Practitioners in Queensland should note that a person who makes an isolated loan at a rate exceeding eight per cent per annum, without carrying on the business of money-lending, is not required to register under s 6(1) of The Money Lenders Acts and securities taken in connection with such a loan are not void for non-registration.
Later decisions that cite J B Witts Pty Ltd v Wholesalers (Australia) Pty Ltd
Decisions cited by J B Witts Pty Ltd v Wholesalers (Australia) Pty Ltd
J. B. WITTS PTY. LTD. v. WHOLESALERS (AUSTRALIA) PTY. LTD. [1963] HCA 42; (1963) 109 CLR 322
Money Lenders (Q.)
High Court of Australia
Taylor(1), Menzies(2) and Owen(3) JJ.
CATCHWORDS
Money Lenders (Q.) - Non-compliance with statutory requirements - Non-registration - Definition - Person who in an isolated transaction lends money at a rate of interest exceeding eight per centum per annum - Not carrying on business as or holding himself out as a money lender - Whether bound to register - Whether security void - The Money Lenders Acts, 1916 to 1959 (Q.), ss. 3*, 6 (1)**.
HEARING
Brisbane, 1963, September 12, 13;DECISION
October 16.2. The appellant's contention on this appeal is that the course which was taken by the learned trial judge in disposing of the suit precluded a trial of any question of fact which might have been relevant to the broad allegation contained in its statement of claim. No such ground is taken by the notice of appeal which alleges as the sole ground, merely, that the judgment of the trial judge was wrong in law. But as I understand the argument the contention which the appellant now wishes to raise under the quite informal notice of appeal is that it was, at the trial, open to the appellant to assert invalidity on any ground that ingenuity might now discover in The Money Lenders Acts and, if it appears that in relation to any discoverable ground, an issue of fact would be appropriate then it is now entitled to say that the learned trial judge was in error in not proceeding to trial. (at p326)
3. However, the course which the proceedings took is revealed by the supplementary record which was filed immediately before the appeal commenced. It appears that the respondent wished to raise a preliminary matter of law which it is now unnecessary to discuss in detail and that in the course of discussion counsel for the appellant was invited to state his argument "in relation to The Money Lenders Acts". I think it is clear that what the appellant wished to raise was that the respondent was a money-lender within the meaning of those Acts as a person who had lent money at a rate of interest exceeding eight per centum per annum. But in order to succeed on this issue it was necessary for the appellant to establish that money had been lent by the respondent at such a rate. The instruments by which security for the loans made to the appellant was given stipulated interest at the rate of eight per centum but the appellant wished to show that by reason of a commission, specified as a selling commission, payable by the appellant to the respondent, it was possible by evidence to establish that the rate of interest charged, in fact, exceeded eight per cent. The appellant's argument on this point rested upon the definition of "interest" in s. 3 of the Acts. There was, however, no trial on this issue but it is beyond doubt that counsel for the appellant acquiesced in a question of law being resolved before trial on the assumption, made in the appellant's favour, that the rate of interest charged was, in fact, in excess of eight per cent. (at p326)
4. This question was, and still is, whether a person who answers the description of a money-lender merely because he has made a loan at a rate exceeding eight pounds per centum per annum is bound by the provisions of s. 6(1)(c) of the Acts. If he is, then on the assumption made the securities given by the appellant were void (Cornelius v. Phillips (1918) AC 199 ). Indeed, although the section does not expressly so provide, such a result is necessarily assumed by the provisions of sub-s. (3) of s. 6. (at p327)
5. It has long been held in Queensland that s. 6(1) of the Acts in question does not impose an obligation to register upon persons who do not carry on the business of money-lending or who do not advertise or announce themselves or hold themselves out as carrying on that business (Baker v. Pryor (1932) QSR 66 ; and Buchanan v. Kiley (1948) QSR 274 ) and the validity of the earlier decision was assumed in Arnall v. Gray (1941) QSR 122 . This was so held notwithstanding the express reference in the opening words of s. 6 to "a money-lender as defined by this Act". It was pointed out that a person who became a money-lender merely by reason of the fact that he had made a loan at a rate of interest exceeding eight pounds per centum per annum does not become a money-lender as defined until the loan is made and that prior to making the loan it is not permissible for him to be registered as a money-lender. In these circumstances it was held that s. 6(1)(a) did not apply to such a person. This has been the law in Queensland for more than thirty years and, notwithstanding a number of intervening amending Acts, the legislature has not seen fit to change it. A like view was taken by the Supreme Court of New South Wales in Hyde v. Sullivan (1956) SR (NSW) 113; 73 WN 25 concerning the not dissimilar provisions of the Money-lenders and Infants Loans Act, 1941-1948 of that State. But the Queensland decisions, it is said, ought to be reviewed because of the opinion expressed by the majority of this Court in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; [1958] HCA 55; (1958) 101 CLR 428 concerning the operation of s. 5 of the Money Lenders Act 1912-1948 of Western Australia. It is, however, of importance to observe that the Western Australian provision was cast in wider and more emphatic terms than either the Queensland or New South Wales provision for it forbade any person to carry on the business of a money-lender or do anything which constitutes him a money-lender for the purpose of s. 3 of the Act unless granted registration under the Act. And the making of a loan at a rate of interest exceeding twelve and one-half per cent was an act which, under s. 3, constituted a person a money-lender. It is true that the majority inclined to the view that the Western Australian provision required such a person to register, Dixon C.J. observing that "the better view perhaps is that the machinery or procedure must yield to the substantial intention of the main provisions" (1958) 101 CLR, at p 448 . But the point did not arise for decision and no concluded view was expressed; the critical question that did arise and which was decided was that s. 9 of the Act applied to a person, registered or not, who answered the description of a person "who lends money at a rate of interest exceeding twelve and one-half per centum per annum". (at p328)
6. It should also be observed that the case also decided that s. 11(A) of the Western Australian Act, which in terms applied to all "money-lenders", did not apply to such a person. This view rested upon considerations which emerged upon examination of the section and which need not be elaborated here. But the matter is mentioned as a further recognition of the many difficulties that have been experienced in applying very general provisions of Money Lenders Acts to two distinct classes of persons - those who carry on the business of money-lending and those who do not but who, because of one transaction, may be found to be comprehended by one part of the definition of money-lender. (at p328)
7. I do not understand the views of the majority in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; (1958) 101 CLR 428 to question the authority of the Queensland and New South Wales cases. The express reason for mentioning them was that they "supply examples of the interpretation placed on statutes somewhat similarly constructed" (1958) 101 CLR, at p 446 . Nor do the observations made concerning the quite different provision of s. 5 of the Western Australian Act throw any doubt upon them. But, in any event, there is an additional reason why the appellant's contention that s. 6(1)(c) operated to render the respondents' securities void should be rejected. Even if s. 6(1)(a) applies to a person who lends money at a rate exceeding eight pounds per centum per annum - and I do not think it does - it is apparent that s. 6(1)(c) can have no application. It is concerned with things done by a person in the course of his business as a money-lender. In terms, it forbids any money-lender to enter into any agreement with respect to the advance and repayment of money or to take any security for money, in either case, in the course of his business as a money-lender, otherwise than in his registered name and it can have no application to the making of agreements or the taking of securities which are made or taken otherwise than in the course of a money-lending business. There is not in this case any suggestion that the respondents carried on the business of money-lending or that the securities here in question were taken in the course of any money-lending business. That being so, the appellant's contention must be rejected. (at p328)
8. This is sufficient to dispose of the appeal. But in the course of argument we were informed in some detail of the evidence by which, in the event of a new trial being ordered, it was proposed to establish that the rate of interest charged was, in fact, in excess of eight pounds per centum per annum. As already mentioned, the rate of interest reserved by the securities did not exceed this rate but the appellant intended, in the event mentioned, to establish that the respondents' selling commission, or some unspecified part thereof, constituted interest within the defined meaning of that term. In the circumstances it is unnecessary to express an opinion on the question whether evidence of the character indicated to us could justify a finding that the rate of interest on the moneys lent by the respondents exceeded the stipulated rate and for that reason, and that reason alone, I refrain from expressing any view on this point. (at p329)
MENZIES J. I agree that it is not open to the appellant to assert in this Court that it was denied the right to call evidence at the trial because it was with the consent of its counsel that the learned trial judge followed the course that he did and, without evidence, dealt with the questions of law which were raised for his decision. I add that, having regard to the evidence which counsel before us indicated would have been called had the parties gone into evidence upon that part of the case which was concluded by his Honour's decision upon the point of law which is the only matter with which we are now concerned, I am not disposed to think the appellant lost any real advantage by having it determined first. (at p329)
