Austin Distributors Limited v A H Paterson Car Sales Pty Ltd

Austin Distributors Limited appealed to the High Court of Australia from a decision of the Supreme Court of Victoria. The dispute concerned whether Austin Distributors, a company involved in the sale and financing of motor vehicles, was a "money-lender" under the *Money Lenders Act 1938* (Vic.). The company had sued A. H. Paterson Car Sales Pty. Ltd. for moneys due on promissory notes, and by consent, the sole issue for trial was whether the loans made by Austin Distributors to the defendant fell within an exception to the definition of a money-lender.

The legal issue before the High Court was whether Austin Distributors' financing of used-car dealers, conducted at interest rates exceeding eight per cent per annum, constituted carrying on a business of money-lending, or if it fell within the statutory exception for a person "bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money." The *Money Lenders Act 1938* defined a money-lender to include any person lending money at such a rate of interest, but specifically excluded those whose primary business was not money-lending, and in the course of which and for the purposes of which they lent money.

The High Court, allowing the appeal, held that Austin Distributors was not a money-lender within the meaning of the Act. The Court reasoned that while the company did lend money at an interest rate exceeding eight per cent, this activity was incidental to and for the purposes of its primary business of selling new and used motor vehicles. The financing of dealers was a small proportion of the company's overall business and was undertaken to facilitate the sale of vehicles, a recognized mercantile service. The Court distinguished this from a business whose primary object was money-lending, finding that the transactions were part of a normal mercantile operation essential to the motor vehicle industry. The decision of the Supreme Court of Victoria was reversed.