YZ Finance Co Pty Ltd v Cummings
109 CLR 395(Judgment by: Kitto J)
YZ Finance Co Pty Ltd v Cummings
Court:
Judges:
McTiernan J
Kitto JTaylor J
Menzies J
Windeyer J
Subject References:
Banking and finance
Money lenders
Security
Promissory note
Inconsistency between State and Federal legislation
Legislative References: - Constitution (Cth), s 109; Bills of Exchange Act 1909 (Cth); Money-lenders and Infants Loans Act 1941 (NSW), s 24
Hearing date: 21 November 1963Judgment date: 25 February 1964
MELBOURNE
Judgment by:
Kitto J
Judgment was given for the plaintiff in an action in a District Court brought by the payee of a promissory note against the maker of it. An appeal to the Full Court of the Supreme Court of New South Wales succeeded, and an order was made that judgment be entered for the defendant [F10] . From that order the plaintiff appeals to this Court.
The ground upon which the Supreme Court reversed the decision of the District Court Judge who tried the action was that the action was barred by the provision made by s. 24 (1) of the Money-lenders and Infants Loans Act, 1941-1961 (N.S.W.). The relevant facts were not in dispute. The plaintiff, being a money-lender in the sense which that expression has in the Act, lent money to the defendant at interest. The defendant gave the plaintiff, "as security for the repayment and payment of the said principal and interest" (to quote the words of a memorandum of the contract of loan), a trader's bill of sale over chattels, the promissory note sued on in the action (being a promissory note for the aggregate amount of the principal money lent and the agreed interest thereon), and a second mortgage over land under the Real Property Act, 1900 (N.S.W.).
The provision made by s. 24 (1) applies if any security is given or taken to secure the payment of any money lent by a money-lender or any interest thereon. The word "security" as used in the section is the subject of a provision in sub-s. (2) that it "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. The condition of s. 24 (1) was therefore satisfied in this case, whether the promissory note be counted as a "security" or not, by the giving of the trader's bill of sale, and again by the giving of the second mortgage.
The substantive provision which s. 24 (1) makes in such a case (so far as material) is that the money-lender shall not be entitled to institute any proceedings other than for the enforcement of the security, to recover any amount payable under the contract or any interest thereon. The Supreme Court held that the action was a proceeding to recover the amount payable under the contract and the interest thereon, and that it could not be maintained by the plaintiff because the promissory note was not, within the meaning of s. 24 (1), part of the "security" made or taken for the payment of the money lent and the interest thereon, and consequently the action was not a proceeding for the enforcement of the "security".
In reaching this conclusion the Court adopted reasoning of an earlier decision of its own in the case of Batchelor & Co Pty Ltd v Websdale [F11] , and in addition it rejected a submission put to it on behalf of the plaintiff which had not been raised in that case. The new submission was that by force of s. 109 of the Constitution of the Commonwealth s. 24 (1) should be held invalid for inconsistency with the provisions of the Bills of Exchange Act 1909-1958 (Cth) applying to promissory notes. This the learned Judges overruled on the authority of the judgments delivered in this Court in Stock Motor Ploughs Ltd v Forsyth [F12] . The submission was renewed before us; but it is clearly covered by what was said in Stock Motor Ploughs Ltd v Forsyth [F13] , and it may be put aside as not being sustainable consistently with established principle as to the meaning and operation of s. 109 of the Constitution. The only substantial question in the appeal is whether the promissory note was part of the "security" taken by the appellant, in the sense in which s. 24 (1) uses the word.
Without subscribing to everything that was said in the judgment in Batchelor & Co Pty Ltd v Websdale [F14] , I agree in the conclusion that sub-s. (2) of s. 24 exhaustively prescribes the ambit of the word "security" for the purposes of the section. It is expressed as a statement of what the word "security" in the section "includes". Unlike the verb "means", "includes" has no exclusive force of its own. It indicates that the whole of its object is within its subject, but not that its object is the whole of its subject. Whether its object is the whole of its subject is a question of the true construction of the entire provision in which the word appears. The well-known statement of Lord Watson in Dilworth v Commissioner of Stamps [F15] , at pp. 105, 106 should not be taken so literally as to reduce the inquiry in a case like the present to an inquiry into the meaning of the word "includes". Strictly speaking, that word cannot be equivalent to "means and includes". But a provision in which it appears may or may not be enacted as a complete and therefore exclusive statement of what the subject expression includes. A provision which is of that character has the same effect as if "means" had been the verb instead of "includes". The question whether a particular provision is exclusive although "includes" is the only verb employed is therefore a question of the intention to be gathered from the provision as a whole.
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 [F16] , at pp. 49, 57. 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 [F17] , at p. 899, 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.
A suggestion was made in argument that ss. 3 and 52 disclose a careful course of draftsmanship in which "includes" is used where the intention is to make a non-exclusive provision as to the intended scope of an expression, and "means" is used for an exclusive provision. I do not think that a careful reading of the sections bears this out. In s. 3, provisions are made as to the words "company", "loan", and "money-lender", in which "includes" is the verb that is employed; but in each instance what follows seems to be a complete statement of the meaning of the expression. The same is true of the provision in s. 52 with respect to the expression "cash order". The draftsman does indeed appear to have exercised in each section a careful discrimination between "means" and "includes", but not because he has regarded "includes" as appropriate only for making an addition to the ordinary meaning of an expression. Using "means" where his purpose has been to impose upon an expression an artificial meaning to the exclusion of any other, he has used "includes" where his purpose has been to choose one out of two or more otherwise possible meanings by specifying the intended coverage.
In my opinion the decision of the Supreme Court was correct and the appeal should be dismissed.