2. That point of law is whether it was sufficient to establish that the respondent was a money-lender to which s. 6 of The Money Lenders Acts, 1916 to 1959 (Q.) applied to show that the rate of interest it had charged the appellant upon the loan made to it and about which the action was concerned exceeded eight pounds per centum per annum. Stanley J., in rejecting the contention that it was, stated that he would follow earlier decisions of the Full Court. The decisions he had in mind were presumably Baker v. Pryer (1932) QSR 66 ; Arnall v. Gray (1941) QSR 122 and Buchanan v. Kiley (1948) QSR 274 . Before examining these cases it is necessary to examine the relevant provisions of The Money Lenders Acts. (at p329)
3. Section 6 requires "a money-lender as defined by this Act" to "register himself as a money-lender in accordance with this Act, under his own and usual trade name (if any) and in no other name, and with the address, or all the addresses if more than one, at which he carries on his business of money-lender" (s. 6(1)(a)). A money-lender is defined in s. 3 to include - subject to particular exceptions, immaterial here - every person "who lends money at a rate of interest exceeding eight pounds per centum per annum". The problem is whether it is contrary to the Act for a person, who is not otherwise within the definition of a money-lender and who is not within any of the exceptions stated in that definition, to lend money once at a rate of interest exceeding eight pounds per centum per annum without having registered antecedently. It is apparent that before this can be affirmed it must be found that such a person (1) is a money-lender as defined and (2) is required by s. 6 to register. (at p330)
4. It has not yet, I think, been finally settled whether a section such as s. 6 applies to a money-lender who does not carry on a business of a money-lender and it is not necessary for me to decide that point here. The use of the words "a money-lender as defined by this Act" in the opening words of s. 6(1) may require the registration of every money-lender as defined notwithstanding that the actual provisions of the section can only be applied aptly to a person whose business is that of a money-lender, or who advertises or announces or holds himself out as carrying on that business. As was stated by Dixon C.J. with the agreement of McTiernan J. in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; (1958) 101 CLR 428 in relation to the same sort of problem arising under the Money Lenders Act 1912-1948 of Western Australia, "The better view perhaps is that the machinery or procedure must yield to the substantial intention of the main provisions" [1958] HCA 55; (1958) 101 CLR 428, at p 448 . So it is that, in so far as the Queensland cases to which I have referred are decisions that s. 6 does not apply to a person who is a money-lender merely because he has lent money at a rate of interest exceeding eight pounds per centum per annum, I express no opinion as to their correctness. As was done in Mayfair Trading Co. Pty. Ltd. v. Dreyer [1958] HCA 55; (1958) 101 CLR 428 in relation to the Western Australian legislation, I leave for further consideration the question whether s. 6 applies only where a person is carrying on or is about to carry on the business of money-lending. (at p330)
5. It is, however, established that a person who does lend money at a rate of interest exceeding that specified does thereby become a money-lender: see Mayfair Trading Co. Pty. Ltd. v. Dreyer (1958) 101 CLR, at p 445 where Dixon C.J. adopted so much of the judgment of Isaacs J. in Cloverdell Lumber Co. Pty. Ltd. v. Abbott [1924] HCA 4; (1924) 34 CLR 122 as decided that a person who lends at a rate of interest exceeding the rate specified becomes thereby a money-lender even although the loan were an isolated transaction. See too Baker v. Pryor (1932) QSR 66 and Arnall v. Gray (1941) QSR 122 . It follows that some provisions in The Money Lenders Acts do apply to such a person after the making of the loan and do so in respect of the loan made : see per Philip J. in Arnall v. Gray (1941) QSR, at p 125 . The contention in this case, however, goes much further and is that a person who makes such a loan is a money-lender in making it. (at p331)
