Palgo Holding Pty Ltd v Gowans
[2004] HCATrans 461
[2004] HCATrans 461
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S317 of 2004
B e t w e e n -
PALGO HOLDINGS PTY LIMITED T/AS CASH COUNTERS BYRON
Appellant
and
KELVIN GOWANS A PUBLIC OFFICER ON BEHALF OF DIRECTOR GENERAL DEPARTMENT OF FAIR TRADING
Respondent
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 16 NOVEMBER 2004, AT 10.18 AM
Copyright in the High Court of Australia
MR L.J.W. AITKEN: May it please the Court, I appear on behalf of the appellant. (instructed by Hewlett & Company Lawyers)
MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales: If the Court pleases, I appear with my learned friend, MR R.A. GREENAWAY, for the respondent. (instructed by D.I. Catt, Solicitor, on behalf of the Office of Fair Trading)
McHUGH J: Yes, Mr Aitken.
MR AITKEN: Thank you, your Honour. Your Honours, there is a formal matter I need to move on which involves the notice of appeal.
McHUGH J: Yes. You left a few words out.
MR AITKEN: We did, unfortunately. That is probably my error with my typewriter.
McHUGH J: I think the word “and” may have to come out as well.
MR AITKEN: Possibly so, your Honours. I move on a motion which was filed 11 November, Mr Hewlett’s affidavit in support.
McHUGH J: I take it that is not opposed, Mr Solicitor?
MR SEXTON: No.
McHUGH J: You have leave. Yes, Mr Aitken.
MR AITKEN: Thank you. This appeal, as your Honours would be aware, concerns the operation of section 6 of the relevant legislation.
KIRBY J: Your written submissions did not really refer to the facts. I had to plunge into the detail. The facts seem to be something you were rather disinclined to get into.
MR AITKEN: I would not say that, your Honour.
KIRBY J: That was the impression I ended up with.
MR AITKEN: When your Honour says “the facts”, the facts were fairly clearly laid out before both Mr Linden, the Local Court magistrate ‑ ‑ ‑
KIRBY J: But it is helpful to have a sort of short summary of them in our written submissions.
McHUGH J: You would say, as Theo Matthews once said to the English Court of Appeal, that this case contains a pure point of law, devoid of merits.
MR AITKEN: It does. I would not have put it quite so well as ‑ ‑ ‑
KIRBY J: Yes, get away from those facts.
MR AITKEN: Yes, your Honour. In relation to the facts, though, I think the facts are in fairly small compass.
KIRBY J: Possession is the essence of it.
MR AITKEN: Possession is the essence of it in one sense, although, of course, as your Honours would be aware, at page 29 of the appeal book you will find the document upon which we rely.
GUMMOW J: A question of whether it is possession plus title.
MR AITKEN: Indeed. Well, I think we reason quite simply. We say that at page 29, 30 and 30A there is indubitably what is a chattel mortgage or a bill of sale, depending upon which State we are operating in.
KIRBY J: You are going into the document.
MR AITKEN: Indeed, your Honour, yes.
KIRBY J: You do not seem to be very anxious to go into actually what was done by the people who deposited their goods and what was said to them and what they understood.
MR AITKEN: Well, your Honour, I think it has been found, certainly as long ago as Justice Sperling, who heard the matter, that whatever was entered into, it was without doubt a mortgage. Your Honour finds that at page 19, paragraph 37. Perhaps it is the best place to start in Justice Sperling’s judgment.
GUMMOW J: Just before you get any further into what one might think are the merits, your submission is that your client fell outside this regulatory regime.
MR AITKEN: Indeed.
GUMMOW J: Is there a corollary of that that it fell within some other regulatory regime, relating to moneylending, for example, or a credit provision?
MR AITKEN: No.
GUMMOW J: And, if so, what is it in New South Wales?
MR AITKEN: Well, at the time that the various transactions were entered ‑ ‑ ‑
GUMMOW J: Sorry to interrupt you, but I see, for example, from section 4 that there are other regulatory regimes which are expressly put aside.
MR AITKEN: There are.
