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LA313 - Commercial Law - Cases

HOUSE OF LORDS

 

MILIANGOS
RESPONDENT

AND

GEORGE FRANK (TEXTILES) LTD.
APPELLANTS

 

Before : Lord Wilberforce, Nov. 5 Lord Simon of Glaisdale, Lord Cross of Chelsea, Lord Edmund-Davies and Lord Fraser of Tullybelton.

1975 May 19, 20, 21, 22; Nov.5

Currency--Contract-Foreign debt--Contract made in Switzerland stipulating payment in Swiss currency-Whether English judgment can be expressed in foreign currency-Date for conversion.

Judicial Precedent-House of Lords decision-How far binding?––English judgment to be expressed in sterling-Fresh considerations arising-Instability of currencies-Grounds for departing from previous decision

By written contracts made in 1971 a Swiss seller agreed to supply English buyers with goods at a price expressed in one contract in Swiss francs payable within 30 days of date of invoice to a Swiss bank. The goods and invoices were delivered in the autumn of 1971, but the price was not paid and bills of exchange drawn in Switzerland and accepted by the buyers were dishonoured on the due dates. In 1972 the seller started two actions, later consolidated, in England in the first action he claimed the sums due in Swiss francs converted into sterling at the breach date. On November 22, 1974, the buyers intimated that they would submit to judgment. On November 26, 1974, the Court of Appeal in Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416 held (inter alia) that the rule that English courts could express their money judgments in sterling only should be discarded and that judgments should be given in the currencies of foreign countries when the foreign currency was that of the contract and, the money of payment. The seller in the present case thereupon amended his pleadings to ask for judgment in Swiss francs as an alternative to claiming in sterling.

Bristow J gave judgment for the moneys due expressed in sterling, holding that the rule that the English courts could express their judgments only in sterling had not been altered either by Parliament or by any decision of the House of Lords. The Court of Appeal reversed his, decision and, following Schorsch Meier G.m.b.H. v. Hennin, gave judgment for the seller ordering the buyers to pay the sum due in Swiss francs, the currency of the contract, or the equivalent in sterling at the time of payment.

On appeal to the House of Lords:

Held (Lord Simon of Glaisdale dissenting), (1) that it was legitimate for the House of Lords to depart from the "breach date conversion" rule and recognise that an English court was entitled to give judgment for a sum of money expressed in a foreign currency in the case of obligations of a money character to pay foreign currency under a contract, the proper law of which was that of a foreign country, and when the money of account was that of that country or possibly some country other than the United Kingdom (post, pp. 463E, 467G-H, 497H, 500A-B, 501F).

(2) That the claim had to be specifically for foreign currency or its sterling equivalent and conversion should be at the date when the court authorised enforcement of the judgment in terms of sterling (post, pp. 468F-G, 497H-498A, 501A-B, H-502A).

(3) That the instability which had overtaken the pound sterling and other major currencies since the decision of the House of Lords in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, as well as the procedures evolved in consequence by the English courts and by arbitrators in the City of London to secure payment of foreign currency debts in foreign currency, justified departure from that decision in terms of the Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234 since a new and more satisfactory rule could be stated to enable the courts to keep step with commercial needs and would not involve, undue practical and procedural difficulties (post, pp. 467E-F, 469P, 497E-F, 501D).

Manners v. Pearson Son [1898] 1 Ch. 581. C.A.; Young v. Bristol Aeroplane Co. Ltd. [1946] A.C. 163, H.L.(E) and Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416, C.A. considered.

In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, H.L.(E) not followed.

Per curiam. The only judicial means by which. decisions of the House of Lords can be reviewed is by the House. itself under the declaration of 1966 (post, pp. 459E-F; 470G-H, 476 C-D, 496A-C).

Decision of the Court of Appeal [1975] Q.B. 487; [1975] 2 W.L.R. 555; [1975] 1 All E.R. 1076 affirmed.

The following cases are referred to in their Lordships' opinions.

Admiralty Commissioners v. S.S. Amerika .(Owners) [1917] A.C.38, H.L.(E).
Baarn, The [1933] P. 251, C.A.
Bagshaw v. Playn (1594) Cro.Eliz. 536.
Baker v. The Queen [1975] A.C. 774; [1975] 3 W.L.R.113; [1975] 3 All E.R. 55, P.C.
Beamish v. Beamish (1861)9 H.L.Cas.274 H.L.(I).
Beswick v. Beswick [1966] Ch. 538; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1. C.A.; [1968] A.C.58; [1967] 3 W.L.R. 932; [1967] 2 All E.R. 1197, H.L.(E.)
Bonham's (Dr.) Case (1610) 8 Co. Rep. 107a.
British American Continental Bank Ltd., In re, Credit General Liegeois' Claim [1922] 2 Ch. 589.
Broome v. Cassell & Co. Ltd. [1972] A.C. 1027; [1971] 2 W.L.R. 645: [1972] 1 All E.R. 801, H.L.(E.).
Broome v. Cassell & Co. Ltd. (No. 2) [1972] A.C. 1136, [1972] 2 W.L.R. 1214; [1972] 2 All E.R. 849, H.L.(E.).
Celia (S.S.) (Owners) v. S.S. Volturno (Owners) (The Volturno) [1921] 2 A.C. 544, H.L.(E.).
Chesterman's Trusts, In re [1923] 2 Ch. 466, Russell J. and C.A.
Cuming v. Munro (1792) 5 T.R. 87.
Dawson, decd., In re [1966] 2 N.S.W.R. 211.
Deutsche Bank Filiale Nurnberg v. Humphrey (1926) 272 U.S. 517.
Di Ferdinando v. Simon, Smits & Co. Ltd. [1920] 2 K.B. 704; [1920] 3 K.B. 409, C.A
Director of Public Prosecutions for Northern Ireland v. Lynch [1975] A.C. 653; [1975] 2 W.L.R. 641; [1975] 1 All E.R. 913, H.L.(N.I).
Draper v. Rastal (1605) 1 Cro.Jac. 88.
Edwards v. Porter [1925] A.C. 1, H.L. (E.).
Goudy v. Duncombe (1847) 1 Exch. 430.
Halcyon the Great, The [1975] 1 W.L.R. 515; [1975] 1 All E.R. 882.
Harper v. National Coal Board (Intended Action), In re [1974] Q.B. 614; [1974] 2 W.L.R. 775; [1974] 2 All E.R. 441, C.A.
Hart v. Hart (1881) 18 Ch.D. 670.
Hyslops v. Gordon (1824) 2 Sh.App. 451, H.L.(Sc.).
Jugoslavenska Oceanska Plovidba v. Castle Investment Co. Inc. [1974] Q.B. 292; [1973] 3 W.L.R. 847; [1973] 3 All E.R. 498, C.A.
Knill v. Dumergue [1911] 2 Ch. 199; 80 L.J.Ch. 308, C.A.
Launchbury v. Morgans [1973] A.C. 127; [1972] 2 W.L.R. 1217. [1972] 2 All E.R. 606, H.L.(E.).
Liddell's Settlement Trusts, In re [1936] Ch. 365; [1936] 1 All E.R. 239, C.A.
Lloyd Royal Belge S.A. v. Louis Dreyfus Co. (1927) 27 LI.L.Rep. 288, C.A.
Manners v. Pearson & Son [1898] 1 Ch. 581, C.A.
Nederlandsch-Amerikaansche Stoomvaart Maatschappii N.V.v. Royal Mail Lines Ltd. [1958] 1 Lloyd's Rep. 412.
Palmer v. Lark [1945] Ch. 182. [1945] 1 All E.R. 355.
Plaine v. Bagshaw (1594) Moo.K.B., 704;sub nom. Bagshaw v. Playn, Cro. Eliz. 536.
Rands v. Peck (1622) Cro.Jac. 618.
Reg.v. Knuller (Publishing, Printing and Promotions Ltd. [1973] A.C. 435; [1972] 3 W.L.R. 143; [1972] 2 All E.R.. 898, H.L.(E.)).
Schorsch Meier G.mb.H. v. Hennin [1975] Q.B. 416; [1974] 3 W.L.R. 823; [1975] 1 All E.R. 152, C.A.
Shaw v. Director of. Public Prosecutions [1962] A.C. 220; [1961] 2 W.L.R. 897; [1961] 2 All E.R: 446, H.L(E.).
Smith. v Central Asbestos Co. Ltd. [1973] A.C.518; [1972] 3 W.L.R. 333; [1972] 2 All E.R. 1135, H.L.(E.).
Société des Hôtels Le Touque Paris-Plage v. Cummings [1922] 1 K.B.45 1, C.A.
Teh Hu, The [1970] P.106; [1969] 3 W.L.R. 1135; [1969] 3 All E.R. 1200, C.A.
United Railways of Havana and Regla Warehouses Ltd., In re [1961] A.C.1007; [1960] 2 W.L.R. 969; [1960] 2 All E.R. 332 H.L.(E.).
Vionnet (Madeleine) et Cie. v. Wills [1940] 1 K.B. 72; [1939] 4 All E.R. 136, C.A.
Ward v. Kidswin (1625) Latch 77, 84; sub nom. Ward v. Kedgwin, Palm. 407.
Ward's Case (1625) Latch 4.
West Midland Baptist (Trust) Association (Inc.) v. Birmingham Corporation [1970] A.C. 874; [1969] 3 W.L.R. 389; [1969] 3 All E.R. 172, H.L.(E.).
Willshalge and Davidge's Case (1586) Leon. 41.
Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718; [1944] 2 All E.R. 293, C.A.; [1946] A.C. 163; [1946] 1 All E.R. 98, H.L.(E.).

The following additional cases were cited in argument:

Algemene Transport- en Expeditie Onderneming Van Gend en Loos (N.V.) v. Nederlandse Tariefcommissie [1963] C.M.L.R. 105.
British American Continental Bank Ltd., In re, Goldzieher and Penso's Claim [1922] 2 Ch. 575.
British Bank for Foreign Trade Ltd. v. Russian Commercial and Industrial Bank (1921) 38 T.L.R. 65.
Costa v. E.N.E.L. [1964] C.M.L.R. 425.
Crampton v. Varna Railway Co. (1872) 7 Ch.App. 562.
Cummings v. London Bullion Co. Ltd. [1952] 1 K.B. 327; [1952] 1 All E.R. 383, C.A.
Custodian, The v.. Blucher [1927] 3 D.L.R. 40.
Director of Public Prosecutions v. Shannon [1975] A.C. 717; [1974] 3 W.L.R. 155; [1974] 2 All E.R. 1009, H.L.(E.).
Grosvenor Hotel, London, In re (No. 2) [1965] Ch. 1210; [1964] 3 W.L.R. 992; [1964] 3 All E.R. 354, C.A.
Kornatzki v. Oppenheimer [1937] 4 All E.R. 133.
McDonald (A. H.) & Co. Pty. Ltd. v. Wells (1931) 45 C.L.R. 506.
Macfie's Judicial Factor v. Macfie, 1932 S.L.T. 460.
Salim Nasrallah Khoury (Syndic in Bankruptcy) v. Khayat [1943] A.C. 507; [1943] 2 All E.R. 406, P.C.
Tillam Boehme and Tickle Pty. Ltd., In re [1932] V.L.R. 146.

APPEAL from the Court of Appeal.

This was an appeal against an order of the Court of Appeal (Lord Denning M.R., Stephenson and Geoffrey Lane L.JJ.) dated February 10, 1975. The order allowed the appeal by the present respondent, Michael Miliangos, from a judgment of Bristow J. given on, December 4, 1974. whereby he refused to order payment by the appellants, George Frank (Textiles) Ltd., to the respondent of Swiss francs. 416,144.20 but instead gave judgment for the respondent in the sum of £42,038.4991, which the parties agreed was the sterling equivalent of Swiss 416,144.20 at the date when payment thereof fell due.

By a writ and statement of claim dated April 20, 1972. [1972 M. No. 1915], Miliangos, a Swiss. resident in Zurich, brought an action against George Frank (Textiles) Ltd., an English company, claiming the sum of polyester Swiss francs 415,522.45 (£44,440.90) due but unpaid for the price of polyester yarn sold and delivered to the defendants under a written contract dated May 14, 1971. The claim stated that the goods had been delivered between June and November 1971 and that invoices had been sent to the defendants at various dates in 1971 for the total sum claimed. Alternatively the plaintiff claimed against the defendants on two bills of exchange drawn by the plaintiff at Payerne in Switzerland and accepted by the defendants but which had been dishonoured on presentation on the due date, January 31, 1972, the sums of Swiss francs 27,619.45 (£29,264.11) and Swiss francs 27,394 (£2,929.90) respectively and the cost of protesting the bills, totalling Swiss francs 621.75 (£66.49); and interest on the sums claimed under section 3 of the Law Reform (Miscellaneous Provisions) Act 1934. By their defence the defendants admitted the deliveries but claimed that in breach of the contract part of the yarn so delivered was unfit for its purpose and of unmerchantable quality; and they assessed their loss in English weight and pounds sterling, and counterclaimed for damages.

By a second writ [1972 M. No. 2957] issued on June 29, 1972, further sums were claimed under another contract and other invoices, and an alternative claim on dishonoured bills of exchange. The actions were consolidated by an order of October 19, 1973, and set down for hearing on December 2, 1974. By a letter dated November 22, 1974, the defendants abandoned their defence and counterclaim and stated that they would submit to judgment.

On November 26, 1974, the Court of Appeal delivered judgments in Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416. The plaintiff thereupon, on December 2, 1974, amended the statement of claim in the first action to claim Swiss francs 415,522.45 as an alternative to the claim in sterling, or alternatively Swiss francs 301,635.80 under the bills of exchange plus the cost of protesting them; damages for loss on devaluation: and interest under the Act of 1934.

Andrew Leggatt Q.C. and John Peppitt for the appellant. English courts can express their judgments only in the currency of this country: Manners v. Pearson Son [1898] 1 Ch. 581, 586-587, 591-592; Di Ferdinando v. Simon, Smits Co. Ltd. [1920] 3 K.B. 409, 412: S.S.Celia (Owners) v. S.S. Volturno (Owners) (The Volturno) [1921] 2 A.C. 544. 547-548, 561, 566-567; Deutsche Bank Filiale Nurnberg v. Humphrey, (1926) 272 U.S. 517; Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72: Salim Nasrallah Khoury (Syndic in Bankruptcy) v. Khayat [1943] A.C. 507; In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, 1028, 1029-1030, 1033-1034, 1042-1045, 1086 and The Teh Hu [1970] P.106, 110, 112, 124, 126, 128, 129.

Jugoslavenska Oceanska Plovidba v. Castle Investment Co. Inc. [1974] Q.B. 292, 298, 301, was wrongly decided and should be treated very narrowly. If it were correct it would create more problems than would justify departure from the established rule. For example, if a judgment were given in terms of a foreign. currency, what should be the rate of interest? So far loss has been computed on the basis, of what it would have to cost to borrow the money in question. But if the judgment is in a foreign currency the question arises where the money is to be borrowed.

The underlying principle of the rule, as to the conversion of foreign currency into sterling is set out in Dicey & Morris, The Conflict of Laws, 9th ed. (1973), p. 908, r. 174.

It is submitted: (1) A debt expressed in a foreign currency it converted into English currency at the rate of exchange prevailing at the date when it becomes due and payable: Lloyd Royal Belge S.A. v. Louis Dreyfus Co. (1927) 27 LI.L.Rep. 288; Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72; Salim Nasrallah Khoury's case [1943] A.C. 507.

(2) (a) Breach of an obligation to pay a sum in a foreign currency sounds in damages; and there is no sufficient peculiarity in the obligation to pay money (as distinct from other forms of contract) as could justify the adoption of a different rule for the calculation of damages arising from its breach: United Railways of Havana [1961] A.C. 1007. (b) For the purpose of a judgment for damages where damage is measured in foreign currency, the foreign sum is converted into English currency at the rate of exchange prevailing: (i) in contract, at the date of breach: Di Ferdinando [1920] 3 K.B. 409; and (ii) in tort, at the date when the loss was incurred: The Volturno [1921] 2 A.C. 544.

(3) The rule has been adopted respectively by the legislature and in the Rules of the Supreme Court in (a) (i) section 72(4) (payment) and section 57 (2) (damages) of the Bills of Exchange Act 1882; (ii) section 2 (3) of the Foreign Judgments (Reciprocal Enforcement) Act 1933; and (b) R.S.C., Ord. 42, r. 1 (4) (form of judgment), Ord. 45, r. 1 (5) (enforcement of money judgments), Ord. 45, r. 5; see also Ord. 1, r. 4 (decimal currency).

(4) If the rule were otherwise, practical difficulties would arise in relation to (a) set off (R.S.C., Ord. 18, r. 17), (b) payment in (R.S.C., Ord. 22, r. 1), (c) costs, (d) interest, (e) conversion into sterling, (f) county court jurisdiction, since that jurisdiction is fixed at £1,000 and, if the rate of exchange from day to day were to be the criterion, a case might be within the jurisdiction one day and outside it the next.

(5) The rule has not been abrogated by article 106 (1) of the European Economic Community Treaty 1972.

(6) The rule should be retained for the reasons cited (especially those of the House of Lords in United Railways of Havana [1961] A.C. 1007): there has been no such change of circumstances since 1960 as would warrant the conclusion that what was right then is no longer right now.

(7) The Court of Appeal was not at liberty to discard the rule on the ground that the reasons for it no longer existed, (a) because the Court of Appeal is bound to follow an applicable decision of the House of Lords unless and until it is reversed by Parliament or by the House of Lords itself; (b) because, in any event. there has been no relevant alteration to the pre-existing law in either of the respects relied on by the Court of Appeal. namely, (i) the change in the form of order for the payment of money: Supreme Court Practice 1973, R.S.C., Ord. 42, r. 1 (2); and (ii) the decision of the House of Lords in Beswick v. Beswick [1968] A.C. 58 in relation to orders for specific performance of contracts to pay money.

(8) A creditor under a foreign contract who obtains a judgment expressed in foreign currency can convert it into English currency at the rate exchange prevailing on the date of the judgment, (a) when the judgment is registered in England under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (see section 2 (3)) or (b) for the purposes of an action brought in England to enforce the judgment.

Here there is a breach of a contract to pay in Swiss francs and the rate of exchange is taken at the date of the breach: see Macfie's Judicial Factor v. Macfie 1932 S.L.T. 460,462; A. H. McDonald & Co. Pty. Ltd. v. Wells (1931) 45 C.L.R. 506, 515; In re Tillam and Boehme and Tickle Pty. Ltd. [1932] V.L.R. 146 and The Custodian v. Blucher [1927] 3 D.L.R. 40.

It is not open to the Court of Appeal to take the view that a previous decision of the House of Lords is no longer applicable because of a change of circumstances.

In Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416, 425 Lord Denning M.R. departing from the Havana case [1961] A.C. 1007. relied on the fact that the form of judgment had been altered. But, as regards the form of final judgment after assessment of damages, Form No. 43 at p. 23 of the Supreme Court Practice 1973, Vol. 2, it is unthinkable that in the formulation of the new forms the difference between the words "do recover" and " do pay "should have altered settled practice. See R.S.C. Ord. 1, r. 4 (3), the reference to the Decimal Currency Act 1967, R.S.C.. Ord. 42, r.1 (4), and Ord. 45, r.1 (1), (5).

In Schorsch Meier [1975] Q.B. 416, 425 Lord Denning M.R. also relied on Beswick v. Beswick [1966] Ch. 538; [1968] A.C. 58 and said that. the Havana decision [1961] A.C. 1007 had rested on the former inability of the court to order specific performance of a contract to pay money. But Beswick v. Beswick [1966] Ch. 538, 555. 560, 565; [1968] A.C. 58. 81 was not argued in that light. See Dicey & Morris, The Conflict of Laws, 9th ed., p. 914, illustration 3, and Lloyd Royal Belge. 27 Ll.L.Rep. 288. 291, 293, 294, where the Court of Appeal considered the remedy of specific performance.

