The determination of the currency in which obligations under a contract are to be discharged depends on the place of payment and the common unit of account used in the contract, as governed by the law of the place of performance.

Lord Wright:-

The question to be determined in this appeal is what are the rights of the Alliance Assurance Company, Ltd., the respondents, under a debenture bond for £100 and the coupons still outstanding under it of which they are bearers. The bond and coupons were issued by the Mayor, Councillors and Citizens of the City of Auckland in New Zealand, the defendants in the action and the appellants before this Board. The Auckland Transport Board who were third parties in the action are also appellants, but no question arises in this appeal as to their position. The debenture bond is numbered 1744 and is for £100. It was issued under the common seal of the appellant corporation on 9th February 1920. It is headed:

Auckland City Council, Auckland, New Zealand. Auckland City Tramway Loan of £1,250,000. Secured on the revenues of the City of Auckland, subject to the existing loans chargeable on such revenues, and is payable at the holder's option either in Auckland, New Zealand, or in London on 1st July 1940, and is expressed to be issued by the Auckland City Council, New Zealand, under the Local Bodies Loans Act, 1913, and S. 26 of the Appropriation Act, 1915. It provides by its terms that:

On presentation of this debenture either at the Bank of New Zealand, Auckland, New Zealand, or at the Bank of New Zealand, London, England (at the option of the holder hereof) on the first day of July, 1940, the bearer will be entitled to receive £100. Interest on this debenture will cease after the day when the payment falls due unless default is made in payment. This debenture bears interest at the rate five pounds five shillings per centum per annum payable on the first days of January and July in each year on presentation of the attached coupons.

The coupon now in suit is No. 33. It is headed:

Auckland City Tramway Loan, 1920. Of the City of Auckland, New Zealand, issued under the Local Bodies Loans Act, 1913, and S. 26, Appropriation Act, 1915, secured on the revenues of the City of Auckland, subject to the existing Loans chargeable on such revenues.

It contains the following provision :

On presentation of this coupon at the Bank of New Zealand, London, England, or Auckland, New Zealand, at the option of the holder for the time being on or after the first day of January 1936, the bearer will be entitled to receive £2 12s. 6d.; it is signed by the Mayor and the City Treasurer. The series of debentures, of which No. 1744 forms one, was issued under the following circumstances: An English registered company had, some years before 1919, constructed a tramway system in the City of Auckland. In 1919 while they were operating the system they gave an option to the appellant corporation to purchase the tramway undertaking with all its assets. In consequence an agreement was entered into dated 16th February 1920, between the English tram-way company and its mortgagees, an English investment company, on the one hand, and the appellant corporation on the other, for the sale of the whole of the tramway undertaking, its lands, its various rights and all its assets, for the total aggregate sum of £1,227,201 8s. 7d. The price was to be satisfied by a payment to the vendors of £1 8s. 7d. in cash, and by the issue to them of debentures for the total sum of £1,227,200. According to the agreement, the rate of interest on a certain proportion of these debentures was £5 per cent. per annum, and as to the balance, £5 5s. per cent. per annum. The agreement provided that the debentures should rank 'pari passu' and should be payable both as regards principal and interest at the option of the holder for the time being either in London or Auckland, and should be in denominations from £20 to £1,000, as required by the vendors. The consideration for the sale was arrived at on the basis of certain items which were set out in the agreement. Certain of these items were sums of sterling, in particular the amount of the mortgage debt of the tramway undertaking which was £393,750,