Practitioners advising lenders who charge interest exceeding the statutory threshold should note that even a single transaction may bring the lender within the definition of 'money lender', and that 'unenforceability' extends to extra-judicial remedies such as appointment of receivers, not merely to court proceedings.
Later decisions that cite Mayfair Trading Co Pty Ltd v Dreyer
Decisions cited by Mayfair Trading Co Pty Ltd v Dreyer
MAYFAIR TRADING CO. PTY. LTD. v. DREYER [1958] HCA 55; (1958) 101 CLR 428
Money Lenders (W.A.)
High Court of Australia
Dixon C.J.(1), McTiernan(2) and Taylor(3) JJ.
CATCHWORDS
Money Lenders (W.A.) - Defined inter alia as "every person who lends money at a rate of interest exceeding 12 1/2% p.a." - Whether single transaction suffices to satisfy definition - Provision for registration of money lenders - On non-compliance with formalities no security to be "enforceable" - No money lender to lend at rate of interest exceeding prescribed rate - Construction of legislation - Whether provisions limited to money lenders other than those who are such by being persons who lend money at a rate of interest exceeding 12 1/2% p.a. - Whether "enforceable" limited to judicial or curial remedies - Application by borrower in forbidden transaction for specific relief - No provision in legislation for relief sought - Whether borrower must be prepared to refund moneys borrowed as condition of grant of relief - Money Lenders Act 1912-1948 (No. 65 of 1912 - No. 54 of 1948) (W.A.) ss. 3, 5, 9, 11A.
HEARING
Melbourne, 1958, May 20, 21;DECISION
December 12.2. The interest rate charged exceeded twelve and one-half per cent per annum and the plaintiffs said that by this bare fact the defendant firm had constituted itself a money lender under the Money Lenders Act 1912-1948 (W.A.) if not for all purposes at all events pro hac vice. It was thus incumbent upon the defendant firm to register as money lenders and they had not done so. Moreover, it made it necessary that the note or memorandum mentioned in s. 9 of the Act should be signed and delivered as that provision requires and the requirements of the provision had not been fulfilled, the consequence being that the security and, indeed, the whole transaction were unenforceable in point of law. (at p437)
3. In reliance upon this contention the company and the guarantors of the company's liability accordingly instituted the action and sought therein various forms of relief; a declaration that the company was under no liability and that the security and promissory notes given in respect of the loans were "unenforceable", that the promissory notes should be cancelled and delivered up, that a satisfaction of the security, treating it as a bill of sale, should be registered, that an injunction should be granted restraining the defendant firm from attempting to exercise their powers rights and remedies under the security, that the receiver and manager should be ordered to withdraw and to account to the plaintiff company and that he should be restrained from further acting in the capacity. There was also a general claim for damages and for further and other relief. Apparently at some stage of the progress of the action towards a hearing, two of the guarantors or sureties lost heart and dropped out as plaintiffs. They were then placed on the other side of the record. They are not parties to the appeal and it is unnecessary to give any special consideration to their position. The action was heard by Dwyer C.J. His Honour took the view that, inasmuch as more than twelve and one-half per cent per annum had been charged as interest and the firm were not registered money lenders, the transaction could not stand. His judgment or decree declared that the plaintiffs stood under no liability to repay the balance of the loans, an amount of 12,750 pounds, and that the promissory notes, the security given by the company and the guarantee were all unenforceable. Orders followed for the delivery up of these documents, for the registration of a satisfaction, for the withdrawal of the receiver and manager and for the taking of an account of the moneys, and of the proceeds of sale of the property of the company he had received and of the manner in which he had applied the same. But there the relief stopped; the decree did not go on to say that the moneys in the hands of the receiver should be paid over to the company. On the contrary the decree declared that the plaintiff company was not entitled to recover from the receiver or from the the defendants forming the firm of lenders any part of those moneys. They amounted to the sum of 7,437 pounds 10s. 0d. and that sum had been paid over by the receiver to the defendant firm. The sum had been applied by the firm in discharge pro tanto of the indebtedness which the defendant firm claimed against the plaintiff company. The amount of that alleged indebtedness had been 20,187 pounds 10s. 0d. It was thus that the indebtedness claimed by the defendant firm was reduced to the sum of 12,750 pounds, the amount in respect of which the first declaration had declared that the plaintiff company and the guarantors were under no liability. (at p438)
4. The plaintiffs, however, were not content with this measure of relief. Their contention had been that to put the receiver and manager in was to enforce the security which the Chief Justice held to be unenforceable, and accordingly that they were entitled as a necessary consequence to recover the 7,437 pounds 10s. 0d. which the receiver had obtained without any warrant that could stand in face of the statute and had thereupon paid over to the defendant firm. (at p439)
5. To give effect to this contention the plaintiff company and the plaintiff guarantors appealed to this Court from so much of the decree as denied the right of the company to recover any part of the sum of 7,437 pounds 10s. 0d. Thereupon the defendant firm cross-appealed. The receiver and manager is a member of the firm and is accordingly numbered among the respondents and cross-appellants. (at p439)
6. Section 3 of the Money Lenders Act 1912-1948 (W.A.) defines "money lender" for the purposes of the Act. As the provision now stands it establishes three categories and then states some exclusions or exceptions about which we need not be concerned. The categories are, first, any person whose business is that of money lending, and second, any person who advertises or announces himself or holds himself out in any way as carrying on that business. The third is simply "every person who lends money at a rate of interest exceeding twelve and one-half pounds per centum per annum". The third category formed no part of the definition as the Act was originally passed in 1912; it was, so to speak, thrust in by s. 2 (a) of Act No. 19 of 1913. It is only because of its presence in s. 3 that the defendant firm can be brought within the definition. There can, however, be no doubt that the loans which the firm made to the company were to carry a rate of interest of more than twelve and one-half per cent per annum and that the firm were not registered as money lenders. Section 5 (1) provides that no person shall carry on the business of a money lender or do anything which constitutes him a money lender for the purpose of section three of the Act unless he is granted under the Act and is the holder of a current licence issued to him thereunder. Further, it is true that s. 9 requires some formalities in a transaction such as that under consideration and that the requirement was not complied with. The section provides that if there be such a non-compliance no security shall be "enforceable". The defendant firm seeks to meet the plaintiffs' reliance upon these provisions by certain arguments which it is convenient to state at this point, although it will be necessary before discussing them to make a fuller statement of the facts. To begin with, the plaintiffs' claim that the defendant firm falls within the statutory definition of the expression "money lender" contained in s. 3 is disputed. Certainly the firm did not carry on the business of money lending and it did not advertise or announce itself or hold itself out as doing so. In the case of the plaintiffs, however, the defendant firm did on a number of occasions lend money at a rate of interest exceeding twelve and one-half per cent per annum. But the defendant firm say that these loans are to be treated as in effect a single transaction and according to their contention the expression "who lends money" in s. 3 imports habit or practice or at all events repetition. (at p440)
7. In the second place, the defendant firm maintained that, assuming contrary to their primary contention that the firm did fall within the definition of "money lender", the only consequence was that the plaintiffs' contract for repayment of the loan and the deed and other securities (scil. the promissory notes) became "unenforceable" within the meaning of that expression in s. 9 by reason of the failure to comply with the requirements of form imposed by s. 9 and that "unenforceable" there meant no more than unenforceable by legal proceedings. This argument put aside s. 5 in view of sub-s. (6) of that section which provides that no contract agreement or transaction by a money lender shall be void or voidable by reason only of the money lender's having been guilty of a contravention of that section. The argument put aside also s. 11A, introduced by s. 4 of Act No. 23 of 1941. It was not denied that, at all events in the absence of an order or regulation prescribing another rate, the proviso to sub-s. (1) of s. 11A operated to make fifteen per cent per annum the maximum rate of interest and it was not denied that this rate had been exceeded, that is according to the application of s. 11B to the transaction. But it was said that if you look at the whole context of the Act into which s. 11A was introduced you should construe that provision as going no further than inflicting a penalty; it did not bring invalidity in its train. The question therefore, according to the argument, came back to the meaning and effect of the word "enforceable" in s. 9; and it meant enforceable by legal process. On that interpretation the defendant firm had not attempted to infringe upon the provision, for they had not put any of their securities in suit and had not sued for the debt. To put in the receiver was not to "enforce" the security within the meaning of s. 9. The receiver had now gone out but while he was in he was in under a valid security and his presence did not offend against s. 9. (at p440)