Lord Denning M.R. erred in holding on the two grounds on which he relied that the former rule no longer existed: see also section 2 (3) of the Foreign Judgments (Reciprocal Enforcement) Act 1933.

So long as Schorsch Meier [1975] Q.B. 416 stands it is liable to be treated by practitioners as binding: see Halsbury's Laws of England, 4th ed., vol. 12 (1975), para. 1201, pp. 485-486 where in the note to the paragraph on foreign currency the case is cited as establishing an exception. At the most that case is doubtful and constitutes no good ground for adopting the new rule for which the respondents contend, either generally or in the case of countries outside the E.E.C.

As to the effect of section 2 (1) of the European Communities Act 1972. article 106 (1) of the Treaty of Rome, in so far as it relates to payments and capital, is concerned with the exchange control provisions of member States and has no application to the issues raised in the present case. Alternatively, it creates no rights enforceable at the suit of individuals: see Costa v. E.N.E.L [1964] C.M.L.R. 425 and N.V. Algemene Transport-en Expeditie Onderneming Van Gend en Loos v. Nederlandse Tariefcommissie [1963] C.M.L.R. 105. At best article 106 (1) imposes on the United Kingdom a duty to authorise the payments and movements or transfers of capital described therein. As such it would not be enforceable at the suit of an construction it constitutes no more than an under individual. On its true construction taking by member States to take specified steps at an unascertained future date.

The established rule now. in question should not be overturned: Admiralty Commissioners v. S.S. Amerika (Owners) [1917] A.C. 38, 41, 42, 43, 56.

As to the enforcement of money judgments, after the Debtors Acts 1869 and 1875 there could be enforcement by imprisonment on proof that the debtor had had means to pay, but since the Administration of Justice Act 1970 the jurisdiction to commit a defaulter is only exercisable by the High Court in respect of a High Court maintenance order: see The Supreme Court Practice 1973, pp. 675-676 in the notes to R.S.C., Ord. 45, r.1. Under R.S.C., Ord. 45. r.5 a judgment to do or abstain from doing any act can be enforced by committal. Since the procedure by committal under the Debtors Acts is no longer available there is no means of enforcing a foreign money judgment unless it is said that an order for payment in a foreign currency is not an order for payment of money within the Debtors Acts.

In the light of the procedures in the English courts the respondents' contentions give rise to obvious difficulties, for example, in the case of a claim in one currency and a set-off in another. Further, if there was no conversion into English currency, the judge would not know at the date of judgment whether the set-off constituted a sufficient defence. In the case of payment in a foreign currency there would be embarrassing repercussions in the realm of costs. There would also be difficulties in calculating interest rates: should the place of calculation be the plaintiff's country or the country where the debt was incurred or some other place? Difficulties would also arise under sections 57 (2) and 72 (4) of the Bills of Exchange Act 1882. The effect of the respondents' contentions is to render the provisions of section 72 (4) otiose.

The principal merit of the current rule is its certainty. It is for the respondents to show why a rule which has stood for more than three centuries should now be upset.

Stuart McKinnon and David Hunt for the respondents. The respondents' basic proposition is that where the parties to an agreement provides for the money of account and the money of payment to be in a foreign currency, English law recognises as a substantive obligation that the price should be paid in. that currency: see Dicey & Morris, The Conflict of Laws, 9th ed., p. 894, r. 172; see also p. 877, r. 169. The principle there expressed is a correct statement of English law. The comment following rule 172 is fundamental. The rule as to conversion into sterling is a procedural rule and is not concerned with substantive rights but only with enforcement and procedure: see the sixth report of the Private International Law Committee 1962 (Cmnd. 1648), pp. 3-4, paragraphs 3-5, p. 5, paragraph 10 and appendix A, Article 1.

It is a matter of substantive law giving rise to a substantive right that when a debtor has agreed to pay in Swiss francs, judgment should be in Swiss francs and specific performance can be granted.

If the commodity argument is right as a matter of substantive (outside the narrow confines of the conversion rule) the foreign buyer has no right to recover his debt, not because his debt is a claim for damages but because by reason of the conversion rule he is prevented from recovering his debt.

In England the pound sterling can be just as much a commodity as is a foreign currency. For a dealer in foreign coinage sterling is a commodity, though in other circumstances it is money giving rise to a debt. When currency is a commodity it may be the subject of an action for damages but money is not a commodity when it is being used to buy goods. An action for the price of goods sold and delivered has always been treated as an action in debt. From the 15th century the writ of debt covered a wide field. But it is contended that an action to recover a foreign debt was treated as only an action to recover a foreign commodity and Ward v. Kidswin (1625) Latch 77 was treated as authority for that in the Havana case [1961] A.C. 1007, 1047; see also the Salim Nasrallah case [1943] A.C. 507.

In 1455 a creditor had a choice between two actions: see Year Books, 34 Hen. 6, pl. 12. He could sue in debt in the detinet, or in debt. The action of debt in the detinet entitled him to a judgment in a foreign currency and there followed a writ of inquiry to assess the value of the foreign currency in English currency. The judgment was conditional, in effect a judgment for damages to be assessed. Alternatively, the creditor could sue in an ordinary action of debt for the equivalent of the foreign currency in English money. Both debt and detinet were writs of debt and there were close links between them. Today there is existing no true parallel and no lesson is to be learnt by considering which of the two writs was applicable between 1455 and 1625. They do not establish that a foreign currency debt was then regarded as an obligation to deliver a commodity, breach of which sounded in damages. Nor do the cases in the Year Books (1481) 21 Edw. 4, pl. 38 and (1495) 11 Hen. 7. pl. 5.

As to the historical background of the action of debt, see Pollock and Maitland's History of English Law (1968), Vol. 2, pp. 173-174, 203, 207, 210-211 and Holdsworth, A History of English Law (1903), vol. II, pp. 366. 369, vol. 3, pp. 420-421. Willshalge and Davidge's Case (1586) Leon. 41 indicates that a creditor had the choice between suing for foreign money or suing for its value.

A debtor is entitled to discharge his debt in the currency of the contract if that is done at the place of payment. If the actual value of that currency is the same as at the prescribed date of payment, the payment is acceptable. This tender is a purely procedural matter which does not affect the substantive right.

If the money of account and of payment is Swiss francs there is a debt in Swiss francs and an obligation to pay in Swiss francs. The only objection made to that proposition is that the Swiss francs are said to be a commodity. The old cases which have been said to support this cannot be regarded as parallel to a modern commercial transaction. If the Swiss francs were a commodity it would be hard for the appellants to maintain that the obligation was a debt and the only action available would be one for damages for failure to deliver up that commodity. But if suing in debt for an amount of Swiss francs payable for goods sold and delivered amounts to, a claim for specific performance, that is what the respondent has done here.

As to the old `cases, Plaine v. Bagshaw (1594) Moo.K.B: 704; Cro.Eliz.536 provides little help when applied to modern commercial transactions. Such cases as Rands v. Peck (1622) Cro.Jac. 618 indicate that in the Havana case [1961] A.C. 1007, 1047 Viscount Simonds's interpretation of Ward v. Kidswin, Latch 77, was open to doubt. Cuming v. Munro (1792) 5 T.R. 87 rested on the justice of the case and not on the basis that there could not be a judgment in a foreign currency.

The Havana case [1961] A.C. 1007 and The Volturno [1921] 2 A.C. 544 are not binding authorities as to conversion, at least in relation to a debt in a foreign currency. The former case related to proof of a debt in an English liquidation in which there was a rule requiring conversion independently of whether there was a conversion rule in general litigation. And in both cases the conversion rule was conceded and never argued.

But, if in fact that case is a binding precedent as to the conversion rule, it should not be followed in a case such as the present where it can be shown that the creditor has a right in substantive law to recover in a foreign currency because: (1) The reasons for the conversion rule no longer exist and should not be allowed to alter substantive rights, since the rule is simply one of procedure. (2) The conversion rule leads to the breach date rule as a corollary; if the result of not following the Havana case [1961] A.C. 1007 is to outflank the breach date rule, that is a commendable result. If the conversion rule goes, the respondent is not concerned with the breach date rule because they get paid in Swiss francs. When the conversion rule in cases of debt has gone, the breach date rule is no longer relevant. If the respondent gets judgment in Swiss francs, it is purely a matter of procedure at what date he can enforce it, though conversion at the date of payment is preferable. There is only one date of payment, i.e. the date of the actual payment; the date of due payment relates to the breach date rule. The important thing is that the creditor should not get more than the value of the Swiss francs at the date of the actual payment. Their value at the date of due payment cannot be claimed, even though their value may have fallen.

Six reasons have been suggested against the respondent: (1) that the English courts do not know the value of foreign currencies; (2) that foreign currency is a commodity; (3) that there cannot be execution in a foreign currency; (4) that sterling is a stable currency; (5) that there cannot be specific performance of a contract to pay money; (6) that the old forms of judgment use the words "do recover."

[LORD WILBERFORCE intimated that their Lordships did not require to hear argument on the first point.]

As to (2), the commodity argument is not a reason which supports the rule; it arises out of applying the rule. If it is suggested that it is a reason for the rule, it cannot be supported. In debtor cases it was never used as a reason for the conversion rule but only as a justification for applying the breach date rule.

As to (3), the lack of execution in foreign currency is no obstacle. It was a situation foreseen in Bagshaw v. Playn, Cro.Eliz. 536; Moo.K.B.704, where there was a judgment in Flemish currency conditional on an inquiry as to its value. the equivalent of a judgment in Swiss francs today. In the old cases there was an assessment of value, a valuation by a jury as. near as possible to the date of actual payment. In a modern situation the solution of Lord Denning M.R. presents no difficulty so far as execution is concerned, because, if there was a judgment in Swiss francs.. the procedure would be to swear an affidavit as to the value of the foreign currency as close as possible to the date of execution, execution being in sterling. If there is a, substantive right to recover judgment in Swiss francs, then the Rules of the Supreme Court if and in so far as they alter or vary that right are ultra vires: see In re Grosvenor Hotel, London (No. 2) [1965] Ch. 1210, 1242-1243. If a right exists the rules are neither here nor there. As an example of the Rules of the Supreme Court being based on substantive law see The Supreme Court Practice 1973, Sixth Cumulative Supplement. the note on R.S.C., Ord. 42, r.1. The problems of execution are solved by the procedure set out by Lord Denning M.R. in Schorsch Meier [1975] Q.B. 416.

As to (4). the stability of sterling should not be judged according to the position in 1960. The first clear statement of the rule was in Manners v. Pearson & Son [1898] 1 Ch. 581. But the position has so substantially changed since then as to undermine the rule. The House of Lords may wish to take that circumstance into account, in particular the floating pound sterling.

As to (5), it has been argued that specific performance cannot be ordered in the case of a contract to pay money: see Halsbury's Laws of England. 3rd ed., vol. 36 (1961), p. 279, para. 386 referred to by Lord Denning M.R. in Schorsch Meier [1975] Q.B. 416, 424-425. Crampton v. Varna Railway Co. (1872) 7 Ch.App. 562 is cited as authority in the footnote. If Lord Denning M.R. was right there could not be specific performance of .a contract to pay money in the circumstances of Beswick v. Beswick [1968] A.C. 58. If he was wrong it does not hurt the respondent. One way or the other. it does not tell against the respondent. If Lord Denning was right it is not open to him to say that the law has changed since the Havana case [1961] A.C. 1007. As to the form of judgment for specific performance, see Halsbury's Laws of England, 3rd ed., vol. 36 (1961), pp. 334-335, para. 494. In the Havana case [1961] A.C. 1007, 1052, no argument was directed to the point stated by Lord Reid that the plaintiff cannot get specific performance of a contract to pay in dollars." See also Lloyd Royal Belge. 27 Ll.L.Rep. 288, 294.

As to (6) and the difference between the words "do recover" and "do pay" in the forms of judgment, the former Words implied that the judgment would. be expressed in sterling. The change to the words "do pay" suggest that there can be execution in a different currency. These points present no obstacle to recovering judgment in a foreign currency. Unless the hitherto accepted rule has some other form. it should, be disregarded.

As to the alleged difficulties with regard to set off, see R.S.C., Ord. 18, r17 and the sixth report of. the Private International Law Committee 1962 (Cmnd. 1648). pp. 16-17, para. 22. The English courts can easily adapt their procedure to give effect to foreign money claims in specie: see The Halcyon the Great [1975] W.L.R. 515.

As to the alleged difficulty with regard to county court Jurisdiction arising out of the fluctuations of foreign exchange, see section 41 of the County Courts Act 1959 dealing with the abandonment of part of a claim in order to give the court jurisdiction.

If the respondent had sought a declaration as to the amount he should it be paid. the declaration would have been in Swiss francs and there would have been no conversion: see Mann, The Legal Aspect of Money, 3rd ed. (1971), pp. 361-362. It would be strange if such, a declaration could be obtained but judgment could not be recovered for that sum., Kornatzki v. Oppenheimer [1937] 4 All E.R. 133 shows that there is no objection to a declaration in this country expressed in reichsmarks: see also British Bank for Foreign Trade Ltd. v. Russian Commercial and Industrial Bank (1921) 38 T.L.R. 65.

The appellants relied on sections 72(4) and 57(2) of the Bills of Exchange Act 1882. As to section 72(4), see the sixth report of the Private International Law Committee, pp. 3-5, paras. 3, 4(b), 5 and 10 and Mann, The Legal Aspect of Money, 3rd ed., p. 321. It would be absurd if a debtor. having agreed to pay in one currency could only be forced to pay in another. As to section 57(2), see p. 365 of Mann's book. The judgment date or the payment date could be argued for as the proper date of conversion in reliance on various cases. The majority report of the. Private International Law Committee accepts that the creditor should get what he bargained for (p. 3 para. 3). Parties who have agreed on payment in Swiss francs must accept the good or bad luck of appreciation or depreciation. The breach date rule is acknowledged to be unjust and not to give effect to what the parties wanted to achieve.

The appellants also relied on the Foreign Judgments (Reciprocal Enforcement) Act 1933 as giving an apparent advantage to creditors, but the debtor could simply pay the debt and the creditor could not sue and his cause of action would be satisfied.

Reliance is placed on the maxim "cessante ratione cessat ipsa lex": Broom's Legal Maxims, 10th ed. (1939), pp. 97-99 and Edwards v. Porter [1925] A.C. 1, 10. This is not a case within the principle of what was said in the Amerika case [1917] A.C. 38, 41, 43, 56 or Director of Public Prosecutions v. Shannon [1975] A.C. 717, 765-766. Here it is not sought to overturn a rule of substantive law.

The change which has occurred since 1960 is that since 1960 the pound sterling is no longer stable and there has been devaluation on a major scale: see the Jugoslavenska case [1974] Q.B. 292, on which doubt ought not to be cast. Here one is dealing with a debt and not with damages. In the case of conversion under the Carriage of Goods by Road Act 1965, article 27 of the Convention on the Contract for the International Carriage of Goods by Road adopts the actual date of payment rule.

The authorities indicate that the procedural conversion rule has been assumed throughout and never argued. When litigants have found themselves boxed in by it, they have submitted that the debt in question must be treated as damages. Manners v. Pearson & Son [1898] 1 Ch. 581, 585, 587, 592-593 really rested on the "commodity" argument. In the Ferdinando, case (1920) 2 K.B.704-706. 708; [1920] 3 K.B. 409 nothing was said in the Court of Appeal see also The Volturno [1921] 544, 546, 549, 551,553-555, 560,567, Sociétés Hôtels, Le Touquet, Paris-Plage v. Cummings, [1922] 1 K.B. 451, 453, 455-457, 465 illustrates the injustice of applying the breach date rule in, a debt context. The breach date is irrelevant when one is only concerned with the conversion rule. Vionnet's case [1940] 1 K.B. 72, 77-78, 79-80 was wrongly decided on a matter of principle. Salim Nasrallah Khoury [1943] A.C. 507, 511, 512-513 should not be applied to a situation of debt where there is an obligation as a matter of substantive law to pay in Swiss francs. As to the Havana case [1961] A.C. 1007, 1029-1030, 1034, 1043,1069, 1070, it is wrong to treat a debt as damages and a procedural rule of conversion should not deprive a debtor of a substantive right.

The assumed rule of procedure has been superseded by article 106 of the Treaty of Rome 1972 with regard to the currencies of member States of the European Economic Community and the procedural difficulties (if any) arising therefrom are bound to be overcome. In these circumstances there is no reason to preserve the assumed rule with regard to other foreign currencies. The direct application of article 106 does not arise in this case. The House of Lords should accept the decision in Schorsch Meier [1975] Q.B. 416 on this point without commenting on it, one way or the other. The law should be brought into line with it.

Hunt following. (1) The old authorities cited in the Havana case [1961] A.C. 1007 are not an essential part of the respondent's case because the question is not to be decided on the forms of action of the 16th and 17th centuries. Bagshaw v. Playn, Cro.Eliz. 536 exemplifies the nearest equivalent to the procedure suggested by Lord Denning M.R. in Schorsch Meier [1975] Q.B. 416. Draper v. Rastal (1605) 1 Cro.Jac. 88 is the first case of a contract for foreign coin in which it was held that the plaintiff must make his claim in English money. That case shows the pedigree of Ward v. Kidswin, Latch 77 in which 34 Hen. 6, pl. 12 was cited.

(2) When a debtor defaults on a foreign currency obligation the creditor may go either to court or to arbitration. (a) If the law remains as it now is the creditor's right to avail himself (if he can) of the Foreign Judgments (Reciprocal Enforcement) Act 1933 will remain, but there will be cases in which there are difficulties of jurisdiction in suing abroad.

If the creditor is forced to sue in England, he cannot receive more than lie was owed and. if there are any changes in the exchange rite. the debtor can benefit by them. If the foreign currency depreciates, the debtor can tender the depreciated foreign currency: see, the Le Touquet case [1922] 1 K.B. 451.

If sterling depreciates, then on the appellants' argument, all the debtor has to do is to wait to be sued here. The more the pound goes down, the more it is to the debtor's benefit to delay as long as he can. In this case the debt in terms of pounds at the date of breach was worth some £42.000 Now the same Swiss francs are worth some £72,000. Thus on the application of the breach date rule the creditor stands to lose some £30,000. It is no answer to say that the creditor should pursue his remedy in this country. with dispatch, since a debtor who adopts delaying tactics will take the matter out of his hands. In the present law the debtor will know that he will have to pay in. sterling, but the creditor does not know what that will. be, worth in; the currency. of the contract at the date, of judgment.

But, if the creditor goes to arbitration the matter will be governed by the Jugbslavenska case [1974] Q.B. 292. 298-299, 301-302, 305 the award can be made in foreign currency. No doubt should be cast on that decision.

(b) If the respondents succeed, foreign creditors will be able to invoke the Act of 1933 and if they sue in England they will be able to obtain a judgment in a foreign currency. If the claim and the judgment were in a foreign currency neither side would benefit by a fluctuation in the exchange rate. If the debtor does not pay there must be a conversion of some sort, but it takes only a short time to get execution. The debtor's area of delay would be diminished.

If a creditor has elected to be paid in a particular currency, he must stand by his election and claim for that currency; otherwise the creditor would have the best of both worlds.

The result would be that the law would be the same in court proceedings and in arbitrations.

(3) As to garnisheeing, see R.S.C., Ord. 49, r. 1 (1). It is accepted that the word "money " there means English decimal currency. But there is no need for the debt being garnisheed to be an English currency debt. There is nothing in Ord. 49 to prevent a judgment creditor of a sum in foreign currency from garnishing that sum.

Set off and payment into court can also be operated workably within the framework of the present rules. A payment in would be made on the basis of a stated rate of exchange. On judgment the court would decide whether the payment was sufficient to satisfy the judgment.

