HL Deb 18 July 1927 vol 68 cc626-37

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Darling.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL of DONOUGHMORE in the Chair.]

Clause 1 [Licences to be taken out by moneylenders]:

LORD DESBOROUGH moved, at the beginning of subsection (2), to insert:— Subject to the provisions of this Act, moneylenders' excise licences shall be in such form as the Commissioners of Customs and Excise may direct, and shall be granted on payment of the appropriate duty by any officer of Customs and Excise authorised by the Commissioners to grant them, and regulations made by the said Commissioners may make provision as to the procedure to be followed in making application for moneylenders' excise licences: Provided that

The noble Lord said: I have several Amendments on the Paper, all of which are in the nature of drafting Amendments and make absolutely no alteration to the purport and intention of the Bill. The first Amendment which I have to move is to insert at the beginning of subsection (2) the words printed on the Paper. The object of that is to make it clear that the Commissioners of Customs and Excise are the proper authority to which to apply for licences.

Amendment moved— Page 2, line 27, at the beginning insert the said words.—(Lord Desborough.)

On Question, Amendment agreed to.

LORD DESBOROUGH moved, in subsection (2), before "be liable," to insert "be guilty of a contravention of the provisions of this Act and shall for each offence." The noble Lord said: This is a drafting Amendment, and I do not think it needs explaining.

Amendment moved— Page 3, line 5, after ("shall") insert ("be guilty of a contravention of the provisions of this Act and shall for each offence").—(Lord Desborough.)

On Question, Amendment agreed to.

LORD DESBOROUGH

The next Amendment is also drafting.

Amendment moved— Page 3, line 7, at the beginning insert ("Provided that").—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 1, as amended, agreed to.

Clause 2:

Certificate required for grant of moneylender's excise licence.

(2) Certificates under this section (in this Act referred to as "certificates") shall be granted by the petty sessional court having jurisdiction in the petty sessional division in which the moneylender's business is to be carried on.

LORD DESBOROUGH moved, at the end of subsection (2), to insert "so, however, that within any part of the metropolitan police district for which a police court is established, a certificate shall not be granted except by a police magistrate." The noble Lord said: This Amendment covers the point concerning police magistrates and county justices, and it provides that in all cases, as in the case of pawnbrokers, applications for a certificate should be made to a police magistrate.

Amendment moved— Page 3, line 26, at end insert the said words.—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3:

Suspension and forfeiture of certificate, etc.

3.—(1) Where any person, being the holder of a certificate, is convicted of any offence under this Act or under the Moneylenders Acts, 1900 and 1911, the court—

LORD DESBOROUGH moved in subsection (1) to leave out "the Moneylenders Acts, 1900 and 1911," and to insert "section two or four of the Betting and Loans (Infants) Act, 1892, or the Moneylenders Act, 1900." The noble Lord said: This is not exactly a drafting Amendment, but it is a clarifying Amendment and brings the Bill into relation to the Betting and Loans (Infants) Act, 1892, which makes it an offence to solicit an infant to make an affidavit.

Amendment moved— Page 4, line 39, leave out ("the Moneylenders Acts, 1900 and 1911") and insert ("section two or four of the Betting and Loans (Infants) Act, 1892, or the Moneylenders Act, 1900").—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 agreed to.

Clause 5:

Prohibition of moneylending circulars, etc.

5.—(1) No person shall knowingly send or deliver or cause to be sent or delivered to any person except in response to his written request any circular or other document advertising the name, address or telephone number of a moneylender, or containing an invitation—

  1. (a) to borrow money from a moneylender;
  2. (b) to enter into any transaction involving the borrowing of money from a moneylender;
  3. (c) to apply to any place with a view to obtaining information or advice as to borrowing any money from a moneylender.

Any advertisement, circular, business letter or other similar document sent under this section shall show, where any interest proposed is expressed in terms of a rate, the rate per cent. per annum of interest to be charged.

(3) No moneylender or any person on his behalf shall employ any agent or canvasser for the purpose of inviting any person to borrow money or to enter into any transaction involving the borrowing of money from a moneylender, and no person shall act as such agent or canvasser, or demand or receive directly or indirectly any sum by way of commission or otherwise for introducing or undertaking to introduce to a moneylender any person desiring to borrow money.

(5) Where it is shown that a moneylending transaction was brought about by a contravention of any of the provisions of this section the transaction shall notwithstanding that the moneylender was duly licensed under this Act be void, unless the moneylender proves that the contravention occurred without his consent or connivance.

LORD DARLING moved to leave out all words in subsection (1) after paragraph (c). The noble and learned Lord said: This is really a drafting Amendment, intended to carry out what was resolved in the House of Commons during the passage of the Bill but was not expressed with the clearness that is advisable in an Act of Parliament. That is why it is proposed to leave out these words and to substitute others by an Amendment that I shall move in a moment.