8. In the third place, the defendant firm maintained that even if the effect of any of the provisions of the Money Lenders Act was to avoid the securities or to leave the defendant firm without legal authority or justification for the course the firm had taken, nevertheless the Act did not in itself contain any provision for specific relief. The claim for specific relief must therefore rest not on a statutory right but upon the application of equitable remedies to the situation created by the statute and there could be no grounds for the intervention of a court of equity to give specific relief unless the plaintiffs were prepared to refund the moneys which they had received from the defendant firm and had not repaid. (at p441)
9. It is now desirable to state in a little more detail the facts which have given rise to the difficulties appearing from the foregoing description of the case. (at p441)
10. The defendant firm, consisting of twenty people, all of whom are respondents in the appeal, carried on business in Perth under the name of the Eastern Acceptance Company. The primary object of the business is conceded to be the selling of goods upon hire purchase terms. The business does not include money lending and, except in the case of the plaintiff company, the firm has not made loans. (at p441)
11. The plaintiff company was incorporated as a trading company on 31st March 1955 and took over the business and the name of a firm called Mayfair Trading Company which carried on a business of manchester and clothing retailers. The business was conducted at a shop and by door to door selling. The goods were sold sometimes for cash and sometimes for weekly payments extending over a number of weeks. In the latter case the price of the goods was increased by ten per cent. The firm, the Mayfair Trading Company, just before the incorporation of the plaintiff company, had arranged with the defendant firm, the Eastern Acceptance Company, to borrow from the latter 2,000 pounds on the security of agreements which the Mayfair Trading Company had made with customers who had bought goods, paying for them by instalments. There was to be a "premium" of 125 pounds. On the incorporation of the plaintiff company it took over the arrangement and executed the agreement and the promissory notes which formed the contemplated security. There were six promissory notes payable at monthly intervals of 354 pounds 3s. 8d. each, making up 2,125 pounds, that is the loan and the "premium". The agreements with customers were scheduled in a deed which, by its clauses, gave what in effect was a floating security over the instalments and goods they represented to secure repayment of the 2,125 pounds. Beginning thus the plaintiff company repeated on several occasions the process of borrowing on like terms from the defendant firm, the promissory notes always being met. At length, on 23rd September 1955, a deed of a more general character was entered into between the defendant firm, the Eastern Acceptance Company, and the plaintiff, Mayfair Trading Co. Pty. Ltd. It is the deed mentioned in the earlier part of this judgment. It describes itself as a debenture, doubtless because it contained a floating security over the assets of the company not covered by the specific security which it included. At the time the indebtedness to the defendant firm of the plaintiff company outstanding was 12,666 pounds 13s. 4d. and a covenant was included for the repayment of that amount in monthly instalments of varying amounts, six in number. The last instalment was made payable on 15th February 1956. At corresponding dates payments of specified amounts by way of interest were to be made. Provision, however, was made for further advances, so however, that the total moneys of the defendant firm on loan to the plaintiff company at one time should not exceed 36,000 pounds. The plan doubtless was to keep up a regular supply of money to the plaintiff company with regular repayments representing principal and interest. Although before the so-called debenture of 23rd September 1955 the total mentioned in the various deeds was not always the same, the amount of 6,000 pounds seems to have been that to which the parties preferred to ork. It was covered by six promissory notes for equal amounts of principal and premium, due at monthly intervals. Thus it appears that what was contemplated was an arrangement under which the company would be kept in funds to an amount not exceeding 36,000 pounds so secured that interest at flat rates was payable monthly and principal was always repayable in monthly instalments. In this way, if the limit of 36,000 pounds was reached, repayment would be demandable at 6,000 pounds a month. In point of form there were separate loans (however often repeated) repayment of each of which was secured by six separate promissory notes for principal and interest at a flat rate. It is agreed that the interest or premiums charged upon the loans which were made up to and inclusive of an advance of 7,000 pounds made on 15th November 1955 worked out at 25.7143 per cent per annum and that charged upon all loans after that date at 21.4286 per cent per annum. (at p442)
12. The material portions of the debenture are the charging clause and the clause relating to a receiver. By the former the principal sums for the time being owing by the plaintiff company and the interest payable thereon were charged upon the whole of the company's undertaking including book debts and uncalled capital and it was declared that the charge as regards the company's land goodwill and uncalled capital calls and levies should be a specific charge, and as regards the company's other assets including book debts should be a floating charge. The clause relating to a receiver provides that on the company's making default in payment and upon certain other events the mortgagee might by notice in writing elect to enter into possession of the property charged by the debenture as the receiver and manager thereof or he might at his option appoint some other person to be receiver and manager thereof on his behalf. It goes on to provide for the termination of the receivership. The clause that follows gives all the usual powers of a receiver and manager. Inscribed upon the debenture was a guarantee signed by the six directors, four of whom are co-plaintiffs and appellants and two of whom now stand on the other side of the record. The person called in the debenture the mortgagee is the defendant respondent L. E. Dreyer. He is named in the deed as a party who is a trustee for himself and the other nineteen members of the defendant firm. (at p443)
13. The plaintiff company appears to have met its promissory notes until 15th November 1956, but promissory notes falling due on and after that date all appear to have been dishonoured. As of 16th November 1956 the sum already mentioned of 20,187 pounds 10s. 0d. was outstanding in unpaid promissory notes, some of which had fallen due on the previous day. On 16th November 1956 the defendant L. E. Dreyer as mortgagee appointed another member of the defendant firm, H. M. Kitson, to be receiver and manager under the debenture and gave written notice to the plaintiff company of the appointment. The defendant Kitson went into possession immediately. Between the time of his going into possession and the issue of the writ on 12th February 1957 moneys came into his hands as receiver and manager out of which he paid to the defendant firm the sum of 7,437 pounds 10s. 0d. That is the sum which, as already stated, forms the subject of the plaintiffs' appeal. Apparently an interlocutory injunction was granted restraining him from paying any further moneys. At all events we were told that he has now gone out of possession and has ceased to exercise the powers of a receiver and manager. For that reason it appeared to be agreed that the declarations and orders contained in the judgment which are the subject of the defendants' cross-appeal are no longer indispensible to the plaintiffs who, to say the least of it, have a diminished interest in maintaining them. (at p443)