6. For this contention I find no warrant in the Acts or in authority, apart from one possible exception. When a person who does not carry on a business as a money-lender or advertise, announce or hold himself out as doing so lends money at a rate of interest exceeding that specified, it is the lending of the money at the excessive rate that makes the lender a money-lender. This conclusion is, I think, supported by what Isaacs J. said in Cloverdell Lumber Co. Pty. Ltd v. Abbott [1924] HCA 4; (1924) 34 CLR 122 , by what Dixon C.J. said in Mayfair Trading Co. Pty. Ltd. v. Dreyer (1958) 101 CLR, at pp 444-446 and, notwithstanding that money-lender is defined in the New South Wales legislation somewhat differently from the definition in the Queensland legislation, by so much of the decision of the Full Court of New South Wales in Hyde v. Sullivan (1956) SR (NSW) 113; 73 WN 25 as decided that proof of the making of the loan of 5,000 pounds there in question at 10 pounds per centum per annum was not of itself sufficient evidence that the lender was a moneylender when he made the loan. The possible exception referred to above is the Western Australian case of Coles v. Steffan & Orr (1951) 53 WALR 98 where, as I follow the decision, it was held that a person not already a money-lender but who became one by lending a sum of money at a rate of interest exceeding twelve per centum per annum could not recover the money so lent because the borrower had not signed the necessary note or memorandum before the money was lent. The facts, however, are not fully stated. (at p331)
7. I now turn to the Queensland cases already mentioned. In Baker v. Pryor (1932) QSR 66 the decision was that, because a money-lender who was not carrying on business as such could not make the declaration which the existing regulations prescribed as necessary to support an application to be registered as a money-lender, s. 6 did not apply to such a person. The lender was regarded as a money-lender because he had lent money at twelve per centum per annum but not as a money-lender who was obliged to register while the regulations stood as they did. That case has no bearing upon the point upon which I decide this case. In Arnall v. Gray (1941) QSR 122 the decision was to the effect that the prohibition contained in s. 17F of the Money Lenders Acts (Q.) against a money-lender lending at a rate in excess of the prescribed maximum rate, viz. twenty per centum per annum, did not apply to a person who was not a money-lender before making the loan but did become one by doing so. Philip J. said : "It seems to me that in their natural meaning, the words 'no money-lender shall lend' refer to a person who immediately before a transaction was a money lender, and not to a person who by virtue of the transaction itself becomes a money lender" (1941) QSR, at p 125 . I regard this decision as supporting the conclusion that, if the respondent company here did lend the appellant money at a rate of interest exceeding eight pounds per centum per annum, it was by virtue of the making of the loan that it became a money-lender and that it was not under any obligation as a money-lender until it had made the loan. Buchanan v. Kiley (1948) QSR 274 was another decision upon s. 17F of The Money Lenders Acts (Q.) where it was decided that the section applied only to money-lenders who are or ought to be registered as such. Like Baker v. Pryor (1932) QSR 66 it does not bear upon the point upon which I decide this case. (at p332)
8. I think this appeal should be dismissed on the ground that, if the money lent by the respondent company to the appellant was at a rate of interest exceeding eight pounds per centum per annum, such lending did not constitute the respondent a money-lender before the loan was completed and there was, therefore, no contravention of s. 6 of the Act in making the loan. (at p332)
OWEN J. This is an appeal by the plaintiff in proceedings heard by Stanley J. in the Supreme Court in which his Honour entered judgment for the defendants on the plaintiff's claim and, on a counterclaim pleaded by the defendant Wholesalers (Australia) Pty. Ltd. entered judgment in its favour for 10,798 pounds 18s. 8d. The action was one in which the plaintiff sought declarations that certain securities executed by it in favour of the defendant company were void and of no effect on the ground the transaction in respect of which the documents were executed was one of money-lending and that the defendant company was a money-lender within the meaning of The Money Lenders Acts, 1916 to 1959 (Q.) but had failed to register as such under s. 6 (1) of that Act. The counterclaim by the defendant company was for the recovery of moneys alleged to have become due from the plaintiff under the terms of the documents in question and the defence raised to this claim was based upon the fact that the defendant company was not registered as a money-lender under the Acts. The learned trial judge was of opinion that s. 6 (1) did not require the defendant company to register as a money-lender and so held upon the authority of three earlier decisions of the Full Supreme Court of Queensland in Baker v. Pryor (1932) QSR 66 ; Arnall v. Gray (1941) QSR 122 and Buchanan v. Kiley (1948) QSR 274 (at p333)
2. Before his Honour and before this Court the arguments proceeded upon the assumptions, which were accepted by the parties for the purpose of obtaining a decision upon the point of law involved, that the transaction in question was an isolated one and that the defendant company was not carrying on the business of money-lending nor had it advertised or announced itself or held itself out in any way as carrying on such a business but that the rate of interest charged by it on the loan in question exceeded eight pounds per centum per annum. (at p333)