GUMMOW J: Are there any others that your client could have fallen under?
MR AITKEN: Yes, there is a Consumer Credit Code, which came into operation I think as long ago as 1995, which we complied with in terms of the relevant transactions at the time they were entered into. So that was another regime which was in operation.
GUMMOW J: What did that require?
MR AITKEN: That required various documentation to be given. I think various ‑ ‑ ‑
GUMMOW J: Did it require a licence?
MR AITKEN: No. It is a system whereby, if you are offering credit to people who are acquiring goods or the like, or lending money on guarantee, then you are required to provide various notices to them, which I am told we complied with – I assume we did because no prosecution was mounted on that front, and also provide limitation on the interest which could be charged. But as I understand ‑ ‑ ‑
KIRBY J: Which Act is this, I am sorry?
MR AITKEN: I am sorry, your Honour. It is the Consumer Credit Code in force in New South Wales. It is common legislation.
McHUGH J: It is right throughout Australia, is it not?
MR AITKEN: It is, which came into effect I think as long ago as 1995.
KIRBY J: That is before this Act ‑ ‑ ‑
MR AITKEN: I am sorry, your Honour ‑ ‑ ‑
KIRBY J: And 1995 is long ago, is it, nowadays?
MR AITKEN: It is. Well, long ago in one sense.
GUMMOW J: My point is it preceded the pawnbroking legislation.
MR AITKEN: It did. So, as I understand our position, that Act has since been altered because I think at one stage there was a higher limit of interest which was able to be charged, and now the interest has been reduced to 48 per cent as a maximum interest charge with respect to consumer credit lending, with a usual defeasance clause if you pay more promptly. Anyway, our position is that we were at the relevant time of these transactions complying with that legislation. The only other legislation which would seem to touch on the matter would be the Bills of Sale Acts, which Mr Sexton has very helpfully put into the large statutory bundle.
GUMMOW J: Where do we see that?
MR AITKEN: I am sorry, it is not in there. But in any event we have both looked at it and the Bills of Sale legislation did not have an impact on the sale.
GUMMOW J: Is that still in force in New South Wales under that name?
MR AITKEN: It is.
McHUGH J: It is still the 1898 Act, is it?
MR AITKEN: It is, indeed. It has been updated, I think, reprinted in 1997, I think, but without any substantial change. The thrust of that legislation, of course, is to protect people who lend money on their power and possession of chattels still in the hands of the borrower, and so that did not really affect us, as we would see here, either.
GUMMOW J: Thank you.
MR AITKEN: So to answer your Honour’s point compendiously, there does not seem to be any relevant legislation apart from this legislation, which would otherwise catch us.
GUMMOW J: Well, which would otherwise catch you and with which you did not comply.
MR AITKEN: Indeed, yes. There is no doubt we did not comply, because we did not have a relevant licence at the time under the legislation, but ‑ ‑ ‑
McHUGH J: It is a short point, is it not? I mean, I must say, I had always thought that the pawnee had only a special property ‑ ‑ ‑
MR AITKEN: Yes.
McHUGH J: ‑ ‑ ‑ in the chattel, and that was the difference.
MR AITKEN: It is.
McHUGH J: Whereas the mortgagor had absolute title. That was the difference between the two.
MR AITKEN: That is it. That is the difference.
KIRBY J: That is the question of whether that is the essence of it, or whether the essence of it is the passing of possession, and that, by passing the possession, you cannot walk out of an Act with these purposes simply by slipping in a little provision saying the property has passed. What a fantastic result that would be.
MR AITKEN: Well, your Honour, it is more than a little provision. It is the essence of the transaction as we would see it, and indeed, as the lower courts ‑ ‑ ‑
KIRBY J: That is the question.
MR AITKEN: Your Honour, with respect that has not ‑ ‑ ‑
HAYNE J: It is a question that was addressed in very early pawnbroking legislation. If you go, for example, to 35 and 36 Victoria, the 1872 English Act, section 6 had an anti-avoidance provision of very large operation. So that anti-avoidance provisions in pawnbroking legislation have been around for quite some years.