14. It is evident from what has been said that the question in this appeal upon which all other questions must turn is whether the Money Lenders Act applies to the transaction or transactions between the defendant firm and the plaintiff company. It has been held that it does apply because the rate of interest at which the money was lent to the plaintiff company exceeded twelve and one-half per cent per annum. The words which s. 2 of Act No. 19 of 1913 inserted in s. 3 say that the expression "money lender" in the Act includes every person "who lends money at a rate of interest exceeding twelve and one-half pounds per centum per annum". Why should that not result in all the provisions dealing with a money lender becoming applicable for the purposes of a given transaction to a person who in that transaction lends money at interest exceeding the rate which those words specify? The answer given for the defendants is that the words "who lends money", on their proper interpretation, connote practice, repetition, or a course of business or perhaps a guiding rule or principle of conduct in fixing interest. It is denied that the words are satisfied by lending in one transaction, and for this purpose the defendant firm treats the course followed with the plaintiff company as amounting to a single transaction or dealing. In support of this contention it is no doubt relevant to point to the seemingly incongruous operation of other provisions of the Act unless something like carrying on a business is made the test of being a money lender within the meaning of the Act. For example, s. 5 (1) forbids a man doing anything which constitutes him a money lender unless he has been granted registration as a money lender and holds a current licence. To do that he must, as sub-s. (2) shows, register the address or all the addresses "at which he carries on his business of money lending". The whole procedure for obtaining registration prescribed by s. 6 is based on the pre-supposition that there is a business or something like it or a place of business. Indeed, it is not going too far to say that, before the amendment made by Act No. 19 of 1913, the Money Lenders Act 1912 was constructed on the basis that there would be a business of money lending or the holding out as a money lender and that the Act was not reconstructed to give ready effect to the amendments. In other words, it may be conceded that the amendment does not take its place happily with the provision unless it too relates to something like the course of a business. Another way of using the same incongruity is to assume or concede that the words introduced in s. 3 may include in relation to a particular transaction the lending of money at more than twelve and one-half per cent per annum but nevertheless to treat the provision relating to registration and the consequences of non-registration as inapplicable. (at p444)
15. No doubt the amendment is inadequately conceived and perhaps crudely made. That appears to be true, more or less, on any view of its construction and operation. But one may reasonably suppose that what the legislature was driving at was the prevention of anyone but a registered money lender charging interest upon a loan of money at a rate of more than twelve and one-half per cent per annum. The words in question did not form part of s. 6 of the Money Lenders Act 1900 of the United Kingdom whence s. 3 of the Western Australian Act of 1912 was taken. But they were placed in the transcription of that section made in s. 3 of the Money Lenders Act 1906 of Victoria and no doubt were adopted from that source in Western Australia. Not a few of the incongruities found in the latter Act existed in the former Act. But Isaacs J. in his dissenting judgment in Cloverdell Lumber Co. Pty. Ltd. v. Abbott [1924] HCA 4; (1924) 34 CLR 122 found no difficulty in assigning to the words an operation covering a single transaction. Isaacs J. said: "It is urged that the Court should give a restrictive meaning to the word 'lends', so as to exclude a single transaction, or even any number of transactions, however high the rate of interest or however harsh and unconscionable the bargain may be, unless the lender can be said to do it 'habitually'; which, in effect, is the same as saying 'carrying on business'. That construction would, of course, fly in the face of Lord Loreburn's opinion above quoted. It would favour usurious lenders, and would deprive a necessitous and oppressed borrower of the protection which the primary meaning of the words naturally confers, and it would, as was candidly admitted in argument, really add nothing to the prior words of s. 4. I reject the limitation. The Victorian Parliament, finding English decisions limiting the benefits of the Act to 'businesses' of money lenders, enlarged it so that a Court under its provisions could relieve from oppression even in an isolated transaction, just as can a Court of equity in a proper case. This is emphatically shown by the definition of 'loan' and 'lend' in s. 3, which expressly relate to 'every contract' which is a loan of money". (1924) 34 CLR, at p 139 The majority of the Court found it unnecessary to express any opinion upon the words under consideration. (at p445)
16. In two earlier cases Dwyer C.J. had based his decision on the assumption that for the purposes of the Act the definition of "money lender" applied, at all events pro hac vice, whenever a lender charged a rate of interest of more than twelve and one-half per cent per annum, even although it were an isolated transaction. The opinion of Isaacs J. on this question seems to have been adopted too in the Supreme Court of Queensland in Baker v. Pryor (1932) QSR 66 , see too Arnall v. Gray (1941) QSR 122 per Philp J. (1941) QSR, at p 125 . It is, however, one thing to treat, as it seems proper to do, the words of the definition as covering the lending of money in a single transaction at a rate of more than twelve and one-half per cent per annum, and it is another thing to apply that part of the definition to every provision of the Act in which the expression "money lender" is used. In the first of the two Queensland cases cited it was decided, for example, that in the context of that Act the definition should not lead to the conclusion that a person who only occasionally lends money but not as part of a money lending business must, or indeed could, be registered. That was in part because of the provisions of the rules which were treated as of equal status with the Act and in part because the provisions of the Act about registration required the use of names and addresses in which and where the business (i.e. the money lending business) was carried on. The court (R. J. Douglas, Webb and E. A. Douglas JJ.) thought that unless a man carried on business as a money lender or held himself out as doing so there was no provision enabling him to register. In Buchanan v. Kiley (1948) QSR 274 the Supreme Court of Queensland (Macrossan C.J., Philp and Stanley JJ.) decided that the part in question of the definition was inapplicable to s. 17F of the Queensland Act, a provision corresponding with s. 11A of the Act of Western Australia, inserted therein by s. 4 of Act No. 23 of 1941. The provision was construed as applying only to money lenders who were registered or who were required to be registered. In the case of the Money-lenders and Infants Loans Act of New South Wales (No. 67 of 1941 and No. 3 of 1948) the corresponding part of the definition of "money lender" is not the same: the words are "who from time to time lends money at a rate of interest exceeding ten pounds per centum per annum". The Supreme Court of New South Wales (Street C.J., Roper C.J. in Eq. and Herron J.) in Hyde v. Sullivan (1956) SR (NSW) 113; 73 WN 25 decided that in spite of these words registration or licensing was restricted to those who carried on the business of money lending and accordingly that a provision (s. 21) disabling an unlicensed money lender from recovering in a court any moneys lent by him or interest thereon did not apply to a person who fell within the definition only because of the interest rate he had charged. This is not the occasion for considering the correctness of any of these decisions and the reason for mentioning them is that they do supply examples of the interpretation placed on statutes somewhat similarly constructed. In the present appeal s. 11A of the Western Australian Act was treated, to say the least of it, with reserve by the appellants and the respondents alike. Probably it does not apply where the only ground for treating a lender of money at more than the maximum rate prescribed by or under that section as a money lender is that in the transaction he lent money at more than twelve and one-half per cent per annum. The effect of s. 11A (1) considered with the proviso to that sub-section is to forbid a "money lender" to lend money at more than a maximum rate of interest which at present is fifteen per cent per annum. It seems a sound enough construction to limit the application of this provision to money lenders who fill that description independently of the charging of a rate of interest of more than twelve and one-half per cent per annum. For otherwise the sub-section would operate on everybody who charged fifteen per cent per annum or over and the reference to his being a money lender would be without any significance as a condition of liability and superfluous. What is important in this case is the question whether s. 9 applies to a case where the reason for treating the lender as a money lender is that he has lent at a rate of interest of more than twelve and one-half per cent per annum to one borrower on one or more occasions in a single transaction or series of transactions. The reason which the respondents assigned for disputing the application of s. 9 to such a case went back to the definition of "money lender" in s. 3. That is to say the argument for the respondents was that the material words in the definition contemplated a practice or course of dealing or the like of lending at a rate of more than twelve and one-half per cent per annum. Enough has been said already to show that the argument does not accord with the view of these words which has long been judicially accepted. It gives a meaning to the words which is very indefinite and one to which it is difficult to give a ready practical application in any given case if there has been more than one loan. Further, it seems to defeat what must have been an object, if not the chief object, of the introduction of the words, namely to give the courts power to re-open transactions under s. 4 wherever a rate of interest of more than twelve and one-half per cent per annum has been charged. There is, however, the possibility that even so s. 9 should be construed as lying outside the application of the words in s. 3 "every person who lends money at a rate of interest exceeding twelve and one-half pounds per centum per annum". Conceding that s. 11A may be so construed because of its special terms and character, nevertheless a clear inconsistent context must be found in any other provision that is to be treated in a