Leggatt Q.C. in reply. The court cannot force a defendant debtor to pay in foreign currency. In fact he never could do so unless he happened to have it in his safe. Hence there is the necessity for conversion at some date. That was all that was meant by what was said in Manners v. Pearson & Son [1898] 1 Ch. 581. To make an order for specific performance in the present case would outflank the Havana case [1961] A.C. 1007 and any such attempt is wholly unwarranted. It would also be unreal to try to restrict its effect to sums proved in a liquidation. It has been rightly interpreted as a decision about debt generally. The members of the House of Lords who decided it cannot have failed to understand what was said in the case of Manners [1898] 1 Ch. 581.

Because Miliangos was outside the jurisdiction the contract could not have been enforced specifically against him; the contract thus lacked mutuality and- accordingly could not have been made the subject of an order for specific performance against the English defendants. When there is a failure to pay the price under an English contract for the sale of goods it is irrelevant whether the action is for the price or for damages for failure to pay the price, because at a particular date the sum was dub and the defendant failed to pay it and what is claimed is a sum corresponding to what would have been the value at the date of the breach.; The right is the same when the contract is to pay in a foreign currency.

This well-established rule should not be upset: see Director of Public Prosecutions v. Shannon [1975] A.C. 717, 755-756. In the context in which the House of Lords is invited to abrogate this rule one should ask what will be the effect on sterling. It would tend to deprive sterling of its validity in international trade. When the pound was depreciating no contracts would be made in sterling and even English traders would tend to their business in Swiss francs.

The subject matter of the court's order is a sum of money and not a commodity. It cannot be treated as a sum of money when the parties do not want it to be a commodity and vice versa. This is not a case like In re Grosvenor Hotel, London (No. 2) [1965] Ch. 1210. The relevant Rules of the Supreme Court purport. not to alter the law, but to state it. The obligation of the debtor is to pay in English pounds. albeit depreciated. Either the foreign currency is money or it is not. If it is not. the debtor could only be ordered to deliver it, an order for specific performance. But if it is money, it must be available for set off. The whole English legal system in this context is based on the idea that " money " means only English money. If foreign money were to be included. there would have to be provisions for it to be used as subject matter for set off. One can imagine systems of using foreign money in our courts, but there is no reason why we should start inventing conversion dates. One might devise such a system of procedure, but it is not available now, the law on this subject being what it is. If the law is to be changed, it is appropriate that it should be done by the legislature.

If the House of Lords accepted the respondent's argument, there would arise in liquidation the dilemma of either applying a different rule. or holding that Havana [1961] A.C. 1007 was wrongly decided. Reliance is placed on the liquidation cases, In re British American Continental Bank Ltd. Goldzieher and Penso's Claim [1922] 2 Ch. 575 and In re British American Continental Bank Ltd. [1922] 2 Ch. 589.

The Jugoslavenska case [1974] Q.B. 292 should be overruled or at least the question whether or not it was rightly decided should be reserved.

This respondent relied on the Le Touquet case [1922] 1 K.B. 451, which was not followed in the Vionnet case [1940] 1 K.B. 72, 78-79 where the Crédit Lyonnais case [1922] 2 Ch. 589 was followed. The Vionnet case was considered by the Court of Appeal in Cummings v. London Bullion Co. Ltd. [1952] 1 K.B. 327, 331-332, 335-336.

Once it is accepted that there must be a conversion into sterling, the only question is: when? Within the confines of a case such as this an anomaly ought not to be created by acceding to the respondent's arguments.

Their Lordships took time for consideration.

November 5. LORD WILBERFORCE. My Lords, the facts in this case are as simple as in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007 they were complex. It is concerned with a contract made in May 1971 for the sale of 90,718 kilogrammes of polyester yarn at a price of 12.56 Swiss francs per kilogramme, price to be paid within 30 days of invoice. The proper law of this contract was Swiss law and the money of account and of payment was Swiss francs. The respondent, the seller, is a national of Switzerland and the yarn was produced by his firm in Switzerland. It was delivered in the autumn of 1971 under five invoices, each of which stated the price in Swiss francs, payment to be made within 30 days to a Swiss bank. The appellant company did not pay any part of the price. It accepted, by way of part payment, two bills of exchange drawn in Switzerland for a total sum of 300,000 Swiss francs payable on January 31, 1972, but these were dishonoured on presentation.

The action was begun by writ on April 20, 1972. In his statement of a claim the respondent claimed the amount of the price or, alternatively, the amount due on the bills expressed, in each case, in the sterling equivalent of the sum due in Swiss francs as at the dates when payment should have been made. The appellant delivered a defence and a counterclaim alleging that the yarn was defective and there followed a number of interlocutory steps arising out of this allegation. But on November 22, 1974, just before the action was due to come on for trial the appellant wrote to say that it abandoned the defence and counterclaim and would submit to judgment.

Thereafter the proceedings took a remarkable course. On November 26, 1974, the Court of Appeal (Lord Denning M.R., Lawton L.J. and Foster J.) announced their decision in a case involving a claim in German currency-Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416. Although they were faced with a unanimous decision of this House in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007 that, on a foreign currency claim, judgment can only be given in sterling, to which the foreign currency must be converted as at the date when the debt became due. the court held by a majority that an English court could give a money judgment in a foreign currency, when that currency was the currency of the contract. Lawton L.J., dissenting, considered that he was bound by the Havana Railways case. Unanimously, as a second ground of decision, the court held that where the creditor resided in an E.E.C. country, an English court was obliged (sic) by article 106 of the Treaty of Rome to give a judgment in the currency of the creditor, if that was the currency of the contract.

This decision was naturally welcomed by the respondent. So when this action came on for hearing on December 2, 1974, he applied to amend his statement of claim so as to claim the amount due to him in Swiss francs. This amendment was allowed by Bristow J. so that the claim became one for 415,522.45 Swiss francs for the price plus 621.75 the cost of protesting the two bills, making together 416,144.20 Swiss francs. Since, between the date in 1971 when payment was due and, the date of the hearing, sterling had fallen in value as against the Swiss franc from Sw.Frs.9.90 to 6.00 (approximately) to the £, this meant that if the respondent could obtain judgment in Swiss francs he could recover in sterling terms some £60,000, whereas if he had to accept the sterling equivalent at the 1971 rate he could recover only some £42,000.

This amendment having been made, the action (together with a second action into which it is unnecessary to enter) came for trial The learned judge found himself in a difficult position. On the one hand there was the decision of this House in the Havana Railways case [ 1961] A.C., 1007 which clearly precluded him from giving judgment in Swiss francs or from awarding the sterling equivalent of the sum due converted at any, other date than the date when the sum claimed was due. On the other hand there was the decision of the Court of Appeal in Schorsch Meier which had declined to apply the Havana Railways decision. In these circumstances he decided that he ought to follow the decision of this House and that the decision in Schorsch Meier was given per curiam.

An appeal was brought to the Court of Appeal and was heard in February 1975 by Lord Denning M.R., Stephenson and Geoffrey Lane L.JJ. It was submitted that the court, on indistinguishable facts, was bound by and should follow the Havana Railway's case, but the court declined to do so. It held that the majority decision in Schorsch Meier was not given per curiam (the unanimous alternative was not directly relevant since Switzerland is not an E.E.C. member) and that it was binding upon the Court. It therefore varied the judgment of Bristow J. so as to give judgment for the respondent for the sum claimed in Swiss francs. From this judgment appeal has come to this House. There has been no appeal in the Schorsc Meier case but since it was applied by the Court of Appeal in these proceedings I shall have to comment upon it. My Lords, it is clear from this account that some distortion of the judicial process has been brought about. As Bristow J. said [19751 Q.B. 487, 492:

"I am faced with a judgment of a majority of the Court of Appeal. which in its application to the issue raised before me says that a rule of English law taken for granted by the Court of Appeal and the House of Lords for some 350 years is no longer a rule of English law. The speeches of the House of Lords in Broome v. Cassell & Co. Ltd. [1972] A.C. 1027 constrain me in the circumstances to hold that the rule of law that my judgment can only be expressed in sterling is still of full force and effect, since Parliament has not altered it, nor has the House of Lords itself under its 1966 declaration: see Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234."

It has to be reaffirmed that the only judicial means by which decisions of this House can be reviewed is by this House itself, under the declaration of 1966. Whether it can or should do so is a difficult enough question, which I shall now examine.

My Lords, although the "breach date rule" has a long history, possibly, but, I think, not clearly, extending back to the Year Books, consideration of it at the present time as regards foreign money debts must start from the Havana Railways case [1961] A.C. 1007. For that was a case of a money debt as to which it was sought to persuade this House that a different rule should be applied from that which was admitted to be relevant to claims for damages for tort or for breach of contract. The claim there was for a debt (or debts) in U.S. dollars. due under a contract the proper law of which was held to be the law of Pennsylvania. the debtor (the United Havana Railways Co.) was English: the creditor was American. The proceedings were by way of proof in the liquidation of the debtor, not by action by writ, but it was not suggested that this made any difference, and I say at once that I do not think that, any distinction can be drawn on this ground. On the arguments presented which were at least strenuous, and after examination of the cases extending over a long period, the House unanimously decided that the provable sum in U.S. dollars had to be converted into sterling at the. rates of exchange prevailing when the relevant sums fell due and were not paid. They rejected the counter-suggestion that conversion should be made at the date of judgment. They did not take up or accept suggestions which had been made in some earlier cases that a separate rule applied to foreign money claims.

My Lords, even if I were inclined to question some of the arguments used in the speeches, I should find it inappropriate and unnecessary to say that, in the circumstances of the time and on the arguments and authorities presented, the decision was wrong or is open to distinction or explanation.

What we can do, and what is our responsibility, is to consider whether this decision, clear and comparatively recent, should be regarded as a binding precedent in today's circumstances. For that purpose it is permissible to examine the speeches in order to understand the considerations upon which the opinions there reached were based, for the ultimate c purpose of seeing whether there have emerged fresh considerations which might have appealed to those who gave those opinions and so may appeal to their successors.

The leading opinion was given by Viscount Simonds: Lord Radcliffe added some important observations but expressed agreement with it, and Lord Morris of Borth-y-Gest, concurred without comment.. The kernel of this opinion is in the critical paragraph where Viscount Simonds says [1961] A.C. 1007,1043:

"The question, summarily stated, is what sum in sterling is recoverable by a plaintiff suing in the courts of this country, for a sum of money payable in foreign currency in a foreign country under an instrument of which the proper law is a foreign law. Admittedly, the claim must be for a sterling sum and the judgment must be in sterling. It is established by authority binding on this House that a claim for damages for breach of contract or for tort in terms of a foreign currency must be converted into sterling at the rate prevailing at the date of breach or tortious act: see, for example, SS. Celia v. SS. Volturno [1921] 2 A.C. 544. But, it was said, doubts had been expressed whether the same rule applied where the claim arose from a failure to pay a debt expressed in terms of foreign currency, and it was urged that on principle the plaintiff should recover sterling at the rate prevailing at the date of judgment or, alternatively, at the date of the writ or other initiating step of the proceedings. To this it was answered that without undue refinement the two cases, damages and foreign debt (as I will call a debt in foreign currency) could not be distinguished, that an action to recover a. foreign debt was upon a sound analysis nothing else than an action for recovery of damages for breach of a contract to deliver foreign currency, that there was ample authority, ancient and modern, for this proposition, and that in any case convenience demanded that the same rule should obtain."

There are three essential steps here: the first, which was accepted or assumed without argument, is that the claim must be in sterling and that judgment must be in sterling: the second, that an action to recover a foreign debt is an action in damages: the third, that authority and convenience requires that the same rules should obtain for all actions in damages whether for failure to pay a foreign debt or founded on tort or breach of contract. It is obvious that of these the first is fundamental and that the others in some degree follow from it.

Lord Reid opens his remarks (p. 1050) by saying that, although the weight of authority in favour of the "breach date" is very great, the House was not bound by authority so that the whole matter could be re-examined. He examines and analyses various types of contract, for the supply of goods, where the contract is governed by English or by foreign law, and for repayment of money lent. I think it is fair to say that, in logic, he saw good reason for treating money claims separately (pp. 1051-1052):

"The original reason for the rule has no application in such a case . . . dollars lent in America are not a commodity, and if they are not repaid at the due date there can be no question of an American going into the market and buying dollars to replace those which the debtor failed to deliver."

There is then the critical passage, at p. 1052:

"The reason for the existing rule is, I think, primarily procedural. A plaintiff cannot sue in England for payment of dollars, and he cannot get specific performance of a contract to pay dollars-it would not be right that he should. So at best he could only have the dollars converted to sterling at the date of judgment."

His Lordship then mentions a number of practical objections against the date of judgment, the date of payment and the date of the writ and concludes at p. 1053:

"That rule may in some cases be artificial, it may even be unjust, but it has been accepted for a long time, it is clear avid certain, and no other rule could be relied on to produce a more just result: indeed, no other rule is really practicable."

The fair conclusion from this, I think, is that if Lord Reid had been persuaded that action could be brought for payment of dollars, and procedural and practical difficulties in doing so could be overcome. His inclination on grounds of justice would have been in favour of a separate rule relating to payment of money debts expressed in foreign currency, at least where they arise under a contract whose proper law is foreign. Lord Radcliffe, as I have stated, expresses agreement with the opinion of. Viscount Simonds. He continues with a passage in which he rejects the commodity "theory of foreign money", at p. 1059:

".... this notwithstanding the fact that, if action is taken in England for breach of the contract, the remedy sought must be damages, not debt, and those damages expressed in sterling for the purposes of judgment."

Again, the basic supposition is that the action in England can only be for damages, expressed in sterling, from which presupposition the logical conclusion is drawn that, as in other claims for damages, the breach date A for conversion must be applied. His Lordship continues, at p. 1060:

"I share the theoretical objection to applying this rule to debts due in foreign currency. The effect of it is to express the creditor's rights in terms of sterling at a date earlier than that at which, assuming default, he has any means of obtaining' the sterling and reconverting it into the currency which was due.... One looks for a rule by which the creditor takes what risk there is, at any rate as long as possible, in terms of the currency for which he has stipulated by his contract. This argues for a date of conversion later than the date of breach. But neither the date of execution nor the date of judgment offers itself as a practical proposition in litigation, and the only real alternative to the date of breach is the date at which legal proceedings are begun in this country."

But finally Lord Radcliffe rejects these alternatives as not really workable, or, indeed, necessary.

Lord Denning opens with an emphatic statement, at pp. 1068-1069:

"And if there is one thing clear in our law, it is that the claim must be made in sterling and the judgment given in sterling. We do not give judgments in dollars any more than the United States courts give judgments in sterling."

He then examines the consequences of regarding the claim as a claim in damages and refers to the change in the status of sterling as a currency, at pp. 1069, 1071:

"It may be said that in these conditions the rule is apt to produce an injustice to a creditor in the United States who is owed money in dollars: because, if he comes to our courts after devaluation, he does not recover sufficient sterling to compensate him for his - loss. But I am afraid that, if he chooses to sue in our courts instead of his own, he must put up with the consequences ... coming here, it must accept the rule of our law that we can only give judgment in sterling, ..."

It is clear, and I think significant, that his Lordship, in the light of developments, has departed from these views in recent decisions.

My Lords, I have quoted extensively from these opinions, not only because they embody the standing authority on the question now at issue, but also in order to make clear what, I think, appears from all of them to be the basic presupposition. This is that procedurally an action cannot be brought here for recovery or payment of a sum expressed in foreign currency, and that, in effect, it can only be brought for a sum expressed in sterling, recoverable by way of damages. I now have to ask, what is the position at the present time? Have any fresh considerations of any substance. emerged which should induce your Lordships to follow a different rule? I will endeavour to state those which appear to me to be significant.

1. The courts have evolved a procedure under which orders can be made for payment of foreign currency debts in the foreign currency. The Court of Appeal has given its approval to the form:

" It is adjudged . . . that the defendant do pay to the plaintiff [the sum in foreign currency] or the sterling equivalent at the time of payment."

(See Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416, 425 per Lord Denning M.R.). I can find no reason in principle why such orders cannot be made. The courts have generally power to order delivery in specie whenever, in their opinion, damages are an inadequate remedy. In cases such as the present, indeed. one of the arguments against making orders for payment of foreign currency in specie has been that damages are an adequate remedy (see particularly Lloyd Royal Belge S.A. v. Louis Dreyfus & Co. (1927) 27 Ll.L.Rep. 288, 294  per Romer L). But if, in the circumstances of today, damages are not an adequate remedy, as they clearly may not be if the breach date rule is applied in times of floating currencies, this argument, in any case nothing more than an appeal to discretion, loses its force. The jurisdiction is clear, on general principle: how the courts' discretion is to be exercised depends on the circumstances. I return to this later. Further, I can find nothing in the Rules of the Supreme Court which prevents such orders being made: indeed, though I do not attach the same importance to the change as did the learned Master of the Rolls, the present form of the rules (R.S.C., Ord. 42, r. 1, Ord. 45 and Forms 45 et seq., Appendix A) is somewhat more favourable to the making of orders in this form than was the version in force in 1961. Lord Denning M.R. adhered to this position in the present case after further argument upon the rules, by which time any serious inconveniences or practical difficulties would have come to light. I shall return to this subject later with particular reference to the question of the date of conversion. At the present stage what is relevant is that orders in this form are jurisdiction ally legitimate and procedurally workable.

2. The situation as regards currency stability has substantially changed even since 1961. Instead of the main world currencies being fixed and fairly stable in value, subject to the risk of periodic re- or devaluations, many of them are now "floating," i.e., they have no fixed exchange value even from day to day. This is true of sterling. This means that, instead of a situation in which changes of relative value occurred between the "breach date" and the date of judgment or payment being the exception, so that a rule which did not provide for this case could be generally fair, this situation is now the rule. So the search for a formula to deal with it becomes urgent in the interest of justice. This leads to the next point.

3. The state of facts referred to under 2 has become recognised in those commercial circles which are closely concerned with international contracts. The reaction to them appears in the field of arbitration. In 1969 two of the most experienced arbitrators in the City of London made an award expressed in terms of U.S. dollars and the validity of this came to be tested in the courts: Jugoslavenska Oceanska Plovidba v. Castle Investment Co. Inc. [1974] Q.B. 292. In reserved judgments the Court of Appeal (Lord Denning M.R., Cairns and Roskill L.JJ.), disagreeing with observations made in that court in The Teh Hu [1970] A P. 106, 129, held that the award was valid. What is more, and relevant in the present context, they held that it could be enforced under section 26 of the Arbitration Act 1950 which enables an award to be enforced " in the same manner as a judgment or order to the same effect." They pointed out that this was also the case as regards foreign awards which under section 36 (1) of the same Act " shall be enforceable " in the same manner as an award " is enforceable under section 26." Roskill L.J., who has great experience in these matters, said that awards of this kind made in the City have been entirely satisfactory and honoured all over the world. He also referred to inquiries made by Kerr L, at first instance, of the Central Office of the High Court which showed that there is no difficulty in practice in enforcing foreign currency awards: the foreign currency is simply converted into sterling at the rate prevailing at the date of the award.

I regard this development as of great importance for two Fees reasons First, it goes a long way towards removing the practical objections as regards enforcement which weighed so heavily in the Havana Railways case [1961] A.C. 1007. If an award in a foreign currency case can be readily enforced, after conversion into a sterling sum, and since and award is enforceable as a judgment, it should follow that a judgment in a foreign currency can be similarly enforced, after conversion into a sterling sum. Secondly, it would be an intolerable situation if a different rule were to prevail as regards arbitrations upon debts expressed in foreign currency on the one hand and actions upon similar debts on the other. Counsel for the appellants was therefore obliged to argue that if he was to succeed the decision in the Jugoslavenska case [1974] Q.B. 292 must either be overruled, or narrowly confined. I can find no limits within which it can be confined which would not still enclose the present case, so, if the appeal were to be allowed, the case would have to be overruled. But if I am faced with the alternative of forcing commercial circles to fall in with a legal doctrine which has nothing but precedent to commend it or altering the doctrine so as to conform with what commercial experiment has worked out, I know where my choice lies. The law should be responsive as well as, at times, enunciatory, and good doctrine can seldom be divorced from sound practice.

