Hastings Deering Finance & Investment Co Ltd v Read [1962] HCA 24; (1962) 106 CLR 529 (10 May 1962)

HIGH COURT OF AUSTRALIA

HASTINGS DEERING FINANCE & INVESTMENT CO. LTD. v. READ [1962] HCA 24; (1962) 106 CLR 529

Money-lenders (N.S.W.)

High Court of Australia
Dixon C.J.(1), Kitto(1), Taylor(1), Menzies(2) and Owen(1) JJ.

CATCHWORDS

Money-lenders (N.S.W.) - Non-compliance with statutory requirements - Transaction unenforceable - Loan - Security by way of bill of sale - Extra-curial remedies - Seizure of goods by money-lender - Claim by borrower for conversion and trespass - Availability of defence of leave and licence by virtue of provisions of bill of sale - Money-lenders and Infants Loans Act, 1941-1948 (N.S.W.), s. 22 (1).*

HEARING

Sydney, 1962, April 5, 6; May 10. 10:5:1962
APPEAL from the Supreme Court of New South Wales.

DECISION

May 10.
The following written judgments were delivered: -
DIXON C.J., KITTO, TAYLOR and OWEN JJ. This is an appeal from an order of the plaintiff on demurrers by the defendant to seven replications. The plaintiff's declaration contained three counts. The first alleged that the defendant had converted to its own use or wrongfully deprived the plaintiff of the use and possession of two motor vehicles. The second was a count in detinue relating to the same two vehicles and the third count, again relating to the same vehicles, was for trespass to goods. To each of these counts the defendant pleaded that it had done what was complained of by the plaintiff's leave. The substance of the allegations in each of the replications is that the leave pleaded by the defendant was contained in a bill of sale covering the vehicles which was given as security for the repayment of a loan made by the defendant to the plaintiff; that the defendant was a money-lender within the meaning of the Money-lenders and Infants Loans Act, 1941-1948 (N.S.W.); and that the bill of sale was unenforceable because the requirements of s. 22 of that Act were not fulfilled. (at p531)

2. Section 22 (1) provides that: "No contract for the repayment of money lent by a money-lender after the commencement of this Act or for the payment of interest on money so lent and no security given to any money-lender in respect of any such contract or loan shall be enforceable unless - (a) a note or memorandum in writing of the contract is made and signed personally by the borrower; (b) a copy thereof is delivered to or sent by pre-paid registered letter through the post addressed to the borrower within seven days of the making of the contract; and (c) together with such copy there is delivered or sent to the borrower as aforesaid a summary in writing in the prescribed form of the provisions of this Part which afford protection to borrowers, and no such contract or security shall be enforceable unless it is proved that the note or memorandum aforesaid was signed by the borrower before the money was lent or before the security was given (as the case may be)." Sub-section (2) states what matters are to be contained in the note or memorandum mentioned in sub-s. (1), and sub-ss. (3) and (4) are of no relevance for present purposes. (at p531)

3. The first submission made on behalf of the defendant is that the word "enforceable" wherever used in sub-s. (1) is to be given a limited meaning and refers only to enforcement in judicial proceedings. Some support for this view may be found in the words in the latter part of the sub-section "unless it is proved . . ." which suggest that it is judicial proceedings for enforcement which the Legislature had in contemplation. But when regard is had to the purpose of Pt III of the Act in which s. 22 is found and to the notorious fact that seizure of goods under a bill of sale is a common and perhaps the most common method by which the lender enforces his contractual rights, it is impossible to think that the legislative prohibition of enforcement in s. 22 (1) was intended to be confined to enforcement in curial proceedings. Although s. 22 (1) is not in precisely the same terms as was the Nigerian Ordinance which was considered by the Privy Council in Kasumu v. Baba-Egbe (1956) AC 539 there is, for present purposes, no relevant distinction in the language and, as their Lordships said: "It was not in dispute that the effect of it was that a defaulting moneylender not only incurs a monetary penalty for his offence but also loses any right to take legal proceedings to recover the money he has lent. So far as legal rights of action go he loses his money. Secondly, their Lordships are satisfied that the words of deprivation 'not be entitled to enforce any claim in respect of any transaction' are very widely drawn and that they should not be confined to the assertion of rights by means of or in the course of legal proceedings. Thus the performance of such acts in the law as the exercise of a right of sale over property mortgaged or charged or the retention or taking possession of such property in assertion of the claim to repayment is also precluded" (1956) AC, at pp 546, 547 . Again in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; (1958) 101 CLR 428 Dixon C.J. said of s. 9 of the Money Lenders Act (W.A.), which corresponds with s. 22 (1) of the New South Wales Act: "The words 'enforce', 'enforceable' and 'enforcement' when used in relation to a security may be properly applied to the exercise of any of the remedies which the security may give. When a mortgagee resorts to his power of sale he may be said without any incorrectness to enforce his security. A landlord, where distress for rent obtains, 'enforces' payment of rent when he distrains. There seems to be no reason for limiting the expression 'enforceable' in s. 9 to judicial or curial remedies. What is really important in the present case is the appointment of a receiver as a means of obtaining payment or repayment of the debt for money lent and interest. It is an extra-judicial remedy given by the so-called debenture and the word 'enforce' seems wide enough in its natural meaning to include it" (1958) 101 CLR, at pp 448, 449 . There again the slight differences in wording between the provision under consideration and s. 22 are not such as to make what was there said inapplicable to the present case. The narrow construction of the word "enforceable" for which the defendant contends must therefore be rejected. (at p532)