like way. Section 5 may be taken as an example. You may find in the various sub-sections of that section references to carrying on money lending business and to the address or addresses at which it is done which may make it puzzling to know how a man may register who does not carry on such a business but is a money lender only because he exacts a rate of interest of more than twelve and one-half per cent per annum. But that consideration can hardly overcome the very clear and express prohibition in sub-s. (1) of doing, unless registered, anything which constitutes him a money lender within s. 3. Doubtless the explanation is that the legislature intended to confine the right to charge such a high rate of interest to registered money lenders and was careless about the appropriateness of the machinery or procedure for registering the man who wished to charge the rate on one occasion only and not to make a practice or business of money lending. If the machinery or procedure is inappropriate, it was equally inappropriate in 1913 and that fact would not seem an adequate reason for refusing then to give full effect to the amendment. The better view perhaps is that the machinery or procedure must yield to the substantial intention of the main provisions. When s. 9 is examined, however, its text discloses nothing which involves any actual inconsistency, whether substantial or procedural, with the application of the provisions of s. 9 to a money lender who takes that character only from the fact that he lends money at a rate of interest greater than twelve and one-half per cent per annum. There is no reason why such a person should not require the borrower to sign a note or memorandum in writing or why he should not deliver or send a copy thereof to the borrower or why he should not obtain from the borrower a receipt of acknowledgment of the latter's having received the note or memorandum. Nor is there any reason why in such a case the contents of the note or memorandum should not comply with sub-s. (2) of s. 9. Like s. 5 (1) and (2), s. 9 in its present form was inserted in the Act by Act No. 31 of 1937 and it does not seem likely that, when it speaks of a money lender, it means anything less than a money lender as specified in s. 3 by a definition standing in the same form since 1913. It was not disputed that there had not been a compliance with s. 9 and it was not contended in this Court that s. 9, in spite of the reference in sub-s. (1) to the borrower signing personally, did not apply when the borrower was a trading company: cf. In re British Games Ltd. (1) per Simonds J. (as he then was). (at p448)
17. It becomes necessary therefore to pass to the contention made on behalf of the respondents that the consequence of non-compliance with s. 9 is that the contract of loan and the security become unenforceable and that all the provision means is that the money shall not be recoverable by legal proceedings in a court of law and that the security shall not be so enforced. 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. In England s. 6 is the provision of the Money Lenders Act 1927 which corresponds with s. 9 of the Act of Western Australia and it uses the word "enforceable". In Mitchener v. Equitable Investment Co. (1938) 2 KB 559 seizure under a bill of sale was treated sub silentio by all parties and by Lawrence J. as enforcement within the provision. In Cohen v. Lester (J.) Ltd. (1939) 1 KB 504 , a case which perhaps presents difficulties in other respects, Tucker J. (as he then was) held that the retention of a pledge until payment of the loan amounted to enforcing the security within the meaning of the provision. In Kasumu v. Baba-Egbe (1956) AC 539 where a Nigerian Money Lenders Ordinance was before the Privy Council containing a provision that a money lender should not be "entitled to enforce any claim in respect of any transaction in relation to which" he had made default in complying with a requirement that he should enter certain particulars in a book, Lord Radcliffe for the Board said this: ". . . 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 In view of the foregoing considerations and authorities there appears to be no sufficient reason to read the word "enforce" in s. 9 as restricted to enforcement by action or suit or other judicial proceedings. It extends to enforcement by extra-judicial remedies authorized or allowed by the security or by the general law. (at p449)
18. Is there any reason on this footing which would justify the refusal of Dwyer C.J. to order repayment of the sum of 7,437 pounds 10s. 0d. which as receiver the defendant Kitson paid over to the defendant firm? He raised or obtained the money by taking possession and conducting the business as receiver and manager pursuant to the debenture. This amounted to enforcement of the security within the terms of s. 9 as interpreted above. The enforcement was contrary to s. 9 and therefore unauthorized and unlawful. The contract of loan was also unenforceable. The money was therefore obtained, paid over and retained without lawful authority and there could be no answer on the facts to a simple claim on the part of the plaintiffs in a common money count. This is true of a count for money had and received. For in spite of the frequent description of that count as an equitable cause of action, it does not seem consistent with the construction that has been given to s. 9 either to treat the moneys as properly applicable in the hands of the defendant firm to the discharge pro tanto of the unenforceable loan or to do as was done by the Court of King's Bench under Lord Mansfield in Fitzroy v. Gwillim (1) and require the plaintiff to bring into account the loan moneys as a condition of his title to recovery. That decision which in fact concerned an action of trover cannot now be regarded as law, at all events in its application to that cause of action: see Tregoning v. Attenborough (2). But the point touches a matter which must be considered later, namely the possibility of requiring the plaintiffs as a condition of the relief which they obtained before Dwyer C.J. to submit to the repayment of the unpaid loan moneys with legal interest. The result of what has been said so far is that the appeal should be allowed and that the appellant company should have judgment for the payment of the sum mentioned. (at p450)
19. There remains the question arising upon the cross-appeal, namely, whether the relief granted by Dwyer C.J. should have been granted in the absence of any offer on the part of the plaintiff company to submit to a condition that it would repay the unpaid loan moneys, and without the court itself imposing a condition to that effect. In the Court of Chancery it was necessary for a plaintiff to show an equity to relief; otherwise he was not entitled to specific relief at the hands of that court but must rest content with whatever relief he could obtain at law, whether under the provisions of statute or at common law. What constituted an equity to relief was determined by the doctrines of equity. In a case such as this the question would be governed by the rules regulating the exercise of the auxiliary jurisdiction of courts of equity. For the rights of the parties, as distinguished from their remedies, are determined by the Money Lenders Act 1912-1948 (W.A.) and no question of substantive equitable right could arise. Whatever remedies at law are given by or arise in consequence of the statute may, of course, be pursued by the party unconditionally. But something more would be required before a court of equity intervened on equitable grounds and so went further in point of remedy than the statute provided. There must be some ground, some particular situation, giving an equity to the party to the form of relief sought. In the case of the entry of the receiver and manager into possession in the present case, it might have been enough to found the equity to relief by injunction that the statute made the security unenforceable and that nevertheless the receiver entered and took possession. It might have been enough according to the principles of equity to entitle the company to an unconditional injunction and, of course, the injunction might have been preceded by a declaration of right. The reason why an equity to an injunction might thus have arisen is that a continuing trespass to property, particularly the seizure of a business, if without legal authority, might well be considered sufficient in itself to justify the intervention of the court of equity with its special remedy of an injunction. In effect the case might be considered within "the rule that where the plaintiff has established the invasion of a common law right, and there is ground for believing that without an injunction there is likely to be a repetition of the wrong, he is, in the absence of special circumstances, entitled to an injunction against such repetition": per Cussen J. in Beswicke v. Alner [1926] VicLawRp 10; (1926) VLR 72, at p 76 . For this purpose there is no distinction between continuance and repetition. But an equity entitling a party to the delivery up and cancellation of documents, or to an injunction against suing at law on a negotiable instrument or to some other kindred specific relief must rest on other grounds. In many situations something beyond the mere existence of a legal right was needed before a ground could be found for the intervention of a court of equity. The fact that the legislature has declared a particular transaction illegal or void does not in itself warrant a court of equity in improving upon or adding to what the legislature has done and to furnish its remedies on no other ground than that the mere existence and general character of the statute would be to do that. But rescission of the entire transaction and restitution of the parties so far as may be to the situation they initially occupied stands on a different footing. It is a form of relief