4. Further recognition of the need for, and practicality of, making orders in terms of foreign currencies was given in The Halcyon the Great [1975] 1 W.L.R. 515, where an order was made in Admiralty for the sale of a ship for U.S. dollars, and for the lodgment of the price in a separate dollar account. The judgment of Brandon J. contains a clear acceptance (contrary to the appellant's arguments here) of the proposition that U.S. dollar currency may be regarded as "money" within. the meaning of English procedural rules and that the courts can easily adapt their procedure so as to give effect to foreign money claims in specie The case indeed prompts the reflection that a similar procedure might, have been regarded as acceptable in the Havana Railways case, the factual situation (i.e., a debt in foreign currency secured upon a sum expressed in foreign currency) being in many respects similar.

5. I should mention at this stage the argument based upon article 106 of the E.E.C. Treaty of Rome. I can understand the temptation, in the search for an argument why the Havana Railways case should not now be followed, to fasten upon the important development which the treaty represents. Although Switzerland is not an E.E.C. member, the argument unanimously accepted by the Court of Appeal in Schorsch Meier [1975] Q.B. 416 was invoked by the respondent in this appeal and correspondingly attacked by the appellants. It cannot therefore be passed' over in silence, all the less since there is a risk that it may be quoted as a precedent. There are two reasons for dealing with it here with restraint. First, there is no direct appeal against the decision in Schorsch Meier: secondly, the issue of the applicability and interpretation of article 106, if it were to be considered by this House, would necessitate a reference to the European Court under article 177 of the treaty. But nevertheless I feel bound to say that I entertain the strongest reservations concerning the use made by the Court of Appeal of article 106 in the present context, and I cannot believe that, if the court had heard argument on the other side (corresponding to that of the present appellants), very weighty arguments would not have been brought forward concerning such questions as the direct applicability of this article, its bearing on any question of the currency in which claims may be made in the courts of member States or its relevance at all to the ascertainment of the date of conversion of such claims, which arguments seem to have been unappreciated. Any other court in which such issues may arise would be well advised to refer them to the European Court for clarification. In this appeal,in my opinion, no argument based directly or indirectly upon article 106 of the treaty should be considered as available to the respondent.

6. Finally, I wish to express my agreement as to what my noble and learned friend Lord Simon of Glaisdale has said about the maxim "cessante ratione," etc.

My Lords, before attempting the task of deciding where, in the end, this House should stand as regards the Havana Railways [1961] A.C. 1007 rule there are some other general observations I think should be made.

First, I do not for myself think it doubtful that, in a case such as the present, justice demands that the creditor should not suffer from fluctuations in the value of sterling. His contract has nothing to do with sterling: he has bargained for his own currency and only his own currency. The substance of the debtor's obligations depends upon the proper law of the contract (here Swiss law): and though English law (lex fori) prevails as regards procedural matters, it must surely be wrong in principle to allow procedure to affect, detrimentally, the substance of the creditor's rights. Courts are bound by their own procedural law and must obey it, if imperative, though to do so may seem unjust. But if means exist for giving effect to the substance of a foreign obligation, conformably with the rules of private international law. procedure should not unnecessarily stand in the way.

There is, unfortunately, as Lord Radcliffe: pointed out in the Havana Railways case, a good deal of confusion in English cases as to what the creditor's rights are. Appeal has been made to the principle of nominalism, so as to say that the creditor must take the pound sterling as he finds it. Lord Denning said so in the Havana Railways case (pp. 1069-1070) and I can safely and firmly disagree with him in that because he has himself, since then, come to hold another view. The creditor has no concern with pounds sterling: for him what matters is that a Swiss franc for good or ill should remain a Swiss franc. This is substantially the reasoning of Holmes J. in the important judgment of the U.S. Supreme Court in Deutsche Bank Filiale Nurnberg v. Humphrey (1926) 272 U.S. 517. Another argument is that the "breach date" makes for. Certainty whereas to choose a later date makes the claim depend on currency fluctuations. But this is only a partial truth. The only certainty achieved is certainty in the sterling amount-but that is not in point since sterling does not enter into the bargain. The relevant certainty which the rule ought to achieve is that which gives the creditor neither more nor less than he bargained for. He bargained for 415,522.45 Swiss francs; whatever this means in (unstipulated) foreign currencies, whichever way the exchange into those currencies may go, he should get 415,522.45 Swiss francs or as nearly as can be brought about. That such a solution, if practicable, is just, and adherence to the breach date in such a case unjust in the circumstances of today, adds greatly to the strength of the argument for revising the rule or, putting it more technically, it adds strength to the case for awarding delivery in specie rather than giving damages.

Secondly, and I must deal with this point more briefly than historically it deserves, objections based on authority against making an order in specie for the payment or delivery of foreign money, are not, on examination, found to rest on any solid principle or indeed on more than the court's discretion. Your Lordships were referred to a number of early cases dealing with claims expressed, or which the courts thought should or could have been expressed, in terms of foreign money, but though the examination of them proved interesting (and I would like to express indebtedness to learned counsel for the respondent) I do not think they showed more than that English law up to the 17th century, as one would expect in the state of monetary theory and practice, took an empirical position, allowing claims to be made and enforced in various form's and showing a good deal of flexibility, or blurring, in the forms of action, debt, detinet, debt in the detinet, debt and detinet, being among the forms admitted. (See Willshalge and Davidge's Case (1586) Leon. 41; Plaine v. Bagshaw (1594) Moo.K.B. 704; Bagshaw v. Playn (1594) Cro.Eliz. 536; Draper v. Rastal (1605) 1 Cro.Jac. 88; Rands v. Peck (1622) Cro.Jac. 618; Ward's Case (1625) Latch 4; Ward v. Kidswin (l625) Latch 77, 84; Palm. 707). The most respectful adherent to tradition and legal history can find nothing decisive here. The fons et origo of the modern self-imposed limitation is clearly the judgment of Sir Nathaniel Lindley M.R. in Manners v. Pearson & Son [1898] 1 Ch. 581, 586-587. I shall not cite from this length. I think it is clear that he is saying no more than that for enforcement purposes conversion into sterling must be made and he leaves open the question whether before the Debtors Act 1869 an order could have been made in Chancery for a foreign currency (in that case Mexican dollars). He continues that no necessity for conversion arises until the court orders payment and says that it does not follow that the sum to be inserted in the order is the (sterling) equivalent at that time, for there may be damages or interest as well. So I think that he leaves open the whole question of specific orders: and since his time, no real re-examination of the practicability of them has been made. In Beswick v. Beswick [1968] A.C. 58 this House laid down that in a suitable case specific performance may be ordered of an agreement to pay a sum of money of the United Kingdom. Lord Pearce (p. 89) quoted from Hart v. Hart (1881) 18 Ch.D. 670, 685, the words:

"'... when an agreement for valuable consideration . . . has been partially performed, the court ought to do its utmost to carry out that agreement by a decree for specific performance.'"

If this is so as regards money of this country, I can see no reason why it should not be so as regards foreign money: indeed, the latter seems to have a more "specific" character than the former.

These considerations and the circumstances I have set forth, when related to the arguments which moved their Lordships in the Havana Railways case [1961] A.C. 1007, lead me to the conclusion that, if these circumstances had been shown to exist in 1961, some at least of their Lordships, assuming always that the interests of justice in the particular case so required, would have been led, as one of them very notably has been led, to take a different view.

This brings me to the declaration made by, this House in 1966. Under it, the House affirmed its power to depart from a previous decision when it appears right to do so, recognising that too rigid adherence to precedent might lead to injustice in a particular case and unduly restrict the proper development of the law. My Lords, on the assumption that to depart from the Havana Railways case would not involve undue practical difficulties, that a new and more satisfactory rule is capable of being stated, I am of opinion that the present case falls within the terms of the declaration. To change the rule would, for the reasons already explained, avoid injustice in the present case. To change it would enable the law to keep in step with commercial needs and with the majority of other countries facing similar problems. The latter proposition is well vouched by Dr. F. A. Mann's work, The Legal Aspect of Money. 3rd ed. (1971), Chapter X.

I return then to the two preconditions.

1. Can a better rule be stated? I would make it clear that, for myself, I would confine my approval at the present time of a change in the breach-date rule to claim such as those with which we are here concerned, i.e., to foreign money obligations, sc. obligations of a money character to pay foreign currency arising under a contract whose proper law is that of a foreign country and where the money of account and payment is that of that country, or possibly of some other country but not of the United Kingdom.

I do not think that we are called upon, or would be entitled in this case, to review the whole field of the law regarding foreign currency obligations: that is not the method by which changes in the law by a judicial decision are made. In my opinion it should be open for future discussion whether the rule applying to money obligations, which can be a simple rule, should apply as regards claims for damages for breach of contract or for tort. It is only because it has been thought that the same rule need apply to all these situations that we have been forced into straitjacket solutions based on concepts, or on forms of action ("archaic legalistic nonsense" in the words of Lawton L.J. in Schorsch Meier [1975] Q.B. 416, 430). But the principles on which damages are awarded for tort or breach of contract are both very intricate and not the same in each case, involve questions of remoteness (cf. the speech of Lord Parmoor in S.S. Celia (Owners) v. S.S. Volturno (Owners) (The Volturno) [1921] 2 A.C. 544) and have no direct relevance to claims for specific things, in which I include specific foreign currency. To take one familiar point. Whereas in the case of the inevitable contract to supply a foreign cow, the intending purchaser has to be treated as going into the market to buy one as at the date of breach, this doctrine cannot be applied to a foreign money obligation, for the intending creditor has nothing to buy his own currency with-except his own currency. I therefore see no need to overrule or criticise or endorse such cases as The Volturno [1921] 2 A.C. 544 or Di Ferdinando v. Simon, Smits Co. Ltd. [1920] 3 K.B. 409. I would only say, in agreement with Scrutton L.J. (The Baarn [1933] P. 251, 266), that the former case leaves a number of difficulties unsolved and that the mere fact that as a general rule in English law damages for tort or for breach of contract are assessed as at the date of the breach need not preclude, in particular cases, the conversion into sterling of an element in the damages, which arises and is expressed in foreign currency, as at some later date. It is for the courts, or for arbitrators, to work out a solution in each case best adapted to giving the injured plaintiff that amount in damages which will most fairly compensate him for the wrong which he has suffered. As examples in which acceptance of this principle might have led to a juster result I may refer to The Teh Hu [1970] P. 106 and Nederlandsch-Amerikaansche Stoom vaart Maatschappij N. V. v. Royal Mail Lines Ltd. [1958] 1 Lloyd's Rep. 412, and as an example where it did so to In re Dawson, decd. [1966] 2 N.S.W.R. 211.

As regards foreign money obligations (defined above), it is first necessary to establish the form of the claim to be made. In my opinion acceptance of the argument already made requires that the claim must be specifically for the foreign currency-as in this case for a sum stated in Swiss francs. To this may be added the alternative "or the sterling equivalent at the date of . . . ." (see below). As regards the conversion date to be inserted in the claim or in the judgment of the court, the choice, as pointed out in the Havana Railways case [1961] A.C. 1007. Is between (i) the date of action brought, (ii) the date of judgment, (iii) the date of payment. Each has its advantages, and it is to be noticed' that the Court of Appeal in Schorsch Meier and in the present case chose the date of payment meaning, as I understand it, the date when the court authorises enforcement of the judgment in terms of sterling. The date of payment is taken in the convention annexed to the Carriage of Goods by Road Act 1965 (article 27 (2)). This date gets nearest to securing to the creditor exactly what he bargained for. The date of action brought, though favoured by Lord Reid and Lord Radcliffe in the Havana Railways case, seems to me to place the creditor too severely at the mercy of the debtor's obstructive defences (cf. this case) or the law's delay. It may have been based on an understanding of the judgment of Holmes J. in the Deutsche Bank case (272 U.S. 517) now seen to be probably mistaken (see Mann, The Legal Aspect of Money, 3rd ed. (1971), p. 355 and cases cited). The date of judgment is shown to be a workable date in. practice by its inclusion in the Carriage by Air Act 1961 which gave effect to the Hague Convention of 1965 varying, on this very point, the Warsaw Convention of 1929, but, in some cases, particularly where there is an appeal, may again impose on the creditor a considerable currency risk. So I would favour the payment date, in the sense I have mentioned. In the case of a company in liquidation, the corresponding date for conversion would be the date when the creditor's claim in terms of sterling is admitted by the liquidator. In the case of arbitration, there may be a minor discrepancy, if the practice which is apparently adopted (see the Jugoslavenska case [1974] Q.B. 292, 305) remains as it is, but I can see no reason why, if desired, that practice should not be adjusted so as to enable conversion to be made as at the date when leave to enforce in sterling is given.

2. A rule in the form suggested above would not, in my opinion, give rise to any serious procedural difficulty. Suggestions were made at the Bar that as regards such matters as set off, counterclaim. payment into court, it would be difficult or impossible to apply. I would say as to these matters that I see no reason why this should be so: it would be inappropriate to discuss them here in detail and unnecessary since the Court of Appeal has assessed the procedural implications and has not been impressed with any difficulty. I have no doubt that practitioners, with the assistance of the Supreme Court, can work out suitable solutions-not overlooking the provisions of the Exchange Control Act 1947. I would only add that while the rule I have suggested would fit perfectly well into such a situation as existed in Société des Hôtels Le Touquet Paris-Plage v. Cummings [1922] 1 K.B. 451 it would not be reconcilable with the later case of Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72. I do not think that case can any longer be followed.

My Lords, in conclusion I would say that, difficult as this whole matter undoubtedly is, if once a clear conclusion is reached as to what the law ought now to be, declaration of it by this House is appropriate. The law on this topic is judge-made: it has been built up over the years from case to case. It is entirely within this House's duty, in the course of administering justice, to give the law a new direction in a particular, case where, on principle and in reason, it appears right to do so. I cannot accept the suggestion that because a rule is long established only legislation can change it-that may be so when the rule is so deeply entrenched that it has infected the whole legal system, or the choice of a new rule involves more far-reaching research than courts can carry out. A recent example of the House changing a very old established rule is West Midland Baptist (Trust) Association (Inc.) v. Birmingham Corporation [1970] A.C. 874. Lord Reid thought- that it was proper to re-examine a judge-made rule of law based on an assumption of fact (as to the stability of money) when the rule was formulated but which was no longer true and which in many cases caused serious injustice. So in that case the House selected a new date and did not think it necessary or right to wait for legislation and I would not think it necessary or right here. Indeed, from some experience in the matter, I am led to doubt whether legislative reform, at least prompt and comprehensive reform, in this field of foreign currency obligation: is practicable. Questions as to the recovery of debts or of damages depend so much upon individual mixtures of facts and merits as to make them more suitable for progressive solutions in the courts. I think that we have an opportunity to reach such a solution here. I would accordingly depart from the Havana Railways case and dismiss this appeal.

LORD SIMON OF GLAISDALE. My Lords, "... if there is one thing clear in our law, it is that the claim must be made in sterling and the judgment given in sterling," said Lord Denning in In re United Railways of Havana and Regla Warehouses [1961] A.C. 1007, 1068-1069. This was apparently still the law when Jugoslavenska Oceanska Plovidba v. Castle Investment Co. Inc. [1974] Q.B. 292 was decided on July 6, 1973 (see especially Lord Denning M.R. at p. 299 D-F). But by the time the judgments in Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416 came to be delivered by the Court of Appeal some 17 months later the things that had been clearest in our law were no longer apparent: in fact the rules of law had been clearly reversed; and it was held that a claim could be made in our courts in a foreign currency and judgment could be given in that currency by an English court. Of course, the fact that a rule of law is clear and of long standing and has been reiterated by a long series of great lawyers does not preclude its abrogation when it is found to work injustice or no longer to accord with changed social or economic conditions or with changed ideologies or sensibilities or with newly dominant theories. But it has been generally accepted that a revolutionary change in the law prompted by such factors is within the proper and exclusive province of Parliament advised by the executive (and often, appropriately, by a Royal Commission or a departmental or interdepartmental committee); because Parliament, so advised, is in general the constitutional organ best fitted to weigh such factors. It is true that since 1966 your Lordships have power to depart from a previous decision of your Lordships' House; although, in view of the limited resources available to decision-making by a court of law, it is a power which your Lordships have exercised with due restraint. But the statement: of Lord Gardiner L.C. of July 26, 1966 [Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 395], expressly asserted that it was "not intended to affect the operation of the rule of precedent elsewhere than" in your Lordships' House; and it is clear law that the Court of Appeal is bound by a decision of your Lordships' House and (at least on its civil side) by a previous decision of the Court of Appeal itself:

Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718; [1946] A.C. 163, 169. Any change in this respect would require legislation.

Then, in the instant case, Bristow L held that, since Schorsch Meier [1975] Q.B. 416 was a reversal of the law as laid down in the Havana, case [1961] A.C. 1007, by which the Court of Appeal was bound Schorsch Meier must have been decided per incuriam, and that he himself was bound to follow the law as laid down by the highest tribunal in the land, your Lordships' House, in the Havana case. The Court of Appeal held that he was wrong, and that he should have applied Schorsch Meier, by which, as they held, they themselves also were bound. The defendants now appeal to your Lordships' House.

The instant appeal therefore raises profoundly important issues as to the working of the doctrine of precedent in our legal system. On the other hand, it is undoubtedly open to your Lordships, even if not to the Court of Appeal, to declare that, although in 1961 there were rules which were appropriately described by the phrase "if there is one thing which is clear in our law," those rules should no longer be applied, and that the Havana decision should be overruled. I say "overruled" expressly: it is better to avoid euphemisms like "departed from "; a wise decision is more likely to be achieved if the reality is faced.

The issues

On the basis of the facts as stated by my noble and learned friend, Lord Wilberforce, and what I have said heretofore, the following seem to me to be the questions before your Lordships: (1) Was, Schorsch Meier correctly decided on its own grounds-(a) by application of the maxim "Cessante ratione cessat ipsa lex"? (b) by reason of article 106? (2) Was Bristow J. right to follow the Havana case in preference to Schorsch Meier? (3) Was the Court of Appeal in the instant case bound .by Schorsch Meier? (4) If (1) (a) is answered No, should your Lordships nevertheless yourselves affirm the Court of Appeal decision in the instant case, and overrule the decision of your Lordships' predecessors in the Havana case?

Schorsch Meier and the maxim "Cessante ratione . . ." The Court of Appeal in Schorch Meier recognised that your Lordships' House in the Havana case had endorsed the long-accepted and authoritatively reiterated rule that a money judgment by an English court could only be given in sterling ("the sterling judgment rule") and also the rule that the conversion of the relevant foreign currency into sterling must be made at the exchange rate which prevailed at the date when payment should have been made ("the breach date rule"). But the majority of the Court of Appeal held that changed circumstances had nullified the reasons which has led to the formulation of those rules, and that the legal maxim "cessante ratione cessat ipsa lex" enjoined or at least permitted the court to declare that the rules of law so established, and endorsed were no longer of binding force-in effect, were abrogated.

This raises two questions. First, does the majority's application of the maxim represent its true significance in English law? Secondly, if so were the changed circumstances descried by the majority in Schorsch Meier [1975] Q.B. 416 sufficient to abrogate the rules of law endorsed and declared by your Lordships' House in the Havana case [1961] A.C. 1007?

