Brown v Brook

Brown v Brook - [1971] HCA 30 - HCA 1971 case summary — Zoe

[6]

The plaintiff in this action, who is the respondent in the appeal, issued a writ against the defendants claiming the repayment of money lent together with certain interest. In his statement of claim the plaintiff alleged that on or about 10th October 1969 he had lent the defendants an amount of $18,000 repayable on 1st March 1970 with interest at the rate of 15 per cent per annum. He alleged further that the defendants had failed to repay the loan and some of the interest due thereon. The defendants entered an appearance to the writ and in August 1970 delivered their statement of defence. It admitted the making of the loan and the fact that it had not been repaid and went on to allege that "the agreement or contract on which the plaintiff sues is governed by the laws of the State of Queensland, and in particular by the Money Lenders Act 1916-1969 " and that the plaintiff was a "money-lender" as defined in these Acts in that he had lent money at a rate of interest exceeding $8 per cent per annum. It alleged also that on or about 27th October 1967 the plaintiff had lent $7,000 to the first defendant or to a named company at an interest rate of $20 per cent per annum; that the plaintiff was not at any time registered as a "money-lender" and that for this reason he could not successfully maintain his claim. The plaintiff then sought an order for summary judgment upon an affidavit stating, inter alia, that he believed that there was no defence to the action. The matter came before the Acting Chief Justice and the plaintiff was cross-examined on his affidavit. In the course of that cross-examination he denied that in October 1967 he had made a loan of $7,000 as alleged in the statement of defence. That transaction, he said, was not one of loan. The amount alleged to have been lent was his contribution to a joint venture of buying and selling cattle upon which he and the defendant had embarked. He said, however, that on an occasion in 1967 he had lent the wife of one of the defendants $5,000 or $7,000 for a period of three weeks; that he had told the borrower that he wanted no interest on it but that in fact the latter had insisted on paying interest at the rate of 9 per cent per annum for the period of the loan. The learned Acting Chief Justice ordered that judgment be entered for the plaintiff for $18,675, that being the amount endorsed on the writ. His Honour gave no reason for his decision but I think it is plain that he dealt with the matter in a summary way because he was of opinion that authorities which bound him had decided that the statement of defence did not disclose any answer to the plaintiff's claim.

[26]

In J. B. Witts Pty. Ltd. v. Wholesalers (Australia) Pty. Ltd. [8] , the question was whether securities taken by a person who lent money in an isolated transaction at a rate above the rate mentioned in the definition, without having registered himself as a money-lender, were avoided by reason of his failure to register. Menzies J. considered it unnecessary to express an opinion concerning the correctness of the Queensland cases to which I have referred above. His Honour based his decision on the ground that a person, who is not a money-lender before the making of a loan at a rate of interest exceeding the specified rate and who becomes a money-lender only as a result of making such a loan, is not at the time when he makes it under any obligation imposed by the Act upon money-lenders and his right to recover the money lent cannot be affected by a failure to carry out any such obligation. Taylor J. was of opinion that s. 6 (1) (a) of the Act, which is the provision which requires a money-lender to register, does not apply to a person who is a money-lender only because he lends money at a rate of interest exceeding the specified rate. He went on to say, [9] , that even if that provision did apply to such a person, s. 6 (1) (c) could have no application to him. That provision forbids a money-lender 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 in the course of his business as a money-lender, otherwise than in his registered name. That provision has no direct relevance in this appeal, in which the appellants have not contended that in relation to the transaction upon which the respondent sued there was a breach of s. 6 (1) (c). But because of the presence in s. 6 (1) of par. (c) and also of par. (b), it is plain that the words "as defined by this Act" at the beginning of the subsection cannot have the effect that all persons who come within any of the descriptions contained in the definition provision are bound to observe all the requirements of the sub-section. Plainly it is only those who carry on the business of money-lending who can come under the obligations set out in pars. (b) and (c). This seems to me to weaken the force of the argument that because the words "as defined by this Act" have been included in s. (6) (1), that provision must be taken to apply to all the classes of money-lenders mentioned in the definition in s. 3, without any qualification based upon the words "unless the context otherwise indicates" which appear in s. 3. The argument is that unless this be so the words "as defined by this Act" can serve no purpose. Those words do present a difficulty. But when it is clear that most of the provisions of s. 6 (1) are quite incapable of applying to a money-lender who does not carry on and does not propose to carry on business as such, it cannot be said that the purpose of including the words "as defined by this Act" must have been to ensure that all persons answering the statutory definition should be bound by the provisions of the subsection.