administered by a court of equity and it may be appropriate to the situation in which the statute places the parties. If the party whom it is the purpose of the legislature to protect is prepared to do his part by restoring what he has obtained from the other party by means of the transaction, a court of equity may properly consider that an equitable title exists in him to the remedies which will result in remitting the parties to their former position so far as may be. Such a court may take the view that it is by submitting to this condition that the party makes out an equitable title to the relief of the court. Sometimes it is simply put that because he seeks equity he must do equity. The real meaning and operation of the maxim referred to has been often explained but nowhere more strikingly than by Wigram V.C. in Hanson v. Keating [1844] EngR 836; (1844) 4 Hare 1, at pp 5, 6 [1844] EngR 836; (67 ER 537, at pp 538, 539) . In one sentence, the equity of the borrower is to have the whole transaction rescinded. "The Court will do this so as to remit both parties to their original position." That is why the borrower must submit to the repayment of the moneys borrowed remaining unpaid. All this was explained in this Court in Langman v. Handover [1929] HCA 42; (1929) 43 CLR 334 . That was an appeal from a decision of the Supreme Court of New South Wales in its equitable jurisdiction. As the Judicature Act has not been adopted in New South Wales the equitable principles remain applicable by which a title to specific relief was governed in a court of equity: see David Jones Ltd. v. Leventhal [1927] HCA 53; (1927) 40 CLR 357 . In Langman v. Handover [1929] HCA 42; (1929) 43 CLR 334 this Court decided that a suit in equity should be dismissed claiming declarations that certain transactions involving stock mortgages and a crop lien were transactions of money lending by a money lender and that the stock mortgages and crop lien were void and of no effect. The suit was by a borrower who alleged that the securities were void under the Money Lenders Act but the statement of claim contained no offer to repay the moneys obtained by the transaction either with or without legal interest. The ground of the decision was that the statute had absolved the borrower from his contractual obligation because the lender had offended against provisions directed to the protection of the borrower or his class and that the borrower's equity must rest on something more than the legal right or immunity given by the statute: it was the situation created by the statute which gave the innocent party the right to be restored to his former position, but such a ground of equity involved an offer of restitution (1929) 43 CLR, at p 356 . Adapting the words of Lord Selborne in Jervis v. Berridge (1873) LR 8 Ch App 351, at p 358 , it was a case in which the whole locus standi of the plaintiff in a court of equity was dependent on an election that must be declared in his pleading to forego legal rights for the sake of equitable remedies. In Lodge v. National Union Investment Co. Ltd. (1907) 1 Ch 300 , Parker J., as he then was, acted upon these principles in giving relief to a borrower from a transaction with an unregistered money lender. The relief which Lord Parker granted was an order for delivery up by the lender of certain bills of exchange and conveyances and of a policy of life insurance; but it was made a condition of the relief that it should be upon repayment by the borrower to the lender of the balance of the loan moneys and some premiums the latter had paid. In his judgment in Langman v. Handover [1929] HCA 42; (1929) 43 CLR 334 , Isaacs J. speaking of Lord Parker's decision, to which he gave his complete adherence, said " . . . for my part, the exploration of foundations to which I have been driven by the arguments in this case, has satisfied my mind that the position of Lodge's Case is impregnable" (1929) 43 CLR, at p 345 . "Impregnable" has proved hardly to be the correct epithet. For notwithstanding the strength of the foundation upon which it then seemed to rest, the effects of the decision may be taken to be largely undone by the judgment of the Privy Council in Kasumu v. Baba-Egbe (1956) AC 539 . It was a decision upon the Money Lenders Ordinance of Nigeria which, so the report says, was in terms similar to those of the Moneylenders Act 1927 of the United Kingdom, except that the precise requirement on the neglect of which the case turned is not to be found in the English Act. But the judgment of their Lordships delivered by Lord Radcliffe concludes with a contrast of the Usury Acts with that legislation, much of which, his Lordship said, is directed to enforcing measures of control that have no concern with the intrinsic nature of the contract made. "Such requirements as that the moneylender must be registered or licensed, must use his authorized name, must procure a note or memorandum of the contract signed personally by the borrower, must keep a book in which is entered a contemporary record of the transaction, strike indifferently at all moneylender's loans, however moderate the terms of any particular transaction. When the governing statute enacts that no loan which fails to satisfy any of these requirements is to be enforceable it must be taken to mean what it says, that no court of law is to recognize the lender as having a right at law to get his money back. That is part of the penalty which the statute imposes. There is no room to reform the terms of the loan, since the statute is not concerned with the vice of its content but with the vice of the conditions under which it was made. The provisions of section 19 are not purposeless: they seem to assume that no loan that is not contemporaneously recorded can be established with sufficient certainty to be recognized at law. If a court therefore were to impose terms of repayment as a condition of making any order for relief it would be expressing a policy of its own in regard to such transactions which is in direct conflict with the policy of the Acts themselves. In their Lordships' opinion the court should not place itself in such a position" (1956) AC, at pp 551, 552 . The judgment does not refer to the basal considerations determining in a court of equity the plaintiff's equitable title to relief, the considerations governing the decision of this Court in Langman v. Handover [1929] HCA 42; (1929) 43 CLR 334 , and no doubt that decision will continue to govern the Supreme Court of New South Wales in its equitable jurisdiction. It may be safely assumed that the Supreme Court of Nigeria was regulated in its jurisdiction and procedure by provisions based upon the judicature system. Doubtless that would mean that declarations of right could be made as they may under O.XXV, r. 5, with which O.XXV, r. 5, of the Rules of the Supreme Court of Western Australia corresponds. At all events Chapman v. Michaelson (1908) 2 Ch 612; (1909) 1 Ch 238 is cited by Lord Radcliffe where the difference between what Fletcher Moulton L.J. (1909) Ch, at p 242 described as "true equitable relief such as was asked for in Lodge v. National Union Investment Co." (1907) 1 Ch 300 and "an action for a mere declaration of rights" was made the ground of distinguishing Lord Parker's decision. Farwell L.J. said: "I think you cannot now have recourse to the old equitable practice to explain, and still less to limit, a novel practice given by the Judicature Act and a power given to the High Court and not to one division of the High Court to the exclusion of the other" (1909) 1 Ch, at p 243 . Cf. Guaranty Trust Company of New York v. Hannay & Co. (1915) 2 KB 536 and Russian Commercial & Industrial Bank v. British Bank for Foreign Trade Ltd. (1921) 2 AC 438 . In the case of injunctions the view has been adopted too that the effect of the Judicature Act is to enable the court "where there is a legal right" . . . "without being hampered by its old rules" to "grant an injunction where it is just or convenient so to do for the purpose of protecting or asserting the legal rights of the parties": per Cotton L.J. in North London Railway Co. v. Great Northern Railway Co. (1883) 11 QBD 30, at p 39 , see too per Lindley M.R. in Cummins v. Perkins (1899) 1 Ch 16, at p 20 . But no general desertion of the true principles of equity has been considered allowable in granting injunctions. See in Victoria Attorney-General v. President etc. of Shire of Huntly (1887) 13 VLR 66 , per Holroyd J. (1887) 13 VLR, at p 70 . In Cohen v. Lester (J.) Ltd. (1939) 1 KB 504 there appears to have been a pledge by deposit of some jewellery as security for a loan. Some promissory notes were given. In the same way as in the present case the contracts of loan and the securities were unenforceable and for non-compliance with what is substantially the same set of requirements as those imposed by s. 9 of the Money Lenders Act 1912-1948 (W.A.). The plaintiff sought a declaration that the contracts of loan and the promissory notes were unenforceable, an injunction restraining the defendants (the lenders) from disposing of the jewellery and an order for delivery up of the jewellery. The defendants were willing to submit to the declaration, the injunction and the order for the delivery up of the outstanding promissory note but contended that they were entitled to retain the jewellery until the plaintiff paid the money owing. Curiously enough the order claimed for delivery up of the jewellery was treated as equitable relief and for that reason, so it was argued, subject to the condition that repayment should be made by the plaintiff of unpaid loan moneys. There is no trace of a mortgage of the jewellery as a chattel personal as distinguished from a pledge by deposit and it seems almost certain that the relief sought was an order for specific delivery based on detinue: see per Collins M.R. in Hymas v. Ogden (1905) 1 KB 246, at p 250 . But however that may be, Tucker J., as he