First, then, for the true significance and operation of this maxim in relation to tribunals which are subject to the legal rule of precedent. When a legislature has to determine whether to repeal a previous enactment or to abrogate a current rule of judge-made law, obviously one of the matters which the legislature will weigh is whether the reason for the original formulation of the rule (if discoverable) is still cogent. Until 1966 your Lordships' House, though bound by the decision of no court of law, was bound by a previous decision of your Lordships' House sitting judicially, even when it was recognised that such previous decision was erroneous (Beamish v. Beamish (1861) 9 H.L.Cas. 274; and see cases cited in Reg. v. Knuller (Publishing, Printing and Promotions) Ltd. [1973] A.C. 435, 485B-D). Since 1966 your Lordships, by constitutional convention having the force of law, are not absolutely bound by the decisions of your predecessors; though in Knuller Lord Reid said, at p. 455:

"... our change of practice in no longer regarding previous decisions of this House as absolutely binding does not mean that whenever we think that a previous decision was wrong we should reverse it. In the general interest of certainty in the law we must be sure that there is some very good reason before we so act."

Obviously then, as with the legislature when changing the law, one (but only one) of the matters which will weigh with your Lordships sitting judicially is whether the reason which led to the original formulation of the questioned rule of law has lost cogency with changed conditions. The maxim as reformulated by Mr. Peppitt, and approved by Bristow J. [1975] Q.B. 487, 492, "cessante ratione cesset ipsa lex apud senatum" ("If the reason for a law ceases to be valid, then let the law itself cease when Parliament, or the House of Lords sitting judicially, so determines") is thus not indeed a rule of law but a piece of political wisdom-so long as it is not taken to be an exhaustive injunction.

But since the Court of Appeal is absolutely bound by a decision of the House of Lords and (at least on its civil side) by a previous decision of the Court of Appeal itself, it would be surprising if the meaning and application of the maxim "cessante ratione" were really that accepted by the majority of the Court of Appeal in Schorsch Meier and again by the learned Master of the Rolls in the instant case. For as such it would enable any court in the land to disclaim any authority of any higher court on the ground that the reason which had led to such higher court's formulation of the rule of law was no longer relevant. A rule rooted in history could be reversed because history is the bunk of the past. Indeed, taken literally, there is no ground for limiting "lex" judge-made law. Coke, apparently the originator of the tag (Co.Litt. 70b), was quite prepared to say that a statute which conflicted with reason could be declared invalid by the courts (Dr. Bonham's Case (1610) 8 Co.Rep. 107a, 118a). The maxim, as glossed by the majority of the Court of Appeal in Schorsch Meier, belongs to such a legal philosophy which has no place in our own modem constitution. As Trayner wrote (Latin Maxims and Phrases, 2nd ed. (1876), p. 72): "This maxim, if read literally, and in its widest signification is erroneous and misleading."

It would be easy to compile a bulky anthology of authoritative citations to show that those courts of law which are bound by the rule of precedent are not free to disregard an established rule of law because they conceive that another of their own devising might be more reasonable. I content myself with three citations, because they are not only of high authority but also constitute the ratio decidendi of the case in which they were enunciated. Admiralty Commissioners v. S.S. Amerika (Owners) [1917] A.C. 38. The rule with which the House was then concerned was that which established that in a civil court the death of a human being could not be complained of as an injury (subsequently, of course, abrogated by statute). Earl Loreburn said, at p. 41:

"When a rule has become inveterate from the earliest time, as this rule appears to have been, it would be legislation pure and simple were we to disturb it."

Lord Parker of Waddington said, at p. 43:

"This House, however, is bound to administer the law as it finds it. The mere fact that the law involves some anomaly is immaterial unless it be clear that the anomaly has been introduced by erroneous judicial decision. . . . [p. 50] I do not think the appellants can be said to have advanced any sound reasons why your Lordships' House should disturb a rule of law which has been so long recognised in our courts, and which, however anomalous it may appear to the scientific jurist, is almost certainly explicable on historical grounds."

Lord Sumner said, at p. 56:

"... nor does it follow, in the case of a legal system such as ours, that a principle can be said to be truly a part of the law merely because it would be a more perfect expression of imperfect rules, which, though imperfect, are well established and well defined. Again, an established rule does not become questionable merely because different conjectural justifications of it have been offered, or because none is forthcoming that is not fanciful.... [p. 60] I think that the argument ... is really an appeal to this House in its legislative and not in its judicial capacity."

Though all this now requires some qualification as applicable to your Lordships' House, it applies with full force (mutatis mutandis) to all courts bound by the rule of precedent. It needs no further justification in a court of law than that it is the law of the land. But in fact it has powerful practical vindication, in the superior aids to most decision-making which are available to the legislature in contradistinction to courts of law. This is a theme to which I shall venture to return later.

If, then, the maxim "cessante ratione cessat ipsa lex" is not a licence to the judiciary, with their limited perspective, to abrogate rules of law where the reason for the original formulation is either no longer discernible to them or appears to them to have been overtaken by changed circumstances, what, if any, is the current legal efficacy of the maxim? It is, in my view, a still valid description of a species of legal reasoning-namely, that which operates to distinguish an instant from a previous legal decision or to justify an exception from a principal legal rule.

I indicated that, given Coke's legal philosophy, it would not have been surprising to have found that his application of the maxim was that of the majority of the Court of Appeal in Schorsch Meier [1975] Q.B. 416. But in fact even Coke used the maxim to describe the process of legal reasoning whereby a rule of law is distinguished, and not to justify the judicial abrogation of a rule of law. Here is the context (Co.Litt. 70b):

".... if the king give lands to a maior and communalty and their successors, to be holden by knights service, in this case the patentees (as hath beene said) shall do no homage, neither shall there be any wardship or relief, onely they also shall find a man, &c. or pay escuage. But if they convey over the lands to any naturall man and his heires, now homage, ward, marriage, and reliefe, and other incidents belong thereunto. And yet this possibility. was remota potentia; but the reason hereof is, Cessante ratione legis cessat ipse lex [sic]; the reason of the immunity was in respect of the body politique, which by the conveyance over ceaseth ....".

What Coke was saying is this. Tenure by knight service involves, of course, the tenant providing for his lord an armed horseman (or a sum of money, escuage, which may go to pay for one); but it also normally involves lord and tenant entering into the fundamental feudal relationship marked by homage, whereby the tenant became the lord's man, with feudal incidents like wardship and marriage and relief (a succession duty paid by the tenant's heir). A corporation aggregate, however, is only a person in contemplation of law; so that, although it can provide an armed horseman (or pay escuage in default), it cannot become anyone's man, nor has it children pay relief who can become the lord's wards, nor daughters or widows whose hands the lord can bestow in marriage, nor heirs to on succession. It is the metaphysical nature of a body corporate which renders inappropriate the homage, wardship, marriage and relief which are the normal incidents of knight service. But if the corporation alienates the land held by knight service to a natural person, the new situation is distinguishable. The fictitious personality of the corporation was the material fact in the old situation, but it is not present in the new situation; so that the new tenant, notwithstanding that he derives title from a tenant enjoying immunity from feudal incidents, himself enjoys no such immunity. Cessante ratione cessat ipsa lex. Certainly, there is nothing in Coke's use of the maxim to justify judicial abrogation of an established rule' of law.

Moreover, not surprisingly in view of what was said in, Admiralty Commissioners v. S.S. Amerika (Owners) [1917] A.C. 38, none of the examples given in Broom's Legal Maxims, 10th ed. (1939), p. 97, provides any such justification. All of them (except one, which calls for separate discussion) exemplify the process whereby a rule of law is distinguished. Broom's leading example deals with the rule that a member of Parliament is privileged from arrest in civil process (see Erskine May's Parliamentary Practice, 18th ed. (1971), p. 89 et seq). The reason for the. privilege is that it is only thereby that the member can discharge his public duties and obligations (Erskine May, p. 89). But after the lapse of a reasonable time from the dissolution or prorogation of Parliament (legally conventionalised at 40 days: Goudy v. Duncombe (1847) 1 Exch. 430) the reason is no longer compelling. The situation 40 days after the end of the session is thus distinguishable from the situation theretofore. The fact that was material in the previous situation (the duty and obligation of the member) is not present in the new situation. The member is therefore no longer immune from arrest. The maxim "cessante ratione cessat ipsa lex" has been applied not to abrogate the rule giving privilege from arrest but to distinguish the situation in which it applies.

All the examples cited in Broom under the brocard "Cessante ratione cessat ipsa lex" fall into this pattern, except for its use in Viscount Cave's speech in Edwards v. Porter [1925] A.C. 1: though even that does not support the application of the maxim by the majority of the Court of Appeal in Schorsch Meier [1975] Q.B. 416. In Edwarvis v. Porter the House was concerned with the established common law rule (since abrogated by statute) that a husband was liable to be sued for his wife's torts committed during coverture unless the tort was directly connected with a contract with the wife and was the means of enforcing it.. One question which arose was whether the main rule had been abrogated by the Married Women's Property Act 1882. The majority (Viscount Finlay, Lord Atkinson and Lord Sumner) held that it had not: the minority (the Earl of Birkenhead and Viscount Cave) that it had. In Viscount Cave's view (Earl of Birkenhead concurring) the reason why the husband had had to be joined in an action for tort against a wife arose from the universal rule that a wife during coverture could not be either a sole plaintiff or a sole defendant (p. 9). The Act of 1882 had provided that "a married woman shall be capable ... of suing and being sued ... in all respects as if she were a femme sole." Viscount Cave said, at p. 10:

"The whole reason and justification for joining a husband iii an action against his wife for her post-nuptial tort has therefore disappeared; and it would seem to follow, upon the principle ' cessante ratione cessat lex,' that he is no longer a necessary or proper party to such an action."

The. first thing to be noted is that this was a minority opinion. The second is that the appeal on this point turned on statutory construction of the Act of 1882 (see Viscount Finlay at pp. 17, 18: Lord Atkinson at pp..26-28; Lord Sumner at p. 36 et seq). There is no question but that a. statute may not only expressly but also by clear and necessary implication repeal a rule of law. The approaches to construction in such a case are well established: and it merely confuses to invoke the maxim "cessante ratione." Lord Atkinson's speech is especially illuminating, since his view of the reason for the common law rule was the same as Viscount Cave's (see p. 26). If an otherwise binding precedent is inconsistent with a supervening Act of Parliament (or with the decision of a higher court given subsequently: Young v. Bristol Aeroplane Co. Ltd. [1946] A.C. 163, 169, the previous decision must not be followed. This has nothing to do with the maxim "cessante ratione": it arises from the legal rule of stare decisis together with the constitutional hierarchy of courts and the constitutional supremacy of Parliament over all courts. But, thirdly, even Viscount Cave's view that an Act of Parliament may abrogate a rule of law by nullifying the reason for the rule does not justify the view that a rule may be judicially abrogated if changed circumstances appear to the court to have nullified the reason for the rule.

To sum up on this part of the case: (1) the maxim in the form "cessante ratione cesset ipsa lex" reflects one of the considerations which your Lordships will weigh in deciding whether to overrule by virtue of the 1966 declaration, a previous decision of your Lordships, House; (2) in relation to courts bound by the rule of precedent the maxim " cessante ratione cessat ipsa lex," in its literal and widest sense, is misleading and erroneous; (3) specifically, courts which are bound by the rule of precedent are not free to disregard an otherwise binding precedent on the ground that the reason which led to the formulation of the rule embodied in such precedent seems to the court to have lost cogency; (4) the maxim in reality reflects the process of legal reasoning whereby a previous authority is judicially distinguished or an exception is made to a principal legal rule; (5) an otherwise binding precedent or rule may, on proper analysis, be held to have been impliedly overruled by a subsequent decision of a higher court or impliedly abrogated by an Act of Parliament, but this doctrine is not accurately reflected by citation of the maxim "cessante ratione cessat ipsa lex."

Since in my respectful opinion, the majority of the Court of Appeal misapprehended and misapplied the maxim " cessante ratione cessat ipsa lex," which is not a licence to courts to change the law if it appears to them that the circumstances in which it was framed have changed, I would hot be justified in detaining your Lordships by engaging in a detailed discussion whether the procedural change in the form of an English judgment and the decision in Beswick v. Beswick [1968] A.C. 538 constituted sufficient rationes cessantes to justify a change in the law. It is sufficient to say that Beswick v. Beswick did not make new law in so far as it held that specific performance may be ordered of an agreement to pay a sum of money (see, e.g., Palmer v. Lark [1945] Ch.. 182): the rule was merely, and still is, that specific performance will not be ordered where damages would be an adequate remedy (as they would not have been in Beswick v. Beswick). I agree with what my noble and learned friend, Lord Cross of Chelsea, is to say about Beswick v. Beswick in this context. As for the procedural change it merely brought the form of judgment in the Queen's Bench Division into line with that already used in the Chancery Division; and again I venture to invoke what is to be said by my noble and learned friend, Lord Cross of Chelsea. In any case this seems to me to be a minuscule hair indeed to wag the tail to wag the dog which lay in the kennel your Lordships' predecessors built in the Havana case [1961] A.C. 1007.

My conclusion is therefore that Lawton L.J. was correct in holding in Schorsch Meier [1975] Q.B. 416 the Court of Appeal to be bound by the Havana case, and that the majority decision in Schorsch was wrong.

Schorsch Meier: article 106

On this question, which does not affect the outcome of the instant appeal, I am content to express my agreement with what has been said by my noble and learned friend, Lord Wilberforce.

Bristow J. and the per incuriam rule

Bristow J. thought, rightly, that the decision of the majority of the Court of Appeal in Schorsch Meier conflicted with the unanimous decision of your Lordships' House in the Havana case [1961] A.C. 1007. He was thereby placed in a situation of great embarrassment, exactly as was foreseen in Broome v. Cassell & Co. Ltd. [1972] A.C. 1027, 1057, to be likely to occur did a court whose decision would be binding fail to abide loyally by the decision of a court higher in the curial order. Faced with irreconcilable decisions of the Court of Appeal and the House of Lords, Bristow J. followed the decision in Havana. Holding Schorsch Meier [1975] Q.B. 416 to have been decided per incuriam.. This was on the basis that the relevant maxim was not " cessante ratione cessat ipsa lex " but " cessante ratione cesset ipsa lex apud senaturn 'so that both he and the Court of Appeal were bound by the Havana case until it had been reversed by legislation or overruled by your Lordships under the declaration of July 26, 1966.

Greatly as I sympathise with Bristow J. in his predicament, 1 feel bound to say, with all respect, that I think he was wrong. In the first place, it involved misapplication of the concept of a decision given per in curiam. In the second place, it involved such departure from the rule of binding precedent based on a gradation of courts as both offends legal and constitutional principle and is potential of grave practical disadvantage.

A previous decision of the same appellate court is not binding if it is given per incuriam: Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718. But this exception to the rule of stare decisis is one which must be most modestly invoked. It is not applicable merely because the authority in question does not mention some relevant rule (judge-made or statutory or regulatory); still less merely because that authority appears to be open to practical or policy objections which have not apparently been envisaged or sufficiently weighed; and least of all, of course, because the judge otherwise bound merely considers the otherwise binding judgment to be wrong. A court should only hold a judgment to have been given per incuriam if it is satisfied, first, that such judgment was given in inadvertence to some authority (judge-made, statutory or regulatory) apparently binding on the court giving such judgment and, secondly, that, if the court giving such judgment had been advertent to such authority, it would have decided otherwise than it did-would, in fact, have applied the authority. Neither of these conditions was satisfied in the instant case. The Court of Appeal in Schorsch Meier was fully advertent to the Havana case, in which all the other relevant authorities were reviewed. It is true that, apparently, not all the matters subsequently urged in the Court of Appeal in the instant case against the Schorsch Meier decision had been considered by the Court of Appeal in that case (though most, albeit not mentioned, apparently were): see (1975) Q.B. 487, 504D-E. But. as I have ventured to submit to your Lordships, failure to consider matters of policy or to allow for practical difficulties arising out of a decision is quite insufficient to justify application of the per incuriam doctrine.

I respectfully agree with what Lord Denning M.R. said in the instant case about this aspect of the per incuriam doctrine ([1975] Q.B. 487, 503A-F); subject to three riders. First, where a "court does its own researches itself, as it often will and sometimes must, it should proceed c with special caution since it is thereby acting without the benefit of adversary argument. Secondly, where such research throws up an authority or argument which is material (even if only to be finally distinguished or rejected), it is better that it should be mentioned in the judgment, for the benefit of those who have subsequently to consider the judgment. Thirdly, although certainly a case is not decided per incuriam merely because it is argued on one side only (as Schorsch Meier [1975] Q.B. 416 was), the absence of a contrary argument will sometimes make it easier to establish a per incuriam exception, and in any case a judgment in undefended proceedings or a decision ' on an uncontested issue tends to have less authority than one given after argument on both sides.

Then there are the constitutional and practical disadvantages of Bristow J's approach. His understanding of the maxim "cessante ratione ..." differed from that of the Court of Appeal in Schorsch Meier. It matters not whether Bristow J. was right or wrong. It is the duty of a subordinate court to give credence and effect to the decision of the immediately higher court, notwithstanding that it may appear to conflict with the decision of a still higher court. The decision of the still higher court must be assumed to have been correctly distinguished (or otherwise interpreted) in the decision of the immediately higher court. For example, in the instant case, in my respectful opinion, Bristow J. should have assumed that the Court of Appeal in Schorsch Meier had correctly interpreted and applied the maxim "cessante ratione ..." and had in consequence correctly held that it was not bound to apply the Havana decision [1961] A.C. 1007 to the facts judicially ascertained in Schorsch Meier. Any other course is not only a path to legal chaos but in effect involves a subordinate court sitting in judgment on a decision of its superior court. That is contrary to law. Moreover, in this respect, as so often, the law is a distillation of practical experience, even though all knowledge of the experience may be lost. Here, however, the experience is recoverable. If a subordinate Court fails to abide loyally by the judgment of its superior court, the decision of the subordinate court is likely to be appealed to the superior court, which is in turn likely to vindicate its previous decision. It was in this way that many thousands of pounds were added to the cost of the litigation in Broome v. Cassell & Co. Ltd. (No. 2) [1972] A.C. 1136. Cf. also In re Harper v. National Coal Board (Intended Action) [1974] Q.B. 614, where a dextrous adherence to a statutory construction disapproved by a majority of your Lordships' appellate committee in Smith v. Central Asbestos Co. Ltd. [1973] A.C. 518 not only perpetuated what was, apparently, a judicial misinterpretation of parliamentary meaning (see Law Reform Committee, Twentieth Report., Cmnd. 5630 of 1974, paragraph 51) but must also have at least contributed to the prompt intervention of Parliament by the Limitation Act 1975: it is impossible to compute the cost to the public. So here. Predictably Bristow L's decision was appealled. Predictably the Court of Appeal followed its previous decision: Lord Denning M.R.. understandably, approved the reasoning of the previous decision. Geoffrey Lane L.J. was obviously doubtful about it. but both concurred with John Stephenson L.J. that the majority judgment in Schorsch Meier was indistinguishable on this issue and should therefore be followed. If Bristow J. had given his reasons for doubting Schorsch Meier but held himself nevertheless bound by it, the case might have qualified for the " leap-frogging " procedure of the Administration of Justice Act 1969 Part II, and the costs of the hearing in the Court of Appeal might thus have been obviated.

The two strands of argument under this heading come together in the judgment of the Privy Council delivered by my noble and learned friend, Lord Diplock, in Baker v. The Queen [1975] A.C. 774, 788G-H:

"Strictly speaking the per incuriam rule as such, while it justifies a court which is bound by precedent in refusing to follow one of its own previous decisions (Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718), does not apply to decisions of courts of appellate jurisdiction superior to that of the court in which the rule is sought to be invoked: Broome v. Cassell & Co. Ltd. [1972] A.C. 1027. To permit this use of the per incuriam rule would open the door to disregard of precedent by the court of inferior jurisdiction by the simple device of holding that decisions of superior courts with which it disagreed must have been given per incuriam."