3. The sole question then is whether s. 6 (1) of the Act applied. The sub-section requires that a money-lender "as defined by this Act" shall - "(a) Register himself as a money-lender in accordance with this Act, under his own and usual trade name (if any) . . . and with the address . . . at which he carries on his business of money-lender; and (b) Carry on the money-lending business in his registered name . . . and at his registered address . . . and at no other address; and (c) Not enter into any agreement in the course of his business as a money-lender with respect to the advance and repayment of money, or take any security for money in the course of his business as a money-lender, otherwise than in his registered name". Section 17D of the Act obliges every moneylender to make application to the Registrar of Money Lenders for registration and directs that such application shall be accompanied by a statutory declaration to be made by the applicant in the prescribed form. And, by s. 17E, any money-lender who ceases to carry on the business of a money-lender is directed to send to the Registrar a notice in the prescribed form and upon receipt thereof the Registrar is to cancel the registration. The prescribed form of statutory declaration which an applicant for registration is obliged to furnish under s. 17D requires him to state that he intends to carry on the business of money-lending under a particular name or style and at a specified address, and the prescribed form of notice which s. 17E requires to be sent to the Registrar notifies that the person registered "who formerly carried on business as a money lender under the name, style or designation of - at - . . . ceased to carry on . . . such business on the - " (at p334)
4. On their face these provisions of the statute and the forms prescribed under the Act appear to relate only to those persons who fall within the first two categories set out in the definition of "Money-lender" in s. 3 of the Act, namely those whose business is that of money-lending, and those who advertise or announce themselves or hold themselves out in any way as carrying on a money-lending business. The definition contains, however, a third category, namely persons who lend money at a rate of interest exceeding eight pounds per centum per annum and it is difficult, and indeed impossible, to fit this third category into some of the sections of the Act. It is true that s. 3 qualifies the definition by the use of the words "unless the context otherwise indicates" but the opening words of s. 6 (1) refer to a money-lender "as defined by this Act" and it is on these words that the plaintiff relies in support of the submission that the full definition of "Moneylender" is to be applied in construing s. 6 (1). The answer is, in my opinion, that the words "unless the context otherwise indicates" in s. 3 are also to be read into s. 6 (1) as part of the definition of "Money-lender" and if that be done the difficulties disappear and a person who enters into a single and isolated transaction under which he lends money at a rate exceeding eight per cent and who, for that reason alone, becomes a "money-lender" within s. 3 is not required to comply with the requirements of s. 6 (1) which are entirely inapt in such a case. Counsel for the plaintiff sought further support for his submission in a passage from the judgment of Dixon C.J. in Mayfair Trading Co. Pty. Ltd. v. Dreyer (1958) 101 CLR, at p 446 . That was a decision upon ss. 5 and 9 of the Money Lenders Act of Western Australia. Section 5 provided that "No person shall . . . do anything which constitutes him a money lender for the purposes of section three of this Act unless he is granted registration under this Act . . . " and s. 9 prohibited the enforcement of a contract to repay money lent by a money lender or of any security given by the borrower unless a written note or memorandum of the contract was signed by the latter and a copy thereof supplied to him within seven days of the making of the loan. By s. 3 "money lender" was defined as including "every person . . . who lends money at a rate of interest exceeding twelve and one-half pounds per centum per annum . . . ", but it is to be noted that that section did not contain the words "unless the context otherwise requires", although that phrase did appear in s. 2, which was another definition section. It was in these circumstances that the majority of the Court held that ss. 5 and 9 applied to all persons who fell within the definition of "money lender" and not merely to those whose business it was to lend money. In the course of his judgment, with which McTiernan J. agreed, the learned Chief Justice referred to the Queensland decisions mentioned earlier and to Hyde v. Sullivan (1956) SR (NSW) 113; 73 WN 25 , in which the Supreme Court of New South Wales had adopted the reasoning in the Queensland cases, and said of them: "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" (1958) 101 CLR, at p 446 . But that passage should not be read as indicating that his Honour thought that the cases in question were not correctly decided. His purpose was, as I read it, to point out that they threw no light upon the construction of the sections of the Western Australian Act which were then being considered. (at p335)
5. In my opinion s. 6 (1) of the Queensland Act has no application to a case in which a person falls within s. 3 merely because he has made a loan at an interest rate exceeding eight per centum per annum. (at p335)
6. The appeal should be dismissed with costs. (at p335)
ORDER
Appeal dismissed with costs.