then was, said (1939) 1 KB, at p 507 that in his opinion the true position was that when the defendants maintained that they were entitled to keep the jewellery unless and until the plaintiff paid the money they were really seeking to enforce the contract which they admitted to be unenforceable. His Lordship drew a distinction between an illegal contract, a category to which Lodge's Case (1907) 1 Ch 300 belonged, and an unenforceable contract. The decision of Lord Tucker is cited by Lord Radcliffe with apparent approval, but it is by no means certain that the distinction commended itself to their Lordships, in spite of what is said in the head note in the Law Reports and of the comment by Mr. Megarry (1956) 72 LQR 480 . After all what Lord Parker was saying was that the borrower was entitled to sue notwithstanding the illegality because the statutory provision was for his protection. "It seems reasonably clear that at any rate in equity, if not also at law, a person taking advantage of the exception arising from the fact that he belonged to the class for whose protection the statutes were passed could not assert any right unless he was himself prepared to do what the Court considered fair to the defendant." (1907) 1 Ch, at p 307 The annuity cases collected in Langman v. Handover (1929) 43 CLR, at pp 354-356 supply an illustration of relief based upon simple invalidity and unenforceability might seem an a fortiori case. Lord Alvanley M.R. in Bromley v. Holland [1800] EngR 246; (1800) 5 Ves Jun 610, at pp 617-619 (31 ER 766, at pp 769, 770) deals with the principles of relief if in a fashion somewhat outmoded and indirect yet in a way making very clear what he took to be the ground of intervention. Perhaps one statement may be quoted: "When in equity the plaintiff states a legal objection an answer very often is 'Go and avail yourself of it at law; a court of equity will not interfere if there is no injustice in the transaction'. I do not deny that in some cases in order to avoid suits and prevent the party being harassed equity will order the instruments that may be the subject of those suits to be delivered up; but those cases are very rare and the relief is always upon terms" (1800) 5 Ves Jun, at p 618 (31 ER, at p 770) . On appeal [1802] EngR 163; (1802) 7 Ves Jun 3 (32 ER 2) , Lord Eldon reviewed this judgment and in form reversed it in order to make a decree somewhat more favourable to the plaintiff, but nothing the Lord Chancellor said diminishes the force of the observations quoted from Lord Alvanley's reasons. However, unless the concluding words of Lord Radcliffe which have been set out above are to be treated as something less than a necessary part of the judgment, it is difficult to escape the consequence that neither as a condition of relief nor otherwise can the plaintiff company be required to account for or restore to the defendant firm the loan moneys remaining unrepaid or any part of them. So far from the passage in question forming no necessary part of the judgment, it seems clearly enough to express the substance of their Lordships' decision. (at p456)
20. One may perhaps be permitted to believe that had the plaintiffs depended for relief upon an application to a court exercising an equitable jurisdiction and nothing else the same result could not have ensued but, as it is, the defendant firm must lose the entire amount of the loan moneys lent to the plaintiff company which remained unpaid at the time when they proceeded to enforce their security by putting in the receiver. (at p456)
21. The consequence of the foregoing reasons is that the appeal should be allowed with costs and the cross-appeal dismissed with costs; the order of the Chief Justice should be varied by omitting par. 8 thereof and, in lieu of such paragraph, making an order that the defendants who constitute the Eastern Acceptance Company repay to the plaintiff company the sum of 7,437 pounds 10s. 0d. which was paid by the defendant Kitson as receiver to that firm between 16th November 1956 and 12th February 1957. (at p456)
McTIERNAN J. I agree with the construction which the Chief Justice has placed upon the material provisions of the Money Lenders Act 1912-1948 (W.A.) and with the statement and application of the principles in his Honour's judgment raised by that construction of the Act. I cannot usefully add anything. I agree that the appeal should be allowed and the cross-appeal be dismissed and with costs. (at p457)
TAYLOR J. In the course of its business as retailers of manchester goods and clothing in Perth the appellant company borrowed from the respondents, other than Cox and McDonald, considerable sums of money for use in its business. The business of the lenders, which was that of the disposal of goods upon hire purchase, was conducted by them under the firm name of Eastern Acceptance Company and it will be convenient to refer to them as the Acceptance Company. The other respondents were originally joined as plaintiffs in the suit but for reasons which it is unnecessary to state they became defendants pursuant to an order made before the trial commenced and they took no part at the hearing or upon this appeal. The appellants, other than the appellant company, are persons who guaranteed repayment of the moneys borrowed from the Acceptance Company. (at p457)
2. Between 15th May 1955 and 15th October 1956 a number of loans were obtained by the appellant company from the Acceptance Company. In each month during this period a loan of an amount varying between 2,000 pounds and 9,000 pounds was made by the Acceptance Company and in each instance the loan was repayable with a specified amount for interest by six consecutive monthly instalments. The particulars concerning each loan are set out in the statement of agreed facts and it appears that on each occasion promissory notes were given in respect of each instalment and that the appellant company's outstanding indebtedness from time to time was secured upon certain assets of the company. The last instrument of charge - which was, in form a debenture - was executed on 23rd September 1955 and by this instrument the appellant company's outstanding indebtedness from time to time was charged upon the whole of its undertaking and upon its uncalled capital. On the same day Cox and McDonald, together with the individual appellants, guaranteed the repayment of the amount then outstanding and also of any other amounts which might from time to time become owing in respect of further loans. (at p457)
3. No default appears to have been made by the appellant company until 15th November 1956. But on that date default was made in respect of a number of promissory notes and on the following day the Acceptance Company, in the exercise of the powers conferred by the debenture of 23rd September 1955, appointed one of their number, Henry Maxwell Kitson, as receiver and manager of the appellant company's business. Immediately thereafter Kitson entered into possession of the appellant company's assets and he continued to act as receiver and manager from then until some time after judgment had been delivered in the suit. Of the appellant company's total indebtedness at that time, namely 20,187 pounds 10s. 0d., Kitson had, prior to the institution of the suit, paid to the Acceptance Company, out of the moneys received by him in his capacity of receiver and manager, the sum of 7,437 pounds 10s. 0d. leaving the amount of 12,750 pounds still outstanding. (at p458)
4. The suit was instituted on 12th February 1957 and by their statement of claim the appellants asserted that the Acceptance Company was at all material times a money lender within the meaning of the Money Lenders Act 1912-1948 and they relied upon this circumstance to establish a right to the relief claimed in the suit. In the result the Supreme Court of Western Australia (Dwyer C.J.) made the following declarations and orders. Declarations - (at p458)
5. "1. (a) That the plaintiffs are under no liability to pay to the first twenty named defendants, Eastern Acceptance Company (hereinafter called the defendant firm) any part of the sum of 12,750 pounds 0s. 0d. representing the unpaid balance of the loans mentioned in the statement of claim outstanding on 12th February 1957. (b) That the promissory notes mentioned in the statement of claim representing such sum and the debenture dated 23rd September 1955 given by the plaintiff company to the defendant Leslie Edgar Dreyer and the guarantee dated 23rd September 1955 given by the individual plaintiffs and the defendants Russell Cox and Edward Peter McDonald to the defendant Leslie Edgar Dreyer are unenforceable." Orders that: - "2. The defendant firm do forthwith deliver up to the plaintiff company for cancellation all the aforesaid promissory notes still outstanding and the said debenture and the said guarantee. 3. The defendant Leslie Edgar Dreyer do forthwith execute for registration in the Bills of Sale Office a satisfaction of the said debenture. 4. The defendant firm and each member thereof be perpetually restrained from exercising or attempting to exercise any power right or remedy under the said debenture. 5. The defendant Henry Maxwell Kitson do forthwith withdraw from possession of the property and undertaking of the plaintiff company. 6. The defendant Kitson do forthwith pay to the plaintiff company all moneys now under his control as receiver for the defendant firm. 7. An account be taken before the master of all moneys of the plaintiff company and of the proceeds of the sale of the plaintiff company's property received by the defendant Kitson or by any person on his behalf, and of the manner in which the defendant Kitson applied the same. 8. The plaintiff company is not entitled to recover from the twenty first named defendants or from the defendant Kitson as receiver or from Eastern Acceptance Company any part of the sum of 7,437 pounds 10s. 0d. paid by the defendant Kitson to the defendant firm between 16th November 1956 and 12th February 1957." (at p459)