(Similar considerations apply to the use of the maxim " cessante ratione….").

The Court of Appeal and Schorsch Meier

It will be apparent that in my view the Court of Appeal in the instant case was correct in following its previous decision in Schorsch Meier [19751 Q.B. 416. There were two concurrent rationes decidendi in Schorsch Meier; one (article 106) that of all members of the court. the other ("cessante ratione . . .") that of a majority. Both were subsequently binding on the Court of Appeal no less than on Bristow L: see Lord Denning M.R. [1975] Q.B. 487. 502B--503A.

Should Havana be overruled?

Naturally, I am deeply impressed by the views of my noble and learned friends that this question should be answered Yes, and by the A fact that the learned Master of the Rolls, who expressed himself so categorically in the Havana case [1961] A.C. 1007, now takes a diametrically opposite view. The reasons why I cannot go along with them are closely interrelated, but can be summarised in two sentences. First, I do not think that this is a "law reform" which should or can properly be imposed by judges; it is, on the contrary, essentially a decision which demands a far wider range of review than is available to courts following our traditional and valuable adversary system-the sort of review compassed by an interdepartmental committee. Secondly, your Lordships' predecessors have wisely set limits on the use of the power to overrule previous decisions of your Lordships' House; and no sufficient reason has, in my view, been shown for overruling the Havana decision.

As for "law reform" by judges, I cannot do better than quote what was said by my noble and learned friend, Lord Kilbrandon, in Director of Public Prosecutions for Northern Ireland v. Lynch [1975] A.C. 653, 700-701:

" ... it is an impermissible, or at least an undesirable, mode of law reform to use the occasion of an appeal in a decided case for the purpose of declaring that changing conditions and enlarging opinions have rendered the ratio decidendi of the lower court obsolete and therefore susceptible of being set aside. ... It would in my opinion be a necessary preliminary to the reform of that, generally accepted version of the common law that consultations, on a far wider basis than ' an discussions among lawyers, including the arguments of counsel before the highest tribunal, should have taken place and been seriously considered. If there is one lesson which has been learned since the setting up of the Law Commissions it is this, that law reform by lawyers for lawyers (unless in exceptionally technical matters) is not socially acceptable. An alteration in a fundamental doctrine of our law, such as this appeal proposes, could not properly be given effect to save after the widest reference to interests., both social and intellectual, far transcending those available in the judicial committee of your Lordships' House.... It will not do to claim that judges have the duty call it the privilege -of seeing to it that the common law expands and contracts to meet what the judges conceive to be the requirements of modern society. Modern society rightly prefers to exercise that function for itself, and this it conveniently does through those who represent it in Parliament. And its representatives nowadays demand, or should demand, that they be briefed by all those who can qualify an interest to advise them."

A fortiori, of course, where the "generally accepted version of the common law" has been impressed with the seal of unanimous approval by your Lordships' predecessors. Moreover, although I myself agreed in that case with what my noble and learned friend said, at least that case did not involve overruling a recent (or any) decision of your Lordships' House; and it was ostensibly concerned only with the juristic concept of duress. The instant appeal raises questions the answer to which imperatively demands the contribution of expertise from far outside the law on monetary theory, public finance, international finance, commerce, industry, economics-for which judges have no training and no special qualification merely by their aptitude for judicial office. All such experience as I have had of decision-making within and without the law convinces me that the resolution of this issue demands a far greater range of advice and a far more generally based knowledge than is available to a court of law-even one assisted, as we have been, by the most meticulous, cogent and profound argument of counsel. Law is too serious a matter to be left exclusively to judges.

For more than 150 years foreign creditors on balance have enjoyed a real advantage from what is now known as the Havana rule. Today, in some (not all) cases it operates to their detriment. Is now the time to overrule it? Would that be fair to English debtors at a time when sterling is falling? Would the reversal of the Havana rule [1961] A.C. 1007, have any significant effect on this country's balance of payments? These are questions on which the Treasury and the Department of Trade and Industry and representative commercial interests are entitled and qualified to express their views. Of course a judge will say: "I know nothing of such matters. What are they to me in any case? Fiat justitia ruat libra!" But does a falling currency advance the totality of justice (not to speak of the general national welfare)? The Havana rule has favoured foreign creditors for well over a century: is it any real injustice to expect them to take the rough with the smooth of the rule? An expert committee might be able to devise rules which were more discriminating, which did more than rough and general justice. But I am far from convinced that merely overruling the Havana case (which is the only alternative to affirmation open to your Lordships) does so-even though it may seem to be justified by the facts of the particular case instantly before your Lordships. Moreover, I am sure that an expert committee, including or taking evidence from departmental officials, would apprehend a great number of not immediately apparent repercussions of the decision which my noble and learned friends propose to take. Such a committee might conclude that the repercussions make the decision unacceptable. Or they might suggest some means of mitigating any adverse effect. Or they might advise that the repercussions were on balance acceptable. But at least the crucial decision would be taken in the light (if all the consequences involved.

By contrast, the training and qualification of a judge is to elucidate the problem immediately before him, so that its features stand out in stereoscopic clarity. But the beam of light which so illuminates the immediate scene seems to throw surrounding areas into greater obscurity: the whole landscape is distorted to the view. A penumbra can be apprehended, but not much beyond; so that when the searchlight shifts a quite unexpected scene may be disclosed. The very qualifications for the judicial process thus impose limitations on its use. This is why judicial advance should be gradual. "I am not trained to see the distant scene: one step enough for me" should be the motto on the wall opposite the judge's desk. It is, I concede, a less spectacular method of progression than somersaults and cartwheels; but it is the one best suited to the capacity and resources of a judge. We are likely to perform better the duties society imposes on us if we recognise our limitations. Within the proper limits there is more than enough to be done which is of value to society.

In my respectful submission, therefore, the very nature of the problem makes this a most unsuitable case for a revolutionary change in the law to be undertaken by judges. But this general view is reinforced by a number of particular considerations.

First, in only nine countries in the world may the writ as well as judgment be for a sum of money foreign to the forum; and in some of those countries the creditor of a foreign money obligation can only sue by demanding the foreign money of account (see Mann, The Legal Aspect of Money, 3rd ed. (1971) p. 351). Is it proposed to deny to the foreign creditor the right to sue in England for the sterling equivalent of the foreign money obligation? How can that be done without legislation? But, unless it is done, the foreign creditor will have the benefit of movement of the exchange rates either way: if sterling is appreciating, he will sue in sterling; if it is depreciating, he will sue for the foreign money. This strikes me as highly unjust to the English debtor, as well as importing an undesirable element of monetary speculation into English litigation (see Lord Sumner in S.S. Celia (Owners) v. S.S. Volturno (Owners) [1921] 2 A.C. 544, 558). The objection to giving the creditor a choice of currencies accords with the evidence given to the Private International Law Committee which reported in 1962: the majority of the banking insurance and shipping associations "objected vehemently" to giving "the debtor the right to discharge a debt in a currency different from that which he had undertaken to pay"; and this view was accepted by the majority of the committee (see Cmnd. 1648 of 1962, paragraphs 3 and 9).

Secondly, then, an expert committee, albeit an exclusively legal one, has in fact examined the problem. They failed to reach agreement (see paragraph 14):

"... while some of us consider that there are substantial arguments in favour of some change of United Kingdom law, ... there was no evidence of any strong feeling in the commercial community that such a change was necessary or desirable."

In these circumstances it seems to me that, quite apart from the general inappropriateness of attempts at law reform by the judiciary in a. field where so many other considerations than the abstractly juridical are involved, it would savour of temerity for judges to rush in to take this decision out of the hands of the Private International Law Committee, Parliament and the executive.

Thirdly, the judgments of the Court of Appeal in Schorsch Meier [19751 Q.B. 416 and the instant case are limited to cases where both the money of account and the money of payment are the same foreign . . currency; and my noble and learned friends add the requirement that the, proper law of the contract is the same. But the money of account and, the money of payment need not be identical. What if they are different? What if one is sterling-does the Havana rule [1961] A.C. 1007 apply? And if so, which money? What if they are different but both foreign and have, moved in different directions in relation to sterling? (Cf. Manners v. Pearson & Son [1898] 1 Ch. 581). What if either is, or both are, different from the proper law of the contract? The Havana rule has at least the merit of simplicity and certainty. To change it as now proposed would only, I should have thought, leave a vast area of uncertainty and be an invitation to further litigations.

Fourthly, I cannot feel that proper consideration has been given to the effect of the Exchange Control Act 1947, it is liable to affect in many. ways the relationship of domestic debtor and foreign creditor. It may, indeed, affect the situation fundamentally by actually preventing the domestic debtor discharging his debt before sterling has comparatively depreciated.

Fifthly, if the breach date rule is abrogated, what is to be put into its place? The logical alternative is the date of payment The difficulty arises from enforcement in default of payment. It now seems to be accepted judicially that, as the Private International Law Committee said in paragraph 10 " . . . for procedural reasons execution in this country must be effected in sterling instead of in the foreign currency." What then should be the date of conversion. if not the breach date? There seem to be a number of alternatives. (1) The date of commencement of proceedings to recover the foreign debt: this appears to be the date chosen by Holmes J delivering the majority judgment of the Supreme Court of the U.S.A. in Deutsche Bank Filiale Nurnberg v. Humphrey (1926) 272 U.S. 517, 520, with which Sir Frederick Pollock apparently agreed (Pollock-Holmes Correspondence, Vol. 2, p. 190, cited in Mann. The Legal Aspect of Money, p. 354)., and which appealed if an alternative were required, to Lord Reid and Lord Radcliffe in the Havana case. (2) The date of judgment in the proceedings to recover the foreign debt: this is apparently how the decision in the Deutsche Batik case has subsequently been construed in the United States (Mann, p. 355). (3) The date of the commencement of proceedings to enforce the judgment. (4) The latest date procedurally possible in the enforcement proceedings i.e., the date of the affidavit leading to execution. This is illogical, but it is the nearest that one can get practically to the date of payment if execution is required. It is the date finally settled for by the learned Master of the Rolls, and is, I think, that which commends itself to my noble and learned friends (even though they describe it as the date when authority is given to execute). However that may be, there is something to be said on each side in respect of all these alternatives. In such circumstances, it seems relevant to bear in mind what was said by my noble and learned friend, Lord Wilberforce, in Launchbury v. Morgans [1973] A.C. 127, 136-137:

"I do not know on what principle your Lordships acting judicially can prefer one of these systems to the others or on what basis any one can be formulated with sufficient precision or its exceptions defined. The choice is one of social policy; there are arguments for and against each of them. If any one is preferable on purely logical grounds, to me it is the [second], for I am unable to state with any precision a rational (as opposed to a policy) preference for drawing a line at either of the alternative points ... Any new direction, and it may be one of many alternatives, must be set by Parliament."

The word "second" in square brackets is my own substitution in default of the breach date; since I find myself convinced by the reasoning of Holmes J. as subsequently interpreted. I would add that it would be in line with the Jugoslavenska case [1974] Q.B. 292, which established (Cairns L.J. dubitante) that conversion should be at the date of the arbitration award, and with the Carriage by Air Act 1961 (based on the Hague Convention of 1956 expressly on this point).

Much of the foregoing impinges on my second main reason why I do not think that your Lordships should overrule Havana [1961] A.C. 1007-namely, that it would be abandoning the justified self-restraint .which your Lordships' predecessors have demonstrated in making use of the 1966 declaration. The reasons for such self-restraint are sufficiently set out in the authorities, and I have already cited what was said by Lord Reid in Reg. v. Knuller (Publishing, Printing and Promotions) Ltd. [1973] A.C. 435. The decision of Lord Reid in that case was, in my respectful opinion, exemplary: although he had himself dissented in Shaw v. Director of Public Prosecutions [1962] A.C. 220 and adhered to the same view, he thought that it would be improper for the majority decision to be overruled.

But. once again here, the general consideration is reinforced by particularities. In the first place, there is no argument of any force that was not fully canvassed and weighed in the Havana case. I do not believe that any of my noble and learned friends is impressed by the argument based on the slight change in the wording of the form of judgment in the Queen's Bench Division. As for Beswick v. Beswick [1968] A.C. 58, I have already ventured to point out that it did not create new law by decreeing specific performance of a contract to pay money, and have invoked in reinforcement the great authority of my noble and learned friend, Lord Cross of Chelsea. In any case I cannot find that inability to decree specific performance of a promise to pay money formed any part of the rationes decidendi of the speeches in the Havana case [1961] A.C. 1007, except perhaps for Lord Reid's enigmatic statement, at p. 1052:

"A plaintiff cannot sue in England for payment of dollars, and he cannot get specific performance of a contract to pay dollars-it would not be right that he should."

Lord Reid seems to be saying, "He cannot get specific performance, because he cannot sue directly" not the converse.

Secondly, in affirming the sterling judgment rule, your Lordships' House was following massive authority. It is quite unnecessary to have recourse to the mediaeval law merchant-though that is available if required. But in modern times there is Manners v. Pearson & Son [1898] 1 Ch. 581 (Lindley M.R. at p. 587; Vaughan Williams L.J. at p. 592); Di Ferdinando v. Simon, Smits & Co. Ltd. [1920] 3 K.B. 409 (Bankes L.J. at p. 412; Scrutton L.J. at p. 415); S.S. Celia (Owners) v. S.S. Volturno (Owners) [1921] 2 A.C. 544 (Lord Buckmaster at p. 549; Lord Sumner at p. 555; Lord Parmoor at p. 560; Lord Wrenbury at p. 566); In re Chesterman's Trusts [1923] 2 Ch. 466 (Younger L.J. at p. 490); Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72 (Clauson L.J. at p. 78, delivering the judgment of the Court of Appeal consisting also of Scott and du Parcq L.JJ.). It is hardly possible to think of a rule with more solid judicial backing. Lord Denning was fully justified in describing the rule by the words. " ... if there is one thing clear in our law [1961] A.C. 1007, 1068-1069. It was also stated in the Havana case by Viscount Simonds at pp. 1043 and 1046 (Lord Morris of Borth-y-Gest concurring), by Lord Reid at p. 1052 and by Lord Radcliffe (of great weight in view of his knowledge, unusual in a judge, of public and commercial finance), at p.1059. Since the Havana case the rule was regarded as settled by Salmon L.J. in The Teh Hu [1970] P. 106, 129, by all members of the Court of Appeal in the Jugoslavenska case [1974] Q.B. 292 (Lord Denning M.R. at p. 299; Cairns L.J. at p. 301; Roskill L.J. at p. 303; although Lord Denning by this time and Roskill L.J. showed no great enthusiasm), and by Lawton L.J. in Schorsch Meier [1975] QB. 416, 434.

Thirdly, these pronouncements were not made in ignorance that currencies are liable to fluctuate in value, or under the illusion that sterling was immutable. In Great Britain there had been considerable currency inflation during and after the war of 1914-18, and we did not return to the gold standard till 1926. To look no further than Europe, the rouble, the mark and the franc had all been gold-backed before 1914: but the rouble after the Russian revolution and the mark during the occupation of the Ruhr had become so much useless paper, to be followed by the collapse of the franc. The speeches in the Havana case [1961] A.C.1007 itself reflect, as one would expect, the consciousness that the very context of the decision was currency fluctuation. For example, Lord Denning said, at p. 1069:

"The question is whether the [breach date conversion] rule is still to apply when sterling loses the value which it once bed. We have seen in recent years how it has depreciated."

and he answered the question, Yes. I cannot see that it makes any difference that currencies float instead of staggering up and down.

This point is of importance; because the consideration of currency fluctuation as if it were a new factor demanding revision of the law seems to me to have been the basis of the judgment of Lord Denning M.R. in Schorsch Meier [1975] Q.B. 416. He put it with characteristic vividness, at p. 424:

"[Sterling] was a stable currency which had no equal. Things are different now. Sterling floats in the wind. It changes like a weather-cock with every gust that blows. So do other currencies."

I confess to knowing myself to be entirely unqualified to judge how permanent a characteristic this is likely to be of the international money market. But certainly the judges I have mentioned were not oblivious of variation in rates of exchange-it was generally the very problem posed to them. In any case, even if sterling veers to every passing breeze, is that any reason why the law should do so? Is it not one of the functions of law in society to give a gyroscopic stability to the ship of state as !he weather shifts and the seas mount?

Fourthly, the breach date rule was the subject of specific and fresh investigation in the Havana case [1961] A.C. 1007. See, for example, Lord Reid at pp. 1050-1053, starting: "So I think it more satisfactory to re-examine the whole matter" and ending:

"So even if this were still an open question, I would have to come to the conclusion that in every case where a plaintiff sues for a debt due in a foreign currency, that debt should be converted into sterling at the rate of exchange current when the debt fell due."

Fifthly, to abandon the breach date rule in relation to foreign debts would leave the law in absurd discrepancy with the decision of your Lordships' House in S.S. Celia (Owners) v. SS. Volturno (Owners) [1921] 2 A.C. 544, which established (or has always been taken to establish) that in tort the breach date is the correct time for conversion, and also with Di, Ferdinando v. Simon, Smits & Co. Ltd. [1920] 3 K.B. 409 which established the breach date as that for conversion of damages for breach of contract. This consideration of anomaly was obviously a weighty factor in all the opinions delivered in the Havana case [1961] A.C. 1007. See, for example, Viscount Simonds at pp. 1046-1047, quoting with approval Clauson L.J. in Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72, 78:

"If this be the position the only question open in this court would seem to be whether any distinction can in principle be drawn between the case of a claim in respect of breach of contract which results in relief by way of damages, and a like claim which results in relief by way of a judgment for a fixed sum. We can find no logical ground for such a distinction either in reason or in any principle which can be deduced from the decided cases; indeed counsel supporting the judgment below was not able to formulate any such principle, still less to point to any decided cases from which any such principle could be deduced."

Similarly, Lord Radcliffe at pp. 1059-1060. Lord Denning (p. 1069) described the breach date rule as one "of positive law established by decisions of this House and of the Judicial Committee of the Privy Council."

Viscount Simonds (Lord Radcliffe and Lord Morris of Borth-y-Gest agreeing) summed the matter up, at pp. 1048-1049:

"We are engaged in settling the law upon a question in which any rule is artificial and to some extent arbitrary. In other systems of law different rules have been adopted, and there is no doubt that one system may benefit one creditor and another. No rule can do perfect justice in every case. In this country the rule is settled so as to bind all courts that where the claim is in damages for breach of contract, or for a tortious act, the date of conversion' is the date of that breach or that act. It would, in my opinion, introduce the sort of refinement into the law, against which I have striven and shall ever strive, if a different rule were adopted in the case of a foreign debt. In the one case a contract for delivery of goods, in another for delivery of foreign currency, in another for payment of a foreign debt, in all alike precisely the same damage suffered by a plaintiff who sues on the failure of the defendant to fulfil his obligation. It would be little credit to our law if a different measure of relief was meted out in these several cases."

Since my noble and learned friends do not propose to overrule The Volturno or Di Ferdinando v. Sinion, Smits &,Co. Ltd. the very refinement is introduced against which Viscount Simonds, Lord Radcliffe and Lord Morris of Borth-y-Gest protested as being discreditable to our law. Indeed, it is worse; the Jugoslavenska [1974] Q.B. 292 has supervened, introducing yet another date the date of the award by which. the debt is established in an arbitration, corresponding to the date of judgment in litigation.

Sixthly, a long-established rule of law almost always gathers juridical adhesions, so that its abrogation causes dislocations elsewhere in the legal system. Parliament, on executive or expert advice, can allow for these: the judiciary can rarely do so. For example, section 72 (4) of the Bills of Exchange Act 1882 seems to have been enacted on the assumption that the law is as stated in the Havana case. It reads:

"Where a bill is drawn out of but payable in the United Kingdom and the sum payable is not expressed in the currency of the United Kingdom, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable."

