six months' interest payable under the mortgages on a sum of £24,000, which was the total principal sum then due. Before this sum became due, however, the defendant by his attorney, on 1 May 1931, paid to the credit of the plaintiff's account with the Bank of New South Wales at Rabaul nine hundred Australian one pound notes "in full payment of interest falling due on 30 June next on the Londip and Livuan Plantation mortgages." At all material times the equivalent of £900 in gold in Rabaul was eleven hundred and seventy–two Australian pound notes, as, at all such times, the rate of exchange was £30 5s. per £100.

The plaintiff claimed that the payment made by the defendant was not made in gold or in currency equivalent thereto, as provided for in the agreement and the mortgages, but in depreciated Australian currency. She accepted in part payment the notes so paid to the credit of her account by the defendant and sued him in the Central Court of the Territory of New Guinea for the sum of £250, which she claimed was the balance owed to her by the defendant in respect of the six months' interest in question. In addition to various defences, the defendant demurred to the plaintiff's claim on the ground that as a matter of law the payment of £900 in nine hundred Australian pound notes was a compliance with the provision in the agreement and mortgages as to the mode of payment. Chief Judge Wanliss held that, although Australian notes were legal tender within the Territory of New Guinea, the agreement that payments should be made by the defendant to the plaintiff in gold or in currency equivalent thereto at the market or exchange rate current at the time of such payments was a perfectly legal agreement at the time it was made, and it had not been affected by subsequent legislation, and the defendant had not complied with the terms of the agreement. Judgment was given in favour of the plaintiff in the sum of £225, to which amount she had reduced her claim.

From that decision the defendant now, by leave, appealed to the High Court under the provisions of s24 of the Judiciary Act 1921–1931 (NG).

Further material facts appear in the judgments hereunder.

Flannery KC (with him Sugerman), for the appellant. The agreement between the parties was one which contemplated the sale of a property for a sum of money, and that that sum of money should, under the law as then existing in the Mandated Territory, be satisfied in either of two currencies, that is, coin or Australian notes. It was not an agreement to pay bullion, but was an agreement to pay money. The appellant's obligation was fulfilled and discharged by payment in the alternative currency. The position of the Mandated Territory was considered in Mainka v Custodian of Expropriated Property (1924) 34 CLR 297. The Mandated Territory of New Guinea became a territory under the control of the Commonwealth on 9 May 1921, that is, on the date of the commencement of the New Guinea Act 1920—which was assented to in 1920 in anticipation of the mandate—and upon the happening of that event the provisions of s60H(1)(b) of the Commonwealth Bank Act 1911–1931, as inserted by the amending Act of 1920, applied to the Mandated Territory. The words of s60H(1)(b) are apt and proper to include the Mandated Territory. By the provisions of that section, aided by s13 of the New Guinea Act 1920, Australian notes are made legal tender within the Territory. In the circumstances it was not necessary that such provisions should be specifically extended to the Territory by Act. Australian coins are legal tender within the Territory by virtue of the provisions of s7 of the Coinage Act 1909, which were specifically adopted by the Laws Repeal and Adopting Act 1921–1927 (NG). In order to ascertain the real intention of the parties as to the mode of payment the Court should look at the transaction as a whole (In re Societe Intercommunale Belge d'Electricite; Feist v Societe Intercommunale Belge d'Electricite (1933) 49 TLR 8, 344; 175 LT Jo 226).

EM Mitchell KC (with him RK Manning), for the respondent. S60H(1)(b) of the Commonwealth Bank Act 1911–1931 did not, at material times, apply and never was applied to the Mandated Territory. The mandate was granted to the Commonwealth subsequently to the date on which assent was given to the New Guinea Act 1920; therefore, at...