YZ Finance Co Pty Ltd v Cummings

YZ Finance Co Pty Ltd v Cummings - [1964] HCA 12 - HCA 1964 case summary — Zoe

[4]

The right of the appellant to bring an action on the promissory note depends upon whether it is a proceeding for the enforcement of a security made or taken to secure the payment of the money lent and interest thereon. The argument for the appellant depends upon the form of sub-s. (2) of s. 24. The words of the sub-section are: "In this section "security" includes bill of sale, mortgage, lien, and charge of any real or personal property, and any assignment, conveyance, transfer or dealing with any real or personal property to secure the repayment of any loan". Lord Watson said in Dilworth v. Commissioner of Stamps [2] : "The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word "include" is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include", and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions" [1] . I agree entirely with the way Sugerman J. applied this passage in the course of his reasoning in Batchelor & Co. Pty. Ltd. v. Websdale [2] . His Honour said, "The enumeration in sub-s. (2) adds nothing to the natural import of the word "security". Indeed all the matters enumerated are within the strictest meaning of that term and, within that meaning, the second limb of the definition is of the widest import. All the matters enumerated share the common characteristic that they relate to securities by which rights in relation to specific property of the debtor are conferred. These considerations lead to the conclusion that "include" in sub-s. (2) is equivalent to "mean and include" and that the definition therein given is intended to be exhaustive, or at least that the securities intended to be embraced all share the common characteristic of conferring rights against specific property" [3] . The word "security" in the context of sub-s. (1) could, in the absence of sub-s. (2), include a promissory note. All the transactions mentioned in sub-s. (2) are securities in themselves. None of them needs any expression of legislative intent to be a security for the purpose of sub-s. (1). The manifest object of sub-s. (2) to be gathered from its contents is to afford guidance as to what the term "security" in sub-s. (1) is intended to be confined. I think it would be contrary to the legislative intention revealed by adding sub-s. (2) to sub-s. (1) to enlarge by construction the scope of the word "security" in sub-s. (1) to bring within the operation of the latter provision a promissory note, as no such instrument falls within the enumeration of securities in sub-s. (2). In my opinion this sub-section provides "an exhaustive explanation" of the meaning of "security" for the purpose of sub-s. (1). The meaning of "security" elsewhere in the Act is not, of course, governed by sub-s. (2).

[18]

Accordingly the problem here is whether sub-s. (2) of s. 24 means that "security" includes the specified things and that that is all it includes, or means that "security" includes the specified things in addition to any others which it includes according to its natural meaning. The specified things are heterogeneous. Some of them (e.g. bill of sale) are instruments of which the essential characteristic consists in the right it gives a creditor to obtain payment of his debt out of specific property; some (e.g. charge) consist of rights to obtain payment of a debt out of specific property by means of curial or extra-curial proceedings; and some (e.g. conveyance to secure the repayment of a loan) are transactions investing the creditor with an estate or interest in specific property, in virtue of which he may deal with the property so as to obtain payment of his debt. The element common to all is the right of recourse against specific property; and it seems impossible to doubt that what the sub-section means by "the enforcement of the security", as applied to any of the specified things, is the taking of steps in virtue of that thing to obtain payment of the money lent (and interest) out of the property comprised in it. To accept this conclusion is to see at once an intelligible policy behind sub-s. (1). A money-lender is not to have both a right to get his money out of property and a right to sue on the personal obligation of the borrower to pay. He must make his choice: if he elects for the former he must be taken to forego the latter. As pursuit of that policy requires, the list of things which sub-s. (2) says that "security" includes is so widely described as to cover all possible forms of security over specific property. But unless sub-s. (2) means that that list covers the whole range of the word's inclusion for the purposes of the section, sub-s. (1) is not to be explained in the way I have mentioned: it must be explained as the product of some other policy. None is to be seen. It is true that modern usages have made "security" a word susceptible of more meanings than one. Its primary meaning is that which sub-s. (2) describes if it be intended as an exclusive definition: see Singer v. Williams [1] . In such contexts as are found in ss. 22 and 23 of this very Act: see Pacific Acceptance Corporation Ltd. v. Marine Food Products Pty. Ltd. [2] , and in some wills: see Halsbury's Laws of England 3rd ed. vol. 39, p. 1027, par. 1545, the word may have a secondary or popular meaning wide enough to comprehend a promissory note. But give it in s. 24 (1) a meaning extending beyond securities over property, a meaning wide enough to include the borrower's promissory note, and the enactment of sub-s. (1) becomes, as I have said, inexplicable on any basis of rational policy. There is no sensible purpose to be seen in forbidding a money-lender to sue on a contract of loan while allowing him to sue on a collaterally-created personal liability of the borrower and so to obtain a judgment against the borrower for the identical sum of money. It seems to me the necessary conclusion that sub-s. (2) is enacted not in order to provide a glimpse of the obvious but in order to describe the whole extent of the inclusiveness of "security" for the purpose of the section, and by so doing to perform the very necessary work of precluding the inference which otherwise might have been drawn from the fact that the word is used in a wider sense elsewhere in the Act.

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Judgment (32 paragraphs)

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