To overrule the Havana decision would seem to create another anomaly here. Similarly, with the Foreign Judgments (Reciprocal Enforcement) Act 1933, section 2 (3).

Seventhly, a number of Rules of the Supreme Court seem to have been adopted on the assumption that an English judgment must be in sterling. See, for example, R.S.C. Ord. 1, r. 4, which states that the judgment must be in decimal currency. Also Ord. 42, r. 1 (4) (form of judgment), Ord. 45, r. 1 (5) (laying down the method of enforcement of money judgments) and Ord. 45, r. 5. I readily concede that rules of procedure must not be allowed to inhibit the proper development of the substantive law. The Rules of the Supreme Court are subordinate legislation: and in so far as they are inconsistent with a binding rule of positive law they are ultra vires. But the fact that overruling the Havana case [1961] A.C. 1007 may lead to the invalidation of rules drafted by a statutory committee headed by the Lord Chancellor. the Lord Chief Justice and the Master of the Rolls should at least impose some caution.

Eighthly, overruling the Havana case Would seem to involve a whole number of procedural problems to which no solution has been propounded which is satisfactory to me at least. How can set-off be worked, under R.S.C., Ord. 18, r. 17? Take a usual case of a claim for the balance of the price of goods (ex hypothesis in a foreign currency), with a counterclaim for damages for defects in the goods (including goods previously delivered under the contract). If Havana is overruled, presumably the balance of the price must be converted into sterling as at the latest date possible before execution. But, unless Di Ferdinando v. Simon, Smits & Co. Lid. [1920] 3 K.B. 409 is also overruled, the damages must be assessed in sterling as at the breach date (i.e., delivery). What if there is currency fluctuation between breach date and execution, so that the price of the goods appreciates in terms of sterling? What if the damages would have matched the outstanding debt in respect of the price of the goods if the latter were converted into sterling as at the time of delivery, but there is a subsequent fall in the value of sterling? Then, how can payment into court be worked under Ord. 22, r. l? What if the payment in is sufficient to satisfy the debt on the basis of conversion at the date of payment-in, but the foreign currency subsequently appreciates? Presumably the debt will be held to be satisfied (any other result would be outrageous). But what if there is a change in the exchange rate before notice of payment-in is received (Ord. 22, r. 1 (2) or within 21 days of receipt of such notice (Ord. 22, r. 3)? In any case here we have yet another date for conversion (date of payment into court) to add to breach date (for damages), execution date (for foreign debt), bill maturity date and arbitration award date. Then there is the possible combination of counterclaim and set off with a payment into court. Again, what if the sterling equivalent of the debt is within the county court jurisdiction at the time proceedings there are started, but subsequent currency movement puts it outside? Transfer of the action to the High Court?-but sterling might rise again. High Court costs or county court costs? I do not doubt that consultation and deliberation would find an answer to many of these problems, though legislation or new rule-making might be required; but no decision ought to be taken which merely sweeps the problems under the carpet, to trip up business men and lawyers.

Notwithstanding the great authority and the high lineage of the Havana case, notwithstanding all its juridical adhesions, notwithstanding my lack of confidence that I am capable of weighing the full potentialities of the situation and the full repercussions of the decision, I might be tempted to join in overruling Havana if I were convinced that that would on balance conduce to justice. I do not think that the Havana rules do justice in the present case-it was envisaged that they (like all others put forward) might not in every case. But take the following example.

John Mitchell is a newly and greatly enriched dividend-stripper and property speculator in England. He conceives that a notable art collection would be a desirable adjunct and mark of his new position in society, his art agent learns that Count Comnenus has the finest collection in Central Europe, accumulated by his enlightened family over the centuries; and that the estates of the count are so heavily encumbered that he is reluctantly faced with the necessity of selling his family collection. The deal is clinched. John Mitchell agrees to buy the collection for million Ruritanian talers. The taler is gold-backed, and the sum is equivalent to £1 million. The collection is duly shipped to England, but the purchaser fails to pay on the due date. It is not his fault. War has broken out, and strict exchange control has been imposed. Towards the end of the war a revolution takes place in Ruritania. Count Comnenus is glad to escape with his bare life, and arrives penniless in this country. In the meantime, the Ruritanian taler, no longer gold-backed, has become worth only the accumulating paper it is printed on. Count Comnenus remembers his debt from Mr. Mitchell and that his magnificent collection is now the principal ornament of the Mitchell mansions. He claims £1 million. Mr. Mitchell tenders him a lorry filled with 10 million worthless Ruritanian talers. Is it justice that Mr. Mitchell should succeed, the proud possessor of a valuable collection acquired for nothing, and that the count should starve?

And lest it might be said that one of the consequences of nationality which must be borne is the danger of collapse of one's national currency, it should be remembered that the situation could affect two citizens of this country. There is an example in the books: Cuming v. Munro (1792) 5 T.R. 87. A bond had been given in 1775 in the sum of £2,400 "proclamation money " of North Carolina (see Stat. 6 Ann., c. 30), which was then worth £1,440 sterling; this was still its worth when the bond fell due. By 1792, when the plaintiff sued on the bond for £1,440, the American War of Independence had supervened, and the proclamation money was valueless. The defendant sought to pay into court the £2,400 of worthless proclamation money and to stay the proceedings. The court (Buller and Grose JJ.) refused to allow this, holding that it would involve injustice. Would it not? Is this case too to be overruled? Are we to apply an iron law of nominalism as if it were a law of nature?

My noble and learned friends are, I know, reluctant to disturb the decision in the Jugoslavenska case [1974] Q.B. 292, whereby an English arbitral award may be made in a foreign currency. It was argued on behalf of the respondents here that it would be illogical to have one rule applicable to arbitration awards and another to judgments. But English law has never allowed itself to be hag-ridden by logic; and arbitration differs in a number of respects from litigation-significantly, there can be no arbitration without an arbitration agreement, If the sterling judgment rule and the breach date rule were to be reconsidered by a properly qualified body, no doubt the Jugoslavenska case would come within its purview. In the meantime, I am content to say that the question whether it was correctly decided (whether it could stand along with the Havana case [1961] A.C. 1007), is not an issue in this appeal, and that all the members of the Court of Appeal in the Jugoslavenska case [1974] Q.B. 292 thought their decision consistent with Havana, in view of tile differences between litigation and arbitration (see especially Lord Denning M..R. at p. 299C-F). Incidentally, that case, like Schorsch Meier [1975] Q.B. 416. was only argued on one side; and it was emphasised that the money of account and the money of payment was one single foreign currency (Lord Denning M.R. at p. 398G; Roskill L.J., p. 305A-B). Moreover, the Jugoslavenska decision in any event stands in anomaly with that which my noble and learned friends propose to take, as I have already ventured to point out: on the analogy of Jugoslavenska the conversion date in litigation should be the date of the English judgment for the debt, not the date of (or approximating to) its execution. The Jugoslavenska case certainly affords no compelling reason for overruling the Havana decision.

To sum up on this part of the case: (1) the decision to abrogate the Havana rules is not one which judges are qualified to take; (2) to overrule the Havana case would be a departure from the limitations which your Lordships have for good reasons self-imposed on the use to be made 13 of the 1966 declaration; (3) the Havana rules have juridical adhesions, so that their abrogation will cause dislocations elsewhere -which have been insufficiently considered; (4) it has not been established that any other rules than the Havana rules would be more conducive to general justice; (5) abrogation of the Havana breach date rule will create a number of undesirable anomalies, (6) if the breach date rule is to be abrogated there are a number of alternatives, the choice between which is not a purely or even a primarily juridical issue.

I would therefore allow the appeal.

Afterword

There are three more general questions which are raised by this important appeal.

(1) Overruling Havana [1961] A.C. 1007 involves that the law must be deemed always to have been as my noble and learned friends now declare it. This may affect the vires of some Rules of Court; but beyond this there has been, so far as I can see, no consideration of what consequences the retrospective alteration of the law (for, let us face it, that is the reality) may have. I would be more ready to go along with my noble and learned friends if the decision had prospective effect only. One of the several reasons why radical law reform is in general more appropriately carried out by Parliament is that a statute can (and usually does) operate prospectively. I venture once again to plead that consideration should be given to the various forms of prospective overruling such as obtain in some other common law systems.

(2) The type of law reform by the judiciary which is here exemplified, and which has been exemplified in some other recent cases, is a very considerable social responsibility. Of course, no worthwhile judge is afraid of responsibility. But I presume to suggest that consideration should be given to the desirability of the Lords of Appeal sitting in banc in such circumstances-at least where the overruling of a recent decision of your Lordships House is in question.

(3) The main ground of my dissent from the opinions of my noble and learned friends is that this type of issue is unsuitable for law reform by the judiciary. It is the sort of case where, in my view, a wide range of advice, official especially but also. commercial, is required. The training and experience of a judge is unsuitable for this type of decision-making unaided. his circumspection is too narrow; his very qualities of keen perception of his immediate problem,, tend, to militate against sound judgment of the wider and more general issues involved. But if courts are to undertake legislative responsibilities, something might be done. to equip them better for the type of decision-making which is involved. Official advice and a balanced executive view might be made available by a law officer or his counsel acting as amicus curiae. I venture to suggest consideration of some such machinery.

LORD CROSS OF CHELSEA. My Lords, the facts of this case are set out in the speech of my noble and learned friend, Lord Wilberforce, which I have had the advantage of reading and I agree with him that the appeal should be dismissed.

The obligation for the breach of which the respondent sued the appellants was an obligation to pay him a sum of Swiss francs in Switzerland in payment for goods sold and delivered by him to them. As was pointed out by both Lord Reid and Lord Radcliffe in their speeches in the Havana case [1961] A.C. 1007, 1057, 1059, a contract to pay a debt in the currency of the country in which settlement is to be made cannot be treated as though it were a contract to supply the creditor with some commodity which, if default is made, he can purchase in the market from someone else. It is a claim for money and if the respondent had sued the appellants in Switzerland the judgment-and the only judgment-which he would have obtained would have been a judgment for the appropriate number of Swiss francs together-if the law allowed it with interest or damages for the failure to pay at the due date. One would expect to find that if he chose to sue on the contract in England the judgment which he would get would be the same. But all the Law Lords who took part in the Havana decision regarded it as clear beyond argument that an English court cannot give a judgment for payment of m of foreign currency. Thus Viscount Simonds, with whose judgment on this point Lord Morris of Borth-y-Gest agreed, said, at p. 1043: "Admittedly, the claim must be for a sterling sum and the judgment must be in sterling." Lord Reid said, at p. 1052: "A plaintiff cannot sue in England for payment of dollars." Lord Radcliffe, at p. 1059, said that though a contract to settle a debt in the currency of the country in which settlement is to be made is a contract for the payment of money not a contract to deliver a commodity, yet "if action is taken in England for breach of the contract, the remedy sought must be damages, not debt, and those damages expressed in sterling for the purposes of judgment." Finally, Lord Denning said, at pp. 1068-1069: ".......... if there is one thing clear in our law, it is that the claim must be made in sterling and the judgment given in sterling." Furthermore, they all held-though Lord Reid and Lord Radcliffe had doubts on this point-that the judgment in sterling should be for the sterling value of the foreign currency in question not at the date of the judgment or even of the issue of the writ but at the date when the sum of foreign currency ought to have been paid under the terms of the contract. The "fons et origo" of these, to me somewhat surprising, conclusions lies-as my noble and learned friend Lord Wilberforce points out in the case of Manners v. Pearson &.Son [1898] 1 Ch 581. The plaintiff in that case was the personal representative of one Morison described as of the city of Mexico who on October. 6, 1891, had entered into a contract with the defendants who were a firm of contractors in this country which provided (inter alia) for the payment by them to him by monthly instalments of a commission of one cent in Mexican currency for every cubic metre of certain excavation works carried out by the defendants for the drainage authority of the city of Mexico and for which the defendants should have received payment from such authority. So long as Morison lived the defendants paid him from the time the sums of Mexican dollars due to him under the contract, but he died on June 14, 1894, and no representation to his estate was taken out until May 29, 1896, when the plaintiff obtained a grant of administration. On June 11, 1896, he issued a writ for an account and by judgment given on November 4, 1897, the court declared that he was entitled to have an account taken of what was due to him as Morison's representative under the. contract and that in taking this account the defendants were to have credit for certain sums there mentioned. The defendants on November 13, 1897, delivered an account showing that a balance of 19,366 Mexican dollars was due to Morison's estate which they offered to pay in dollars or in English money equal to the value of the dollars on November 13, 1897. The plaintiff agreed that the account correctly stated the balance of Mexican dollars due to the estate down to the date when it was delivered. He contended, however, that the conversion into English money should not be made at that date but that the account should have been taken on the principle of charging the defendants with the sums payable monthly turned into English money at the respective dates on which they became payable. As the Mexican dollar had been falling as against the pound sterling during the period since Morison's death this procedure would result in a larger sum of sterling being paid to the estate than if only the ultimate balance was converted at the date of the delivery of the account. After stating the facts Lindley M.R. (with whose conclusions Rigby L.J. agreed) continued as follows, at pp. 586, 587:

"Before considering the questions raised by this appeal it is necessary to ascertain the grounds on which any judgment or order for payment in English money can be properly made in a case where the plaintiff sues upon a contract to pay in the currency of a foreign country. The terms of the contract confer no right to payment in English money. If the defendants had tendered to their creditor either in Mexico or wherever he demanded payment the amounts due from them in Mexican dollars at the proper times they would have offered to perform their obligations in strict accordance with their contract. The necessity for considering what amount.. the defendants ought to pay in English money arises simply from the fact that the plaintiff, having the right to sue the defendants in this country for a breach of their contract, has chosen to sue them here instead of Mexico; and, speaking generally, the courts of this country have no jurisdiction to order payment of money except in the currency of this country. Whatever sum is ordered to be paid, whether for principal, interest, or damages, must be expressed, in English money, or such order cannot be enforced by the ordinary writs of execution. Whether before the Debtors Act an order in Chancery for the payment of so many Mexican dollars could have been made and could have been enforced by attachment I do not pause to inquire. With this possible exception the above statement is correct and affords the true explanation of the necessity for considering how much money in English currency the defendants ought to pay the plaintiff. If the defendants were within the jurisdiction of any other civilized state and were sued there. as they might be, the courts of that state would have to deal with precisely the same problem, and to express in the currency of that state the amount payable by the defendants instead of expressing it in Mexican dollars. If this be the true explanation of the necessity for expressing in English money what the defendants ought to pay, it follows that such necessity does not arise until the court orders payment. But it does not follow that the sum to be inserted in the order is the equivalent at that time of the moneys payable by the terms of the contract, for the defendants may be liable, not only to pay those sums, but also damages in the shape of interest or otherwise for not having paid them at the proper time. The obligations. if any, of the defendants in this respect must be determined before the amount for which they are liable can be calculated and expressed in any judgments or order for payment."

Lindley M.R. went on to hold that the plaintiff had failed to make out any case for any award of damages and so was only entitled to the sterling value of 19,366 dollars as at the date of the delivery of the account which he treated as equivalent to an order of the court for payment of that sum on that date. Vaughan Williams L.J. in his dissenting judgment said (1) that it had not been questioned on either side that the total debt ordered to be paid after taking the account must be expressed in English currency; (2) that in an action in the English courts for recovery of a debt payable in foreign currency what the plaintiff is entitled to is damages for the breach of a contract to deliver the commodity bargained for at the appointed time and place so that the date at which the sterling value of the foreign currency must be ascertained is the date of the breach and not of the judgment; and (3) that the same principle was applicable where the action was for an account of sums of foreign currency falling due from time to time under a contract.

The question whether or not an English court had power to give a judgment for payment of a sum in foreign currency was not an issue between the parties in Manners v. Pearson & Son or argued on either side. The defendants were prepared. to. pay either the 19,366 Mexican dollars or its sterling equivalent; the only point at issue was the date at which the sterling equivalent-if the plaintiff wanted sterling-should be ascertained. What Lindley M.R. said about judgments in foreign currency was, therefore, an obiter dictum. The reason which he gave for saying that no such judgment could be given-at all events since the abolition of imprisonment for debt was that execution by way of"fieri facias" or "elegit" could not issue on such a judgment. That seems to me with all respect to be a very inadequate reason for saying that the court has no power to give such a judgment. In the case of In re Liddell's Settlement Trusts [1936] Ch. 365, the court had ordered a woman who had taken a ward out of the jurisdiction without leave to bring the child home. One of the arguments addressed to the Court of Appeal against the making of such an order was that if she did not choose to obey the order the court could not ensure compliance with it. In answer to that argument Romer L.J. remarked, at p. 374, that it was not the habit of the court in considering whether or not it would make an order to contemplate the possibility that it might not be obeyed. In fact in that case the court put pressure on the woman to bring the child back by sequestrating her assets in this country and I would have thought that in theory if a defendant was ordered to pay a sum of foreign currency and failed to do so the court, if satisfied that he had the means to comply, might proceed to sequestrate his property here. In practice, of c course, no judge would do this for the court does not resort to a process of contempt if its order can be given effect to in substance in some other way. Thus if a defendant who has been ordered to execute a conveyance of property to the plaintiff refuses to do so the judge will not commit him to prison for contempt but will make a vesting order. So if an order were made for payment by the defendant of a sum of foreign currency which was not complied with the remedy which the court would naturally give the plaintiff would be to authorise him to levy execution for the sum of sterling which at the date of the authority was equivalent in value to the sum of foreign currency which the defendant faded to deliver-that is to say, what the Court of Appeal did here. I can see no valid reason why the court should not have power to order payment' of money in a foreign currency if it thinks that justice as between the parties will be served by the making of such an order; and it is to my mind unfortunate that this House in the Havana case accepted it as clear beyond argument that no such order could be made without asking itself if there was any valid reason why this should be so.

Assuming that judgment for a debt payable in the currency of the country of settlement must be given in sterling, at what date should the conversion be effected? The process by which it has come to be held that the appropriate date is the date of failure to pay-the so-called breach date-is very curious. In the first place it seems to have been generally accepted-(see e.g. per Lord Buckmaster in The Volturno [1921] 2 A.C. 544, 550-551 and by P.O. Lawrence J. in In re British American Continental Bank Ltd., Credit General Liegeois Claim [1922] 2 Ch. 589, 595) that the only point on which Lindley M.R. and Vaughan Williams L.J. were in disagreement in Manners v. Pearson & Son [1898] 1 Ch. 581 was whether it made a difference to the result that the action was not an action to enforce payment of a particular instalment but an action for an account of the balance owing over a period. If it had been an action for payment of a single instalment Lindley M.R. would, that is to say, have agreed with Vaughan Williams L.J. that the judgment should be for the sterling equivalent of the Mexican dollars at the date when they should have been paid, not at the date of the judgment. Having read and re-read the judgment of Lindley M.R. several times, I am wholly unable to agree with this view of it. His Lordship stressed the fact that what the plaintiff was entitled to was a payment in Mexican dollars, that the only reason why he could not get a judgment in Mexican dollars was that he had brought his action here where a judgment in Mexican dollars could not be given but that the necessity for a conversion of the Mexican dollars to which he was prima facie entitled into sterling only emerged at the date of judgment. If the action had been for a single instalment Lindley M.R. would, I think, have held that the Mexican dollars should be converted into sterling at the date of judgment-just as he held that, the action being one for an account, the conversion must be effected when the sum of Mexican dollars due under the account was ascertained.