6. It will be seen that although the appellants were substantially successful in the suit the appellant company failed to obtain an order for the repayment of the amount which Kitson had paid to the Acceptance Company whilst he was acting as receiver and manager and this appeal is brought against that part of the order of the learned Chief Justice which denied this relief. On the other hand, the Acceptance Company has cross-appealed on the substantial ground that the trial judge was in error in holding that the members of the firm were money lenders within the meaning of the relevant provisions of the Act and, alternatively, upon the ground that the relief granted to the appellants should have been given only upon the appellant company's undertaking to repay the outstanding sum of 12,750 pounds. In these circumstances it is convenient to go at once to the question whether the Acceptance Company was at all material times a money lender within the meaning of the Act and, if so, whether the statutory provisions so operate as to entitle the appellants to the relief which they succeeded in obtaining in the Supreme Court. Both enquiries are necessary for, as will appear, the question of the validity or enforceability of the transactions between the parties cannot be resolved merely by saying that the Acceptance Company was a money lender within the meaning of s. 3 of the Act and that the loans were made at a rate of interest in excess of that specified in s. 11A. (at p459)
7. The expression "money lender" is defined by s. 3 of the Act to include every person (whether an individual, a firm, a society, or a corporate body) whose business is that of money lending, or who advertises or announces himself, or holds himself out in any way, as carrying on that business, or who lends money at a rate of interest exceeding twelve and one-half pounds per cent per annum. To this definition there are a number of exceptions but none of them has any application to the Acceptance Company. Thereafter the Act contains provisions requiring "money lenders" to seek registration and, additionally, a number of provisions which may fairly be described as designed to regulate the manner in which the business of money lending may be carried on. For present purposes ss. 9 and 11A are of some importance and it is desirable to indicate the nature of the provision which they make. Section 9 provides that no contract for the repayment by a borrower of money lent to him or to any agent on his behalf by a money lender after the commencement of the Money Lenders Act Amendment Act, 1937, or for the payment by him of interest on money so lent, and no security given by the borrower or by any such agent as aforesaid in respect of any such contract shall be enforceable unless a note or memorandum in writing of the contract is signed personally by the borrower and unless a copy thereof is delivered or sent to the borrower within seven days of the making of the contract and, further, that "no such contract or security shall be enforceable if it is proved that the note or memorandum aforesaid was not signed by the borrower before the money was lent or before the security was given, as the case may be" (s. 9). It is necessary that the required note or memorandum shall contain all the terms of the contract and, in particular, that it shall show the date on which the loan was made, the amount of the principal of the loan, and either the interest charged on the loan expressed in terms of a rate per cent per annum or the rate per cent per annum represented by the interest charged as calculated in accordance with the provisions of the schedule to the Act. Section 11A makes somewhat different provision. It provides that no money lender shall in respect of any loan or transaction made or entered into after such date, lend or agree to lend to any person any moneys at a rate of interest exceeding such maximum rate per cent per annum as may pursuant to the provisions of the Act, be from time to time prescribed, and as shall be the prescribed maximum rate of interest at the date of the loan concerned. Then follows a proviso which stipulates that from the date of the amending Act of 1941 "the maximum rate of interest shall be and is hereby declared to be fifteen pounds per centum per annum". Some difficulty may be experienced in discovering any provision of the Act which confers a power to prescribe maximum rates of interest and the proviso itself is somewhat curiously framed. Nevertheless, there seems to be little doubt that the terms of the proviso were intended to specify the "prescribed maximum rate" pending any further prescription and both parties were content to assume that this was so. (at p460)
8. It is the contention of the appellant company that the Acceptance Company was a money lender and that it failed to observe the requirements of each of these sections. Consequently, it was said, the appellants were entitled to the relief claimed. It should be said that, although advanced at the trial, the contention that the loans which had been made by the Acceptance Company to the appellant company were not made at a rate of interest exceeding fifteen pounds per cent per annum was abandoned upon the appeal and it may be assumed that each of the loans was made at a rate of interest in excess of the prescribed maximum rate. It may also be of some interest to notice at this stage that the effect of non-compliance by a money lender with the provisions of s. 9 of the Act is that the relevant contract or security is "unenforceable", whereas the undoubted effect in the case of a transaction which involves a breach of s. 11A is to render the relevant contract or security illegal and void. Whether by rendering contracts and securities "unenforceable", the legislature intended to invalidate such instruments as between the lender and the borower or merely to render them unenforceable so long as the relevant statutory provisions should subsist may be open to argument but the latter conclusion would, upon authority, appear to be correct and it gains some support from the somewhat unusual language of s. 9. (at p461)
9. From what has been said it is apparent that the Acceptance Company lent money to the appellant company at a rate of interest exceeding twelve and one-half pounds per cent per annum. But it is common ground that the Acceptance Company did not at any material time carry on the business of money lending or advertise or announce or hold itself out in any way as carrying on that business. Therefore if it is to be regarded as a money lender it must be so regarded because it lent moneys to the appellant company at a rate of interest exceeding that specified in s. 3 and, therefore, fell into the third category described in that section. (at p461)
10. For the Acceptance Company it was contended that a person does not answer that description unless he lends money habitually or repeatedly. After all, it is said, a significant feature of the legislation is that it requires money lenders to seek registration and it would be idle to require a person to register for the purposes of a single transaction. But what s. 5 of the Act requires is that no person shall carry on the business of a money lender or do anything which constitutes him a money lender for the purposes of s. 3 of the Act unless he is granted registration under the Act and is the holder of a current licence issued to him thereunder. It may be that this provision cannot be read entirely literally but nevertheless its language lends no support to the suggestion that "habitually" or "repeatedly" should be read into the third category specified in s. 3. Indeed this and other like definitions have been read without the addition of any such words on a number of occasions (see per Isaacs J. in Cloverdell Lumber Company Pty. Ltd. v. Abbott [1924] HCA 4; (1924) 34 CLR 122, at p 139 Coles v. Steffan & Orr (1951) 53 WALR 98 ; Baker v. Pryor (1932) QSR 66 ; Arnall v. Grey (1941) QSR 122 and Buchanan v. Kiley (1948) QSR 274 . This, however, is but the beginning of the enquiry on this aspect of the matter for s. 3 is but a definition section and, by itself, in no way operates to impugn the transactions between the appellant company and the Acceptance Company. The sections which may be thught to have this effect are ss. 9 and 11A and to the provisions of these sections further reference will be made after a brief examination of some of the other provisions of the Act. (at p462)
11. If this examination commences with s. 3 it will be seen that the definition of "money lender" is wide enough to embrace both persons who carry on the business of money lending and persons who do not. The latter category consists of those persons who, although they do not carry on the business of money lending, lend money at a rate of interest exceeding twelve and one-half pounds per cent per annum. And, one may think, the relevant words are apt to include a person who makes one such loan. But such a person is not a person who carries on the business of money lending; he is, at the most, what may, perhaps, be called an ad hoc money lender. Nevertheless the form of relief provided by s. 4 to borrowers in particular transactions is just as readily available against him as against a person engaged in the business of money lending. But it should be noticed that this is a form of relief which permits of the reformation of particular transactions in appropriate cases and is of quite a different character from that which accrues to a borrower because of some failure on the part of a money lender to conduct his business in accordance with the provisions of the Act. (at p462)