MR AITKEN: Yes, but with respect, we are starting from a proposition that, at least since Justice Sperling, as his Honour finds as a matter of fact at paragraph 37, the transactions plainly were mortgages.
GUMMOW J: Yes, the question is whether they were pawns as well.
MR AITKEN: Of course, that then raises, with respect, Justice McHugh’s point that as we perceive the position in terms of section 6 and all the case law on the matter; it can either be a contract of pawn, in which case you obtain the special properties that are sometimes set or, I think as Lord Mersey more accurately calls it, “the special interest” – I apologise, it is not on my list but there is a description in a prize case, in a case called The Odessa [1916] 1 AC 145 at 159 where Lord Mersey deprecates the use of the word “special property” which is the old historical term and talks about special interest and discusses the interest. We say here, looking at the document, as found in the lower courts having put…..the question of sham which I think, with respect, your Honour, Justice Kirby addresses the concern ‑ ‑ ‑
KIRBY J: No, not at all. I do not think it needs to be a sham, but it is a question of looking at the true character of the transaction for the purposes of this statute in the way Justice McHugh taught us to do in Kingston v Keprose.
MR AITKEN: Yes.
KIRBY J: That is the modern way, as this Court has said over and over and over again in taxation, in criminal and in other statutes, the way we now address the interpretation of legislation.
MR AITKEN: If we go to the contract ‑ ‑ ‑
GUMMOW J: I do not think that disables you in any way. If you go to the second reading speech, the Minister used the word “streamlining” and she talked about pawnbrokers. She did not talk about anything else. It is at tab 6.
MR AITKEN: No, that is right. The mischiefs aimed at appear to have been people trading in stolen goods ‑ ‑ ‑
KIRBY J: Where is the Minister’s second reading speech?
GUMMOW J: It is at tab 6.
MR AITKEN: Yes, at page 11, your Honour.
GUMMOW J: If she had a purpose which miscarried, well, that is tough, but the burden of the criminal law does not thereby fall on these people.
KIRBY J: But we do not struggle to defeat the purpose.
MR AITKEN: No.
KIRBY J: The people who put their goods in said they were “hocking” the goods.
MR AITKEN: Yes.
KIRBY J: So that is what they understood.
MR AITKEN: That is right.
KIRBY J: That is really what – it went out the back. They gave their goods, they went out the back, they got some money, pawn.
MR AITKEN: Well, no.
McHUGH J: The evidence is in, I suppose.
MR AITKEN: The evidence is in.
McHUGH J: I must say my eyebrows were raised as to how the evidence got in in the first place.
MR AITKEN: That is a question, of course.
KIRBY J: It is there.
MR AITKEN: But your Honour knows that the ‑ ‑ ‑
KIRBY J: Hock.
MR AITKEN: ‑ ‑ ‑ the Local Court ‑ ‑ ‑
KIRBY J: Hock the goods. That is what the ordinary citizen of Australia would regard as happening in this circumstance.
MR AITKEN: With respect, no, your Honour. Although no evidence was led, maybe the case before the learned magistrate could have done with some more evidence, but in fact usually in hocking goods one only gets a small pawn ticket. One does not execute at the counter ‑ ‑ ‑
KIRBY J: The document cannot change the character.
MR AITKEN: The document, with respect, makes it quite clear that we are taking the title in the goods and we certainly thought we were entering into a chattel mortgage, and we no doubt did that advisedly.
McHUGH J: Historically that would be sufficient for your purposes, that you got the title to the goods.
MR AITKEN: It would. We get the title and, in our submission, we have set out the various cases.
GUMMOW J: With an equity of redemption and foreclosure and all the rest of the equitable intervention in mortgages, which is not called for with pawns.
MR AITKEN: No, and, of course, that is the crucial distinction, I suppose, in a sense, that if ‑although one would not practically see it happening very often - one decided to foreclose with respect to the equity under the chattel mortgage, you could then sell and retain the proceeds as the owner yourself. You would extinguish the equity and you would exit but ‑ ‑ ‑
McHUGH J: Could the person get relief against forfeiture in this particular case?