It was, indeed, only by a gradual process that it came to be established that the view championed by Vaughan Williams L.J. was right. In Di Ferdinando v. Simon, Smits Co. Ltd. [1920] 3 K.B. 409, Mr. Schiller K.C., in arguing-successfully-that in an action for damages for breach of a contract to carry goods from England to Italy and for conversion of the goods the proper date at which to convert the damages from lire to sterling was the date of the breach, treated it as self-evident that in a claim for foreign money the rate of exchange at the date of the English judgment must be taken since "otherwise the plaintiff might get more or less money than he claimed." In his speech in The Volturno [1921] 2 A.C. 544, 557 Lord Sumner was careful to leave open the question of the date for conversion in cases of breach of obligation to pay sums abroad in local currency and in Société des Hôtels le Touquet Paris-Plage v. Cummings [1922] 1 K.B. 451, 465, Atkin L.J. said with regard to such a case:

"Much may be said for the proposition that the debtor's obligation is to pay, say, francs, and so continues until the debt is merged in the judgment which should give him the English equivalent at that date of those francs."

The first case which decided that in such circumstances the proper date to take for conversion was the date of the failure to pay the foreign currency was apparently the decision of P.O. Lawrence J. in the Credit Liegeois Claim [1922] 2 Ch. 589, in coming to which the judge was, I think, influenced by his belief-which to my mind was erroneous-that Lindley M.R. and Rigby L.J. in Manners v. Pearson & Son [1898] 1 Ch. 581 were in agreement with Vaughan Williams L.J. that in such a ease the date of the failure to pay was the proper date to take. The decision of P.O. Lawrence J. was however accepted as correct by the Court of Appeal in Madeleine Vionnet et Cie. v. Wills [1940] 1 K.B. 72, and by this House in the Havana case [1961] A.C. 1007-though in the latter case Lords Reid and Radcliffe evidently felt considerable doubts on the point-doubts which are understandable enough if one remembers that the dissenting judgment of Vaughan Williams, L.J. in Manners v. Pearson & Son on which the doctrine really rests is based on the view which their Lordships repudiated that the plaintiffs' claim is for damages for failure to deliver a commodity.

It will be apparent from what I have said that I do not view the decision of this House in the Havana case with any enthusiasm. Indeed, to speak bluntly, I think it was wrong on both points. But as Lord Reid said in Reg v. Knuller (Publishing, Printing and Promotions) Ltd. [1973] A.C 435, 455. the fact that we no longer regard previous decisions of this House as absolutely binding does not mean that whenever we think that a previous decision was wrong we should reverse it. In the general interest of certainty in the law we must be sure that there is some very good reason before we so act. In the Schorsch Meier case [1975] Q.B. 416. 425, Lord Denning MR. with the concurrence of Foster J, took it on himself to say that the decision in the Havana case that our courts cannot give judgment for payment of a sum of foreign currency-though right in 1961-ought not to be followed in 1974 because the "reasons for the rule have now ceased to exist." I agree with my noble and learned friend, Lord Wilberforce, that the Master of the Rolls was not entitled to take such a course. It is not for any inferior court-be it a county court or a division of the Court of Appeal presided over by Lord Denning-to review decisions of this House. Such a review can only be undertaken by this House itself under the declaration of 1966. Moreover, although one cannot but feel sympathy for Stephenson and Geoffrey Lane L.JJ. in the embarrassing position in which they found themselves, I think that it was wrong for the Court of Appeal in this case to follow the Schorsch Meier decision. It is no doubt true that that decision was not given, per incuriam,"but I do not think that Lord Greene M.R., when he said in Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718, 729 that the "only" exceptions to the rule that the Court of Appeal is bound to follow previous decisions of its own were those which he set out, can fairly be blamed for not foreseeing that one of his successors might deal with a decision of the House of Lords in the way in which Lord Denning dealt with the Havana case. I propose, therefore, to consider this case as though the Court of Appeal had dismissed the appeal from Bristow J. and we were hearing an appeal to us by the respondents to depart from the Havana decision under the declaration of 1966.

Lord Denning M.R. says in his judgment in Schorsch Meier that there were two reasons for the rule that no judgment for payment of a sum of foreign currency can be given by an English court which existed in 1961 but had ceased to exist by 1974. The first was that the traditional form of judgment in a common law action for debt or damages, "that the plaintiff do recover against the defendant" the specified sum, was only appropriate to a sum expressed in sterling since otherwise execution could not issue on it; but that that form was replaced in 1966 by a form of order that the defendant "do pay" to the plaintiff the specified sum. The second was that it was held for the first time in Beswick v. Beswick [1968] A.C. 58 that the court could order specific performance of a contract to pay money. To my mind there is nothing in either of these points. As Danckwerts L.J. pointed out when Beswick v. Beswick [1966] Ch. 538, 560-561 was in the Court of Appeal the common form. Judgment in a vendor's action for specific performance has always contained an order that on delivery to him of the conveyance the defendant "do pay " the purchase price to the plaintiff. If he fails to comply with the order it is generally because he cannot raise the money and in. that case the vendor will apply to the court to have the order discharged and replaced by an order rescinding the contract and forfeiting the deposit; but in the rare case where the defendant could pay the purchase price but simply refuses to do so the order for payment can be enforced by sequestration (see Knill v. Dumergue (1911) 80 L.J.Ch. 708, Supreme Court Practice 1973, Ord. 46, r.5 (3)). Beswick v. Beswick made no new law in this field. Nor is it true to say that in 1966 the traditional common law form of judgment was replaced by a new form. As the notes to Ord. 42, r.1, in the Supreme Court Practice make clear, there had been since 1875 two forms of judgment available in the Supreme Court the old common law form that "the plaintiff do recover" and the old Chancery form that "the defendant do pay." It is gratifying to a Chancery lawyer to note that in 1966 the common law form was dropped and that the Chancery form has since then been the only form in use but I am quite unable to attach to this change the importance with regard to the matter in hand that Lord Denning M.R. attaches to it. I agree with everything that my noble and learned friend, Lord Simon, says with regard to the scope of the maxim "cessante ratione legis cessat ipsa lex," but whatever its scope I cannot see how it could possibly apply to this case. The only reason ever given for the rule that judgments for payment of sums of money must be expressed in sterling is that execution by way of "fieri facias" or "elegit" cannot issue automatically on a judgment for a sum of money expressed in a foreign currency-and that reason, for what it is worth, is as valid today as it ever was. As I have said, I think that it is worth nothing; but that is a different matter.

I ask myself, therefore, whether there has been any change of circumstances since 1961 sufficiently great to justify us in saying that the rule which in the Havana case [1961] A.C. 1007 was accepted on all sides without question and which formed an essential foundation for the judgments delivered ought now to be considered to be no longer an existing rule of our law. I agree with my noble and learned friend, Lord Wilberforce, that the change which has come over the "foreign exchange" situation generally and the position of sterling in particular in the course of the last 15 years justifies us in answering that question in the affirmative. In this connection I am particularly impressed by the fact that awards in commercial arbitrations are now often made in a foreign currency and that the Court of Appeal has held in the Jugoslavenska case [1974] Q.B. 292 that such awards can be enforced as judgments under section 26 of the Arbitration Act 1950. It would be most unfortunate for this House to cast any doubt on the correctness of that decision; but, as my noble and learned friend points out. it would be absurd to have one rule with regard to arbitrations on debts expressed in a foreign currency and another with regard to actions brought on similar debts. Like him, however, I would go no further on this occasion than to say that the court has power to give judgment for payment of money in a foreign currency and that one case in which such a judgment should be given is where the action is brought to enforce a foreign money obligation. In that case if the defendant fails to deliver the foreign currency the date for its conversion into sterling should be the date when the plaintiff is given leave to levy execution for a' sum expressed in sterling. I say nothing one way or the other as to the date for conversion into sterling of sums ascertained in foreign currency for damages for breach of contract or tort. Further, I agree with my noble and learned friend that where the foreign money obligation is the subject of a proof in bankruptcy or liquidation the date for conversion into sterling should be the date of the admission of the proof. I also agree with all that he said as to the views expressed by the Court of Appeal in the Schorsch Meier [1975] Q.B. 416 case with regard to article 106 of the Treaty of Rome.

LORD EDMUND-DAVIES. My Lords, I am in respectful agreement with the reasons given by my noble and learned friend, Lord Wilberforce, for holding that this appeal should be dismissed and I desire to add only a few observations.

As I see it the core of this litigation is not in reality whether judgments given by the courts of this country must always be expressed in sterling, though that point was expansively canvassed. I say this because the probability, nay, the certainty is that if a money judgment given in our courts is to be enforced here there will inevitably come a stage when, if the judgment is one expressed in a foreign currency, it must be converted into sterling so that those responsible for enforcing the judgment (whether by levying execution or otherwise) may know what steps are open to them and how far they can go. As Roskill L.J. said in Jugoslavenska Oceanska Plovidba v. Castle Investment Co. Inc. [1974] Q.B. 292, 306, when dealing with an arbitrator's award:

"For my part, I have difficulty in seeing how execution can issue for a sum other than a sterling amount. I therefore think that the necessary conversion should be effected and deposed to in an affidavit before the application for leave to enforce is made. Leave can then issue under section 26 [of the Arbitration Act 1950] to enforce the award in the same manner as a judgment for that sterling equivalent."

The real question arising in this appeal may be thus stated: where a party successfully sues in our courts for a debt where a foreign currency is the currency of the contract giving rise to the claim and the. money. Of payment thereunder, what is the proper date to take for the purpose of converting into sterling the amount of foreign currency found due from the defendant? Different dates have been favoured at different times, in different circumstances, and for different reasons. My noble and learned friend, Lord Wilberforce, has already considered the ground which led Viscount Simonds in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, 1046 to adopt and apply the propositions in Dicey's Conflict of Laws, 7th.ed. (1958), p. 914:

"(1) An English court cannot give judgment for the payment, an amount in foreign currency . . . (2) For the purpose of Litigation in England: (a) a debt expressed in a foreign currency must be converted into sterling with reference to the rate of exchange prevailing on the day when the debt was payable; . . ."

Lord Reid found the acceptability of the breach date not without its difficulties and said in the same case, at pp. 1051-1052:

"If in America one person lends dollars to another and the loan is not duly repaid, the creditor simply sues there for the money and no question can arise about the date at which damages are to be assessed, though interest May be due from the date of breach. But, if the creditor has to come to England to sue, the dollars will, be converted into sterling as at the date of breach, although at that time neither party had any connection with England. The original. reason for the rule has no application in such a case. When dealing with an English contract it may be right to treat foreign currency as a commodity, but dollars lent in America are not a commodity, and if they are not repaid at the due date there can be no question of an American going into the market and buying dollars to replace those which the debtor failed to deliver. Why, then, should the American creditor, if he has to come to England to sue, have his debt converted into sterling as at the date of the original breach? That seems the more anomalous because, if the creditor had been able to obtain judgment in America for his debt, and had brought the judgment here to enforce it, the debt would have been converted to sterling as at the date of the American judgment."

Lord Reid was clearly unhappy about this anomalous situation. But he comforted himself by saying (p. 1052) that:

"The reason for the existing rule is, I think, primarily procedural. A plaintiff, cannot sue in England for payment of dollars, and he cannot get specific performance of a contract to pay dollars-it would not be right that he should. So at best he could only have the dollars converted to sterling at the date of judgment. Owing to appeals or difficulties of enforcement a long time may elapse between judgment and getting his money, and the rate of exchange may have altered substantially during that time."

Lord Reid went on to deal with, as he considered, other practical difficulties which I need not specify, and concluded (pp. 1052-105) that:

"Really the only practicable choice would seem to be between converting at the date of breach and converting at the date of raising the action in England. . . . . But the rate at the date of raising the action might be very different from the rate at the date of payment. . . . . So even if this were still an open question, I would have come to the conclusion that in every case where a plaintiff sues for a debt due in a foreign currency, that debt should be converted into sterling at the rate of exchange current when the debt fell due. That rule may in some cases be artificial, it may even be unjust, but it has been accepted for a long time, it is clear and certain, and no other rule could be relied on to produce a more just result: indeed, no other rule is really practicable."

To my way of thinking, the respondents succeeded in demonstrating that the procedural and practical difficulties of side-stepping the. rule which Lord Reid recognised could be "unjust" are not insurmountable. Rules of procedure are designed to serve justice, and if they are found to defeat it they must be replaced by other and better rules. Speaking for myself, I should hesitate long before I resigned myself to reluctant acceptance of the inevitability of a rule which would lead to the plaintiff in these proceedings recovering, in effect, judgment for a mere £41,000 in what turned out to be an undefended action in which he should have recovered at least £60,000; indeed, at one stage we were told that the sterling equivalent of the sum due might be as great as £71,000. Faced by such a situation, I regard as profoundly unsatisfactory the submission of the appellants (set out in paragraph 12 of their case) that:

"Breach of an obligation to pay in a foreign currency sounds in damages. Just as changes in the market value of goods must be excluded in the ascertainment of damages, so must changes in the value of currency. . . . To include in the calculation alterations in the rate of exchange would be tantamount to awarding damages not only for the breach itself but also for the postponement of payment of those damages until the date of judgment. That loss is normally mitigated, if not wholly compensated, by an award of interest."

Nor am I prepared to accept that any basic distinction can be drawn for present purposes between judgments and awards, although in Jugoslavenska [1974] Q.B. 292, 299 Lord Denning M.R. said:

"The reason why some people have thought that an award by English arbitrators must be in sterling is because they have regarded it as equivalent to a judgment by an English judge which must be in sterling. But there is this difference. When commercial men are in dispute and go to arbitration, they . . . want a decision one way or the other. Once given, they abide by it. The losing party pays up. There is rarely any need to call in the sheriff or his officer to enforce the award. So it is perfectly, fair, as between them, for the arbitrator to make his award in the currency which is appropriate to their dealings. But when a plaintiff goes to a court of law, it is, as often as not, because the defendant. cannot pay or will not pay. The plaintiff wants to get judgment against him, and, if need be, levy execution upon his effects. This is so much in the mind of the 'Courts that they have rules that. They will give judgment only in sterling. That is the one currency which is known to the court and to the sheriffs and their officers. I venture to suggest that this view of the courts should be open for reconsideration. If the money payable under a contract is payable in a foreign currency, it ought to be possible for an English court to order specific performance of it in that foreign currency: and then let the exchange be made into sterling when it comes to be enforced. . . ."

Being governed by sections 26 and 36 (1) of the Arbitration Act 1950, the award of American dollars in that case of necessity had to be convened into sterling at the rate of exchange prevailing at the date when the award was made. But for that fact, the most just rate would be that prevailing when the award was being enforced, for the plaintiff had been kept out of his money until then, and I see no reason why this latter rate should not be the one adopted when judgments expressed in a foreign currency are being enforced. Accordingly, in my view the plaintiff in the present case should have been given judgment. mutatis mutandis, in the form approved of by Lord Denning M.R. in Schorsch Meier G.m.b.H. v. Hennin [1975] Q.B. 416, 425, namely, that:

"It is this day adjudged that the defendant do pay to the plaintiff 416,144.20 Swiss francs or the sterling equivalent at the time of payment."

I confess myself glad to have arrived at the conclusion that, for the reasons given in the speeches of my noble and learned friends, Lord Wilberforce and Lord Cross of Chelsea, the circumstances of today are so greatly different from those prevailing when the Havana case [1961] A.C. 1007 was decided 14 years ago that this House is now free to depart from it. We can therefore avoid perpetrating the great injustice which would result were the ratio decidendi of that case applied to the present claim. Accordingly, while respectfully finding myself unable to regard as valid the points relied upon by Lord Denning M.R. in the Schorsch Meier case as justifying a departure from the Havana case, I would concur in dismissing this appeal.

LORD FRASER OF TULLYBELTON. My Lords, I have read in draft the speech of my noble and learned friend, Lord Wilberforce. I agree with him that, for the reasons he has given, we should decline to follow the decision of this House in the Havana Railways case [1961] A.C. 1007. I think that a party suing for recovery of a debt due in a foreign currency should be entitled to claim payment of, and to get judgment for, the, amount of, the debt expressed in the foreign currency.

But there must be some provision for converting the foreign currency into sterling so that it can be enforced in this country. The question is what the conversion date. should be. Theoretically, it should, in my opinion, be the date of actual payment of the debt. That would give exactly the cost in sterling of buying the foreign currency. But theory must yield to practical necessity to this extent that, if the judgment has to be enforced in this country, it must be converted before enforcement. Accordingly, I agree with my noble and learned friend that conversion should be at the date when the court authorises enforcement of. The judgment in sterling. In the Havana Railways case that date was rejected by Lord Reid and Lord Radcliffe because they considered it to be not practicable but later events have shown that the difficulties are less than were supposed. Lord Denning M.R. has changed his mind and in Schorsch Meier [1975] Q.B. 416,425 gave judgment for a gum in foreign currency or the sterling equivalent at the time of payment." Viscount Simonds and Lord Morris of Borth-y-Gest were the only members of the House in the Havana Railways, case who rejected the date, of payment on grounds of principle rather than of practicability. They did, go because they considered that the same conversion date should apply to damages and to foreign debts, and that the breach date was firmly established for the former. That brings one back to the main question on which, as I have said, I would depart from the Havana Railways decision [1961] A.C. 1007. Any conversion date earlier than the date of payment would in my opinion, be open to the same objection as the breach date, viz., that it would necessarily leave a considerable interval of time. Between the conversion date and the date of payment. During that interval currency fluctuations might cause the sterling award to vary, appreciably from the sum in foreign currency to which the creditor was entitled. In my opinion, it would not be justifiable to disturb the existing rule of taking the breach date, merely to substitute for it some other date rather nearer to the date of payment but still more or less distant from it: If the date of raising an action in this country were taken for conversion, a period of a year or more might easily elapse, allowing for appeals, before payment was made. The date of judgment would be better but there seems no reason why one should stop short of the latest practicable date, which seems to be the date when the court authorises enforcement. of the judgment.

Since the date of the hearing in the present case another case has come to my notice which was not cited in argument but which I think ought to be mentioned as it is a decision of your Lordships' House. That is Hyslops v. Gordon (1824) 2 Sh.App. 451. It was an action raised by a Scotsman who was, or had been, living and carrying on business in New York, against defenders, also Scotsmen, who had lived and carried on business in Jamaica, and was for payment of the. balance due. On some complicated trading transactions between them in those places The money of account was American dollars. The conclusion of the action was for payment of a sum in sterling, but the Court of Session gave judgment for a sum of American dollars. When the case came before this House on appeal, Lord Gifford (the only member of the House reported to have spoken) said that judgment ought to have been given for the sterling equivalent, converted at the date of raising the action in Scotland. The arguments are not reported and no other conversion date appears to have been considered. The reason for that part the decision was the difficulty of ascertaining the rate of exchange at the date when the Scottish action. was: rate but that reason is evidently not applicable today, at least where dollars or other important currencies are concerned. The importance of the case for present purposes is mainly in his Lordship's statement of  the practice then prevailing in the following sentence at p.458:

"... undoubtedly the Court of Session should have done that in this case, which it is the habit of this country to do when an action is brought for a sum of money recovered in foreign money,- they should have ascertained what is to be paid in this country; and therefore, undoubtedly, this House must remit the case back, in order that the sum may be ascertained in British money which is due from the one party to the other."

The case should I think be treated as one decided in accordance with practice that existed in circumstances which were very different from those existing today, and therefore as one not necessarily to be followed now.

I would add that I am not entirely satisfied that difficulty, and even injustice, may not occur if the rule continues to be that damages are converted at the breach date while foreign debts are converted at the date of payment. In the instant case, if the defendants' counterclaim had been successfully maintained, this question might have had to be decided. As things are, it does not arise, and I would agree that it is not necessary or appropriate to consider cases other than foreign debts.

I agree with the observations of my noble and learned friend, Lord Simon of Glaisdale, on the subject of cessante ratione.

I would dismiss the appeal.

Appeal dismissed.

Solicitors: Bower, Cotton & Bower; Gosling & Lewis Barnes.

F.C

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