Wilson v Moss [1909] HCA 7

Wilson v Moss [1909] HCA 7 - HCA 1909 case summary — Zoe

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Grirrita C.J. This was an action brought in the County Court by the respondent against the appellant on a promissory note for £33 10s., dated 18th January 1907, made by the appel- lant in favour of the respondent, and payable three months after its date. It appeared that the promissory note was the last of a long series of promissory notes, each of three months' currency, given in respect of a loan of £50 made by the respondent to the appellant on 18th October 1900. The defence set up by the appellant was a request for relief under the Money Lenders Act 1906, which came into force on Ist January 1907. The respondent is a money lender within the definition of that Act. See. 4 of that Act provides that : - * Where proceedings are taken in any Court by a money lender . . . . for the recovery of any money lent after the commencement of this Act or the enforcement of any agreement or security made or taken after the commencement of this Act in respect of money lent either before or after the commencement of this Act, and there is evi- dence which satisfies the Court that the interest charged in respect of the sum actually lent is excessive or that the amounts charged for expenses inquiries fines bonus premium renewals or any other charges are excessive or that the transaction is harsh and unconscionable or is such that a Court of Equity would give relief the Court may re-open the transaction and take an account between the money lender . . . . and the person sued and may notwithstanding any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation re-open any account already taken between them and relieve the person sued from payment of any sum in excess of the sum adjudged by the Court to be fairly due in respect of such principal interest and charges as the Court having regard to the risk the value of the security the time of repayment and all the other circumstances may adjudge to be reasonable; and if any such excess has been paid or allowed in account by the debtor may order the creditor or the money lender to repay it."

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spective. That position is well put by Lord Hatherley LC. - in Pardo v. Bingham (1) where he said : - Baron Parke did not consider it an invariable rule that a Statute could not be retro- spective unless so expressed in the very terms of the section which had to be construed, and said that the question in each case was, whether the legislature had sufficiently expressed an intention. In fact, we must look to the general scope and pur- view of the Statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the legislature contemplated." If this Act is looked at in the light of a guide of that kind, I think the meaning of it is perfectly plain. The Act is to be applied, in the first place, where money is lent after the commencement of the Act, and, in the second place, it is to be applied where proceedings are taken for the enforcement of an agreement or security made or taken after the commencement of the Act in respect of money lent before or after the commencement of the Act. The legislature, therefore, considered that where a money lender is satisfied with the agreements and securities which he obtained before the Act he is exempt from its provisions. But where the parties choose after the commencement of the Act to alter their position, where a money lender after the passing of the Act makes an agreement or takes a security which gives him new rights and puts him ina new position, then the Act says under these circumstances the whole transaction may be re-opened. I read the Act that way, and that reading will apply also to another question with regard to whieli Cussen J. raised a question as to the retrospective effect of the Act, that is, with regard to the construction of the word "transaction." Cussen J. held that the "transaction" to be re-opened is the transaction that is dealt with in the instrument which comes before the Court and on which the action is founded. It appears to me that it is impossible to so restrict the meaning of the word "transaction" if any substantial effect is to be given to the enact- ment. It is well known that the class of dealings at which the Statute is aimed is one in which the persons who are - obliged for some reason to enter into these oppressive contracts - remain in the hands of money lenders year after year until (1) L-R. 4 Ch, 735, at p. 740.

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of this case; that enforcement of an agreement or security did not mean suing to recover money. So far as relates to the ques- tion whether the word "enforcement" is appropriate to suing upon a promissory note, secs. 21, 38, and 39 of the Jnstrwments Act 1890 are instances in which the legislature has used that very word to describe the very thing which is traversed by the contention. The case of Read v. Anderson (1) is one of many in- stances in which Courts have used the word "enforce" to signify the bringing of an action to recover money. As for a promissory note not being an "agreement," it is, of course, an agreement ; it is a contract on its own footing. That is its primary meaning. As to a promissory note being a "security" that word is not a word of art. Amongst other references Romer J. in In re Rayner ; Rayner v. Rayner (2), said that "security" is a com- mercial term and not a word of art. It is a term which varies in its signification with the history of commerce. One has only to turn to cases where actions have been brought upon negotiable instruments - I am not referring to will cases - to find there repeated references by Judges and by counsel to negotiable instruments as " securities," calling them by that name: Judges like Lord Kenyon, Parke B., Lush J., Bowen LJ. and Lord Lindley, and counsel like Sir Rowndell Palmer and others

and they are men who used language accurately. In modern times, if one wishes to know the accepted use of the term, one need only turn to the Encyclopedia of the Laws of England. There it is said to include, amongst other things, promissory notes and bills of exchange. That being so, if we are to accept Samuel v. Newbold (3) as a guide in interpreting the Act, not to be alert in adopting a restricted construction, there can be no reason whatever for not giving to these terms their ordinarily accepted legal meanings, unless you find in the context something overpowering those meanings. The context of the Act does not, in my opinion, lead to such a conclusion. See. 5 (1) (e) is pointed to as evidencing the intention of the legis- lature to differentiate between "security " and " promissory note." It also differentiates between "debt" and "chose in

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in the end when all the evidence is given whether the interest is excessive. The very amount of it may of itself be some evidence that it is excessive even if nothing more appears to convince the Court that it is. Palles C.B, had an instance before him in which 2,000 per cent. per annum was charged. It was gravely argued here that such a rate is not of itself evi- dence that it is excessive. Palles C.B. thought that it was, and I think so too. A question to be considered is, what is the point at which the rate of interest is to be taken by the Court as being excessive? But I take it that the interest may reach such an amount as to call upon the lender to justify it. It must not be forgotten that it is the lender who fixes the interest, and he must know, or ought to know, how he arrived at it. He it is who has the commanding position. When interest is so much above the ordinary rate as say 50 per cent. is, there must be a considerable amount of necessity. There is a passage from the judgment of Northington L.C. (then Lord Henley) in Vernon v. Bethell (1), which is quoted by Lord Macnaghten in Samuel v. Jarrah Timber and Wood Paving Corporation (2), in which he says : - " Necessitous men are not, truly speaking, free men, but to answer a present exigency will submit to any terms that the crafty may impose upon them." So that a money lender who fixes, say 50 per cent., is a person who is supposed at all events to arrive by some process of reasoning at that amount as being a fair amount. In Samuel v. Newbold (3), Lord Macnaghten quoting Sir William Grant in Bowes v. Heaps (4), said : - *' It is not every bargain which distress may induce one man to offer that another is at liberty to accept.'" Now the money lender calculates the risk, or he ought to do so, and it should not be hard for him - much easier, at all events, than in many cases for the borrower - to state the elements which have been taken into con- sideration. So, without saying anything more about the point at which the interest becomes excessive, I say that 50 per cent. per annum, arate at which the whole of the capital would be returned

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Judgment (124 paragraphs)