[29]

In my opinion this Court should not depart now from the interpretation of s. 6 (1) (a) which has long been adopted in Queensland. As Taylor J. pointed out in the J. B. Witts Pty. Ltd.'s Case [1] , that has been accepted as the law in Queensland since 1932 and notwithstanding a number of intervening amending Acts, the legislature has not seen fit to change it. It was approved by two members of the Court which heard that case and left open by the third member of it. The distinction which made it unnecessary in the view of Menzies J. to deal with the point is, in my respectful opinion, a valid distinction. But it is not one upon which the cases in Queensland have been based. The case of Baker v. Pryor [1] in which there were no antecedent money-lending transactions and the case of Buchanan v. Kiley [1] , in which there were such transactions, were treated alike as cases in which the Act imposed no obligation to register. In my opinion, that is an acceptable interpretation of the provisions of s. 6 (1) (a) and of s. 6 (4) (a), by which a penal consequence is attached to a failure to register. A different interpretation would not merely involve the difficulties, to which the decisions have drawn attention, concerning the manner in which the requirements laid down by the Act and by the Regulations could be satisfied by a person who made loans occasionally but did not carry on a business of money-lending and had no intention of doing so. It would raise other questions to which the Act provides no clear answer. If such a person is bound to register immediately after he makes one loan at a rate exceeding the specified rate, it may be asked whether his failure to register will affect the enforceability of any loan transaction into which he may enter at any time thereafter. It may be asked whether, if he does register, a failure to renew that registration from time to time (see s. 6 (2)) affects the enforceability of any loan which he may make after the initial registration has ceased to have effect. It appears to me that the fact that the Act provides for annual renewals of registration lends support to the conclusion that it is only those who are, or who hold themselves out to be, in the business of money-lending who are bound to register themselves as money-lenders.

[32]

Some questions were raised in the course of argument as to the propriety of the action taken by the primary judge in making any order for the entry of summary judgment. The parties were not in complete agreement as to the facts concerning two earlier transactions in which the respondent had taken part. One of these occurred in October 1967. The appellants alleged that the respondent lent money at that time at an interest rate of twenty per cent per annum, but the respondent said in evidence that this was not a loan but an investment in a joint venture. The other transaction was in August 1967. The respondent said in evidence that he had lent money then for a short period and did not want any interest on it but the borrower's husband "insisted" on paying interest at the rate of 9 per cent. If there had been an issue between the parties as to whether the respondent was carrying on the business of money-lending, it would probably have been thought that any questions of fact which were in dispute should be resolved at a trial and not in an application for summary judgment. Again, if a view of the law had been taken which made it important to determine, in relation to each of the antecedent transactions in 1967, whether it was a loan and, if so, whether it was a loan at a rate of interest exceeding the specified rate, then, as a general rule, such questions would not be decided in a summary application if there appeared to be a genuine dispute about the facts. But upon the view of the law which the learned primary judge was bound to take because of the earlier decisions and which was accepted by the Full Court and should, in my opinion, be accepted by this Court, there was no need to resolve any of those questions of fact. The Full Court stated that it was asked to consider the matter on the basis that three transactions had in fact taken place. I understand this to mean that the Court was asked to consider the case on the basis that there were two antecedent transactions as well as the transaction out of which the action arose and that all of these were loans at above the specified rate of interest. The effect of this was that the facts were assumed to be as favourable to the case for the appellants as they could ever be found to be at a trial. If on that assumption the respondent was entitled to succeed, there could be no valid objection to the making of an order for the entry of judgment in his favour. In this Court, counsel for the appellants submitted that we should deal with the matter upon the footing that there were two antecedent transactions of loans. In the circumstances of this case, I think that we may properly consider it on that footing. In general, we should not be asked to decide cases in which relevant facts have not been ascertained by agreement or by findings. But here the facts of the transaction upon which the action was brought are not in dispute. They are such that prima facie the respondent was entitled to judgment for the repayment of the money lent and for interest. The appellants raised a defence based upon the Act. They put forward certain facts to support that defence. In part, the respondent disputed those facts and he disclosed other facts upon which the appellants sought to rely. The only matters of fact not fully resolved relate to the claim of the appellants that, before the transaction upon which they were sued, the respondent had become a money-lender within the statutory definition, either by making one loan or by making two loans at a rate of interest greater than the specified rate. If they succeeded in establishing that he made two such loans they would still be left, in my opinion, with no defence to the action. The result would be the same if they should establish that he made one such antecedent loan or if they failed to establish that he made any. In those circumstances it is proper, in my opinion, to give effect to the conclusion that the respondent is entitled to judgment. There is no procedural ground for interference with the order which the Full Court made.

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Before

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Judgment (32 paragraphs)

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Cited By (1)