Amendment moved— Page 7, leave out lines 12 to 16.—(Lord Darling.)

On Question, Amendment agreed to.

VISCOUNT BERTIE OF THAME

had given Notice to move, in subsection (3), after "sum," to insert "or inducement." The noble Viscount said: My noble and learned friend Lord Darling thinks the word "inducement" too vague, and he has suggested that I should substitute the words "other valuable consideration." This covers my point, and I beg to move the Amendment in that form.

Amendment moved— Page 8, line 1, after ("sum") insert ("or other valuable consideration".(Viscount Bertie of Thame.)

On Question, Amendment agreed to.

LORD DARLING

My next Amendment, after subsection (3), is consequential upon that which your Lordships accepted a moment or two ago.

Amendment moved—

Page 8, line 3, at end insert— ("(4) Where any document issued or published by or on behalf of a moneylender purports to indicate the terms of interest upon which ho is willing to make loans or any particular loan, the document, shall either express the interest proposed to be charged in terms of a rate per cent. per annum or show the rate per cent. per annum represented by the interest proposed to be charged as calculated in accordance with the provisions of the First Schedule to this Act.")—(Lord Darling.)

On Question, Amendment agreed to.

LORD DARLING moved, in subsection (5), to substitute "illegal" for "void." The noble and learned Lord said: This Amendment is absolutely necessary to carry out the intention of those who passed this Bill through the House of Commons. The distinction between an agreement that is void and an agreement that is illegal is familiar to lawyers and it has consequences which are very well known to those who administer justice in the Courts. I think I can assure your Lordships that this Amendment is necessary if the intention of the Bill is to be carried out.

Amendment moved— Page 8, line 17, leave out ("void") and insert ("illegal.") (Lord Darling.)

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clause 6:

Form of moneylender's contracts.

6.—(1) No contract for the repayment of money lent by a moneylender after the commencement of this Act shall be enforceable unless a note or memorandum in writing of the contract be made and signed personally by every party to be charged, and unless a copy thereof be delivered or sent to the borrower within seven days of the making of the contract.

(2) The note or memorandum aforesaid shall contain all the terms of the contract and in particular shall show the date on which the loan is made, the amount of the principal of the loan, and where the interest, charged on the loan is expressed in terms of a rate, the rate per cent. per annum of interest charged.

(3) No contract for the repayment of money lent by a moneylender after the commencement of this Act, whereby the interest charged on the loan is not expressed in terms of a rate, shall be enforceable unless, before the note or memorandum of the contract was signed as aforesaid, the moneylender had delivered to the borrower a statement in writing signed by the moneylender showing the rate per cent. per annum represented by the interest charged as calculated in accordance with the provisions of the First Schedule to this Act.

THE LORD BISHOP OF SOUTHWARK moved, in subsection (1), to leave out "seven" and insert "three." The right rev. Prelate, said: I am asking your Lordships to substitute three days for seven as the period to elapse between the signing of the note or memorandum and the sending of a copy of the contract. Seven days seems to be an unnecessarily long time and to make frauds much more possible. You are dealing with two classes of people. The first includes persons who are not only extremely capable business men but are sometimes extremely unscrupulous. The second class consists of those who are often very unbusinesslike and may do extremely foolish things. You have to make your measure not only "knave-proof" but, what is very much more difficult, "fool-proof." When once a memorandum has been signed it is easy for it to be lost, or possibly to be altered, in the seven days before the so-called copy is sent. Accordingly I suggest that the period be shortened from seven days to three.

Amendment moved— Page 8, line 25, leave out ("seven") and insert ("three").—(The Lord Bishop of Southwark.)

LORD DARLING

I would ask your Lordships not to accept this Amendment, as I think it will be unnecessary if your Lordships agree to the Amendment which stands next upon the Paper in my name and which covers this point. The Bill provides that the note must be signed before the money is lent, and accordingly it does not seem necessary that the Amendment proposed by the right rev. Prelate should be made. The borrower is bound to sign the note or memorandum before the money is lent, and it does not much matter whether he gets the copy of it within seven days or not.

LORD DESBOROUGH

I hope that the right rev. Prelate may consent to withdraw his Amendment. This matter was discussed in another place, and the promoters of the Bill agreed to accept the word "seven" instead of the word "four." If this Amendment were sent back to another place, it might occasion delay. The whole matter was thoroughly discussed there.

THE LORD BISHOP OF SOUTHWARK

In view of what has been said, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD DARLING moved to leave out Clause 6 and insert the following new clause:— .—(1) No contract for the repayment by a borrower of money lent to him or to any agent on his behalf by a moneylender after the commencement of this Act 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 be made and signed personally by the borrower, and unless a copy thereof be delivered or sent to the borrower within seven days of the making of the contract; and 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. (2) The note or memorandum aforesaid shall contain all the terms of the contract, and in particular shall show the date on which the loan is 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 First Schedule to this Act.