12. The group of sections from s. 5 to s. 8 deals with the registration of money lenders and allied matters. Sub-section (1) of s. 5 provides that no person shall carry on the business of a money lender or do anything which constitutes him a money lender for the purposes of s. 3 of the Act unless he is granted registration under the Act and is the holder of a current licence. But in spite of the italicized words it is open to question whether the operation of this section extends beyond those who carry on the business of money lending or who advertise or announce themselves or hold themselves out as doing so. Indeed sub-s. (2) expressly forbids the registration of any person "except under his own or usual trade name (if any) and with the address or all the addresses, if more than one, at which he carries on his business of money lending". How then could a person who does not carry on such a business ever be registered? Quite clearly registration is for those who carry on the business of money lending and no others and there are further indications in s. 5 that this is so. For instance sub-s. (3) provides that a money lender shall carry on the money lending business in his registered name and in no other name and under no other description, and at his registered address or addresses and at no other address. Further he is forbidden to enter into any agreement in the course of his business as a money lender with respect to the advance and repayment of money or to take any security for money other than in his registered name. Then, by sub-s. (4) it is provided that if a person commits a breach of any of the provisions of the section or shall continue to carry on business during any period when his registration is suspended or cancelled under the Act he shall be liable, on summary conviction, to a fine not exceeding 100 pounds. The grounds upon which a magistrate is to exercise his discretion as to registration are specified in s. 6 and it appears that he is not to direct registration if evidence to his satisfaction has been produced that the applicant or any person proposed to be made responsible for the management of his business as a money lender is not a fit and proper person to be registered. Consideration of these provisions makes it reasonable to conclude that, in spite of the critical words in s. 5 (1) - "or do anything which constitutes him a money lender for the purposes of s. 3 of the Act" - the registration provisions only apply to a person "whose business is that of money lending, or who advertises or announces himself, or holds himself out in any way, as carrying on that business". Obviously this was so in 1912 when the Money Lenders Act of that year was enacted for this was the full content of the definition of money lender in that Act and the requirement that money lenders should register could apply to no other persons. The additional category now contained in the definition - "a person who lends money at a rate of interest exceeding twelve and one-half pounds per centum per annum" - was introduced in 1913 by an amending Act which was directed to this point alone and which made no amendment to the registration provisions. No further amendment was made to s. 5 until 1937 when it assumed its present form. It was then that the critical words in that section - "or do anything which constitutes him a money lender for the purpose of s. 3 of the Act" - first appeared. But although they may apply to persons who advertise or announce themselves or hold themselves out as carrying on the business of money lending I find it extremely difficult to hold that they apply to a person who merely makes a loan at a rate of interest in excess of twelve and one-half pounds per cent per annum and does not otherwise carry on the business of money lending. Indeed, as already appears, such a person cannot register; he has no place of business, he does not carry on the business of money lending nor does he enter into agreements in the course of the business of money lending with respect to the advance and repayment of money. Further it would be quite impossible for him to know to which court of petty sessions he should make his application (see s. 6 (2)) or for an appropriate magistrate, if one could be found, to satisfy himself as to the fitness and propriety of any person proposed to be made responsible for the management of the applicant's non-existent business of money lending. The result is that the Acceptance Company was not within the scope of the registration provisions of the Act. But whether or not sub-s. (1) of s. 5 makes it an offence for any person who does not carry on the business of money lending to make an isolated loan at a rate of interest exceeding twelve and one-half per cent per annum is not the critical question in the case for sub-s. (6) of that section provides that no contract agreement or transaction of a money lender shall be void or voidable by reason only of the money lender's having been guilty of a contravention of that section. (at p464)
13. When one passes to the group of sections from s. 9 to s. 18 it will be seen that they are general provisions designed to regulate the conduct of money lending businesses and are quite inapt to regulate the ordinary commercial activities of a person who, by virtue of a single loan at a rate of interest in excess of twelve and one-half pounds per cent per annum, has brought himself within s. 3 and has thereby become what has been described as an ad hoc money lender. It seems to me impossible to hold that the legislature intended that if such a person subsequently made an isolated loan on the security of an every-day mortgage the security should be unenforceable unless the provisions of s. 9 were observed, or, illegal, pursuant to s. 10 if the mortgage provided "for the rate of interest being increased by reason of any default in the payment of sums due under" the mortgage. Clearly enough this is not the effect of these sections; on the contrary they are designed to regulate and place restrictions upon the manner in which the business of money lending shall be carried on and they have no application to the Acceptance Company. The same thing is true of s. 12 - under which borrowers may obtain from money lenders with whom they have dealt information concerning their dealings - of s. 13 - which provides for rebates of interest to be made where loans are repaid before the due date - of s. 14 - which limits the fees to be charged for investigations made in connection with proposed loans - of s. 17 - which prescribes how loans are to be made - and of s. 18 - which prescribes particular formalities in the case of the assignment to a money lender of any interest under a will or deed or in the estate of a deceased person. (at p465)
14. I have, so far, omitted to notice s. 11A in this group of sections because it was the subject of a comparatively recent amending Act (Money Lenders Act Amending Act 1941). In substance it provides that notwithstanding any law to the contrary "no money lender shall in respect of any loan or transaction made or entered into after the commencement of the amending Act, lend or agree to lend to any person any moneys at a rate of interest exceeding such a maximum rate per centum per annum as may pursuant to the provisions of the Act be from time to time prescribed, and as shall be the prescribed maximum rate of interest at the date of the loan concerned". When enacted this section took its place in association with those provisions designed to regulate the business of money lending and it is, in substance, of precisely the same character as those sections. This being so there is no ground for thinking that the transactions between the Acceptance Company and the appellant company constituted breaches of its provisions. The conclusion, which is involved in these reasons, that the context in which the expression "money lender" is used in ss. 9 and 11A requires it to be understood in a somewhat narrower sense than the defined sense, seems to me to accord generally with the views entertained by members of the Supreme Court of Queensland in Baker v. Pryor (1932) QSR 66 ; Arnall v. Gray (1941) QSR 122 and Buchanan v. Kiley (1948) QSR 274 and by the Supreme Court of New South Wales in Hyde v. Sullivan (1956) SR (NSW) 113; 73 WN 25 . It is, I think, a conclusion which is inescapable and it means that the order of the learned Chief Justice should, in my opinion, be set aside. I should add that the view which I have expressed concerning the operation of s. 11A may also find some support in a consideration of the provisions of sub-s. (1) of s. 5 to which reference has already been made. If upon its true construction that sub-section prohibits persons who do not carry on the business of money lending from making loans at a rate of interest in excess of twelve and one-half per cent per annum it may well be thought that the provisions of s. 11A apply only to persons who do, in fact, carry on the business of money lending. On the other hand if the provisions of s. 5 (1) are to be regarded as limited to those who carry on such a business the reasons underlying that conclusion would apply with equal force to ss. 9 and 11A. (at p465)
15. In the circumstances it becomes unnecessary to consider how far, if at all, the decision of this Court in Langman v. Handover [1929] HCA 42; (1929) 43 CLR 334 has been displaced by the decision of the Judicial Committee in Kasumu v. Baba-Egbe (1956) AC 539 or, whether, when equitable relief by way of declaratory decrees is sought in matters of this character in any of the Courts of the various States, the submission of the plaintiff to appropriate terms will constitute part of his title to that relief. (at p466)
16. For the reasons given the cross-appeal should, in my opinion, be allowed, the order of the Supreme Court set aside and, in lieu thereof, an order should be made dismissing the suit. (at p466)
ORDER
Appeal allowed with costs and cross-appeal dismissed with costs. Omit par. 8 of the order of the Supreme Court and in lieu thereof order that the respondents - except Russell Cox and Edward Peter McDonald - repay to the plaintiff company the sum of 7,437 pounds 10s. 0d.