4. A further argument was submitted which assumed that the licence to seize contained in the bill of sale was "unenforceable" but yet maintained that it possessed some virtue as a "licence" sufficient to answer the wrongs alleged in the declaration. It is difficult to see how this could be so. However, in support of this contention reliance was placed upon a passage in the judgment of Parke B. in Carrington v. Roots [1837] EngR 47; (1837) 2 M & W 248 (150 ER 748) . That was a case in which a contract for the sale of an interest in land was unenforceable because of non-compliance with s. 4 of the Statute of Frauds. The contract was one under which a crop of growing grass had been sold to the plaintiff with liberty to him to enter upon the land to cut and carry away the crop. The plaintiff entered upon the land with a horse and cart to carry away the crop. The defendant, the vendor of the crop, removed the horse and cart and it was held that the plaintiff could not maintain trespass against him for doing so, since the action was, in substance, one charging the defendant upon the contract. Parke B., speaking of the contract, said: ". . . supposing the agreement to be for the sale of chattels, it was not proved by the evidence; if it was an agreement for the sale of an interest in land, it was not binding, by virtue of the 4th section of the Statute of Frauds. I think the right interpretation of that section is this - that an agreement which cannot be enforced on either side, is as a contract void altogether: no doubt it may have, as an agreement in fact, some operation in communicating a licence; but such licence would be countermandable" (1837) 2 M & W, at pp 256, 257 (150 ER, at p 752) . It is unnecessary to consider the view there adopted of the effect of the 4th section of the Statute of Frauds; it can have no application to a case such as the present one in which the seizure of the goods by the defendant was an act done to enforce a security and was therefore one which could not be justified at all by reference to the bill of sale. It must be borne in mind that the replication to be an answer to the plea of leave and licence must cover the whole allegation in the plea. In other words, the replications depend upon the words with which each begins, namely that the leave in the plea alleged is contained in a certain bill of sale. That involves the denial of any other leave and licence such as a verbal one to which the appellant seeks to apply the words of Parke B. Doubtless there was in fact nothing but the licence to seize presumably contained in the bill of sale on which the defendant appellant could depend. (at p533)

5. The decision of the Full Court was correct and the appeal should be dismissed with costs. (at p533)

MENZIES J. I agree that this appeal should be dismissed. (at p533)

2. I was for a time inclined to think that the words "unless it is proved" in s. 22 of the Money-lenders and Infants Loans Act of New South Wales might indicate that this section, unlike those which were considered by the Privy Council in Kasumu v. Baba-Egbe (1956) AC 539 and by this Court in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; (1958) 101 CLR 428 , applied only when a contract or security is being enforced in court and it occurred to me that the words "unless he satisfies the court" in s. 21 could provide a context supporting such a limited application of s. 22. Further consideration of s. 21 has, however, not only removed that impression but has indicated the significance to be given to the words "unless it is proved" in s. 22 in a case where a security has been enforced without judicial proceedings. (at p534)

3. Section 21 is as follows: "No money-lender shall be entitled to recover in any court any money lent by him or any interest in respect thereof, or to enforce any contract made or security taken in respect of any loan made by him unless he satisfies the court by the production of his licence or otherwise that at the date of the loan or the making of the contract or the taking of the security (as the case may be) he was the holder of a licence under this Act or was registered as a money-lender under the Money-lenders and Infants Loans Act, 1905." Although upon a first reading of this section one might obtain the impression that it is confined to enforcement by way of proceedings in court, closer examination dispels any such idea. Unless s. 21 were to apply, a person who was an unregistered money-lender could successfully enforce by extra-curial action a security taken for an irrecoverable loan and this would be entirely contrary to the whole scheme of the Act and it was no doubt to avoid any such consequence that the words "in any court", although inserted after the word "recover", were intentionally omitted after the word "enforce" to make it clear that the enforcement there referred to was enforcement either in or out of court. The application of the words "unless he satisfies the court" would, therefore, in case of an enforcement outside court, refer of necessity to subsequent proceedings in court in which that enforcement has been challenged so that it would then become necessary for the money-lender to satisfy the court that, when he took the security, he was the holder of a licence. No doubt the words "unless it is proved" in s. 22 have a similar significance when there has been the enforcement of a security by extra-curial action. (at p534)

4. When, therefore, the two sections are examined together, it becomes apparent that they are not limited to the enforcement of a security in court. The defence of leave and licence here based upon the unenforceable bill of sale constitutes, therefore, no answer to the claim for damages arising from the forbidden seizure of the vehicles in question. (at p534)

ORDER

Appeal dismissed with costs.