The noble and learned Lord said: This is really a matter of drafting. It is desired to cover three points that were raised in another place. The clause makes its purpose perfectly clear, and provides, as I have just told your Lordships, that the note or memorandum must be signed before the money is lent. To the word "borrower" are added the words "any agent on his behalf," which make it clear that the protection afforded to guarantors in these matters is not dealt with in this clause.

Amendment moved— Page 8, lines 20 to 42, leave out Clause 6 and insert the said new clause.—(Lord Darling.)

On Question, Amendment agreed to.

Clause 7 [Prohibition of compound interest and provision as to defaults]:

LORD DARLING

I have a drafting Amendment to this clause, which I beg to move for the reasons that I have given to your Lordships.

Amendment moved— Page 9, line 3, leave out ("void") and insert ("illegal").—(Lord Darling.)

On Question, Amendment agreed to.

Clause 7, as amended, agreed to.

Clauses 8 to 11 agreed to.

Clause 12 [Prohibition of charge for preliminary expenses]:

Amendment moved— Page 13, line 10, leave out ("void") and insert ("illegal").—(Lord Darling.)

On Question, Amendment agreed to.

Clause 12, as amended, agreed to.

Clause 13:

Limitation of time for proceedings in respect of money lent.

13.—(1) No proceedings shall lie for the recovery by a moneylender of any money lent by him after the commencement of this Act or of any interest in respect thereof, or for the enforcement of any agreement made or security taken after the commencement of this Act in respect of any loan made by him, unless the proceedings are commenced before the expiration of twelve months from the date on which the cause of action accrued:

Provided that— (c) the failure to commence proceedings within the period above specified shall not be a bar to the maintenance of proceedings if the failure was occasioned by absence of the debtor from the United Kingdom, or other reasonable cause.

LORD DESBOROUGH moved to omit paragraph (c) of subsection 1 and insert:— (c) If at the date on which the cause of action accrues or on which any such acknowledgment and undertaking as aforesaid is given by the debtor, the person entitled to take the proceedings is non compos mentis, the time limited by the foregoing provisions of this section for the commencement of proceedings shall not begin to run until that person ceases to be non compos mentis or dies, whichever first occurs; and (d) If at the date on which the cause of action accrues or on which any such acknowledgement and undertaking as aforesaid is given by the debtor, the debtor is beyond the seas, the time limited by the foregoing provisions of this section for the commencement of proceedings shall not begin to run until he returns front beyond the seas, so, however, that section eleven of the Mercantile Law Amendment. Act, 1856 (which relates to the limitation of actions against joint debtors where some are beyond seas) shall have effect as if this section were included among the enactments therein referred to as fixing a period of limitation.

The noble Lord said: The object of these two subsections is to bring the clause into line with the other Statutes of Limitation.

Amendment moved— Page 14, lines 4 to 11, leave out paragraph (c) and insert the said paragraphs.—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 13, as amended, agreed to.

Clause 14 [Special provisions as to pawnbroker's loans]:

Amendment moved— Page 14, lines 20 and 21, leave out ("five, eleven and twelve") and insert ("six, twelve and thirteen").—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 14, as amended, agreed to.

Clause 15 agreed to.

LORD DARLING moved, after Clause 15, to insert the following new clause:—

Notice and information to be given on assignment of moneylenders' agreements, &c.

".—(1) Where any debt in respect of money lent by a moneylender whether before or after the commencement of this Act or in respect of interest on any such debt or the benefit of any agreement made or security taken in respect of any such debt or interest is assigned to any assignee, the assignor (whether he is the moneylender by whom the money was lent or any person to whom the debt has been previously assigned) shall, before the assignment is made—

  1. (a) give to the assignee notice in writing that the debt, agreement or security is affected by the operation of this Act; and
  2. (b) supply to the assignee all information necessary to enable him to comply with the provisions of this Act relating to the obligation to supply information as to the state of loans and copies of documents relating thereto,
and any person acting in contravention of any of the provisions of this section shall be liable to indemnify any other person who is prejudiced by the contravention, and shall also be guilty of a misdemeanour, and shall in respect of each offence be liable on conviction on indictment to imprisonment for a term not exceeding two years, or to a fine not exceeding five hundred pounds, or to both such imprisonment and fine, shall be liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding one hundred pounds.

(2) In this section the expression 'assigned' means assigned by any assignment inter vivos other than an assignment by operation of law, and the expressions 'assignor' and 'assignee' have corresponding meanings."

The noble and learned Lord said: This is to substitute the words which appear upon the Paper and it is necessary that they should be read together with those which appear in the next Amendment. The effect of the two will be this. They relate to the assigning by moneylenders of the contracts made between the borrowers and themselves. The first clause would provide that any moneylender or subsequent assignee should give notice that the debt or contract assigned is affected by this Act. Otherwise the person who takes the contract may find himself the possessor of something he did not want with some burden upon if. The first part of the second clause provides, with regard to moneylending transactions, that all assignees shall be in the same position as the moneylenders themselves. The proviso to the second clause is practically a re-enactment of Section 1 of the Moneylenders Act of 1911. It ensures that, if in spite of the above Amendments there are any bona fide assignees without notice, they shall be protected as distinct from other classes of assignees.

Amendment moved— Page 16, line 30, after Clause 15 insert the said new clause.—(Lord Darling.)

On Question, Amendment agreed to.

Clause 16:

Saving for right of bona fide holders for value.

16. Section one of the Moneylenders Act, 1911 (which relates to the rights of bona fide holders for value under contracts with moneylenders), shall have effect as though references therein to section two of the Moneylenders Act, 1900, and to defects due to the operation of that section, included references to this Act and to defects due to the operation thereof.

Amendment moved— Page 16, lines 31 to 37, leave out Clause 16 and insert the following new clause:—

Application of Act as respects assignees.

(".—(1) Subject as hereinafter provided, the provisions of this Act shall continue to apply as respects any debt to a moneylender in respect of money lent by him after the commencement of this Act or in respect of interest on money so lent or of the benefit of any agreement made or security taken in respect of any such debt or interest, notwithstanding that the debt or the benefit of the agreement or security may have been assigned to any assignee, and, except where the context otherwise requires, references in this Act to a moneylender shall accordingly be construed as including any such assignee as aforesaid:

Provided that—

  1. (a) notwithstanding anything in this Act—
    1. (i) any agreement with, or security taken by, a moneylender in respect of money lent by him after the commencement of this Act shall 636 be valid in favour of any bona fide assignee or holder for value without notice of any defect due to the operation of this Act and of any person deriving title under him; and
    2. (ii) any payment or transfer of money or property made bona fide by any person, whether acting in a fiduciary capacity or otherwise, on the faith of the validity of any such agreement or security, without notice of any such defect shall, in favour of that person, be as valid as it would have been if the agreement or security had been valid: and
    3. (iii) the provisions of this Act limiting the time for proceedings in respect of money lent shall not apply to any proceedings in respect of any such agreement or security commenced by a bona fide assignee or holder for value without notice that the agreement or security was affected by the operation of this Act, or by any person deriving title under him,
    but in every such case the moneylender shall be liable to indemnify the borrower or any other person who is prejudiced by virtue of this section, and nothing in this proviso shall render valid an agreement or security in favour of, or apply to proceedings commenced by an assignee or holder for value who is himself a moneylender; and
  2. (b) for the purposes of this Act and of the Moneylenders Act, 1900, the provisions of section one hundred and ninety-nine, of the Law of Property Act, 1925, shall apply as if the expression "purchaser" included a person making any such payment or transfer as aforesaid.

2. Nothing in this section shall render valid for any purpose, any agreement, security, or other transaction which would, apart from the provisions of this Act, have been void or unenforceable.")— (Lord Darling.)

On Question, Amendment agreed to.

Clause 17 agreed to.

Clause 18 [Short title, citation, construction, repeal, extent and commencement]:

Amendments moved—

Page 18, line 15, leave out ("Acts, 1900 and 1911,") and insert ("Act, 1900").

Page 18, lines 20 to 22, leave out from the beginning of line 20 to ("and") in line 22, and insert ("shall be construed as references to that Act as amended by this Act, and this Act shall be construed as one with that Act").

Page 18, line 29, at end, insert: ("Provided that Section one of the Moneylenders Act, 1911, shall continue in force as respects any agreement with or security taken by a moneylender before the commencement of this Act, or any payment or transfer of money or property made, whether before or after the commencement of this Act, on the faith of the validity of any such agreement or security.")

Page 18, line 32, at end, insert— ("Provided that—

  1. (a) subject to the provisions of any regulations or rules made under this Act, licences and certificates may be granted to moneylenders at any time after the first day of October, nineteen hundred and twenty-seven; and
  2. (b) Orders in Council may be made under the provisions of this Act relating to courts to which proceedings on moneylenders' transactions are to be taken at any time after the passing of this Act,
so, however, that no such licence or Order in Council shall come into force until the commencement of this Act. Nothing in the foregoing proviso shall be construed to limit, or otherwise affect the provisions of Section thirty-seven of the Interpretation Act, 1889.")—(Lord Desborough.)

On Question, Amendments agreed to.

Clause 18, as amended, agreed to.

First Schedule agreed to.

Second Schedule [Enactments repealed]:

Amendment moved— Page 20, line 10, column 3, leave out ("Section two") and insert ("the whole Act").—(Lord Desborough.)

On Question, Amendment agreed to.

Second Schedule, as amended, agreed to.