MR AITKEN: Could they? Yes. I imagine if it was a…..bargain, you would come along and you would say, “I’m paying too much for my ‑ ‑ ‑
McHUGH J: Can a pawnor?
KIRBY J: And no doubt he could say, “I withdraw my request that you hold my goods in these circumstances. I want to take them. I don’t want to have to pay the money back yet; I’ll pay it back later”. This friendly little arrangement of holding in the back room ‑ ‑ ‑
MR AITKEN: I am sorry, your Honour is talking about it within the week in terms of the loan?
KIRBY J: Yes. There is a provision in the document that says that at the request of the depositor you ‑ ‑ ‑
MR AITKEN: One needs to look at the whole document.
KIRBY J: And then the contradictory statement that the previous owner will insure and keep them insured and look after them when he cannot look after them; they are out the back.
MR AITKEN: Your Honour means physically out the back?
KIRBY J: Out the back of the store, just like in a pawnshop, hocked. You must not have ever gone into a pawnshop.
MR AITKEN: I have been in many pawnshops, your Honour.
KIRBY J: So have I.
MR AITKEN: I know exactly how they operate.
KIRBY J: I have been in there.
MR AITKEN: They are normally clearing cheques in advance drawn on large firms of solicitors. Your Honour, we cannot put our case any more clearly. We would simply say that here each of the parties entered into a short‑term loan arrangement which was secured by the chattel mortgage, which is found at pages 29, 30 and 30A. They make it quite clear. In fact, paragraph 2(a) expressly provides that the title is transferred to us as security. Your Honour Justice Kirby has referred to clause 5.1 in terms of what must be done with the mortgage material.
KIRBY J: What page is this?
MR AITKEN: I am sorry, it is page 30 which is the schedule attached to page 29. Of course, with respect, your Honour said it goes straight out the back, but that was not the common course of dealing.
KIRBY J: That was what the evidence revealed happened in this case.
MR AITKEN: Yes, but there was not ‑ ‑ ‑
KIRBY J: They took the goods, they put them out the back, you got your money, and when you paid the money back you got your goods back.
MR AITKEN: Yes, but there was a motor car, for example, which remained. If your Honour goes to page 1 ‑ ‑ ‑
McHUGH J: Well, you did not get your goods back, did you? They were not your goods to get back.
MR AITKEN: No, that is right.
McHUGH J: You had a contractual right.
MR AITKEN: Yes, they were reconveyed to you, I suppose, once you paid the mortgage secured sum.
GUMMOW J: Can I read to you a passage from Professor Goode’s work on Commercial Law, 3rd edition (2004) at 617 to 618:
A pledge . . . involves the transfer of possession of the security, actual or constructive –
and I think you indicated something constructive –
to the creditor. But the delivery of possession does not necessarily signify the existence of a pledge; it may equally be referable to an intention to create an equitable mortgage or charge. The capacity in which the creditor holds possession depends on the agreement of the parties. Is he intended merely to have possession, with a right of sale in the event of the debtor’s default, or is he to be a security owner (mortgagee) or chargee? It seems clear that the three types of security are mutually exclusive and that it is not possible, for example, that the creditor be both a pledgee and a mortgagee of the same asset at the same time.
MR AITKEN: Yes.
GUMMOW J: Is that your submission?
MR AITKEN: That puts it much better than I can put it, of course. Professor Goode has been looking at it for longer. So that is our submission.
KIRBY J: What do you say about the passage of Lord Justice Cotton in the passage quoted by Justice Handley on page 34?
MR AITKEN: That is in Morritt’s Case, your Honour?
KIRBY J: Paragraph 6 of the reasons of the Court of Appeal.
MR AITKEN: I am sorry, but I think Mr Justice Handley is quoting from Morritt’s Case. Yes, well, Morritt’s Case is an interesting case. That passage, I think, with all due respect to his Honour, is being given more weight than it needs to be, because when one looks closely at Morritt’s Case and those interesting decisions around it which I have referred to briefly in my written submissions ‑ ‑ ‑
GUMMOW J: What was the regulatory regime involved in Morritt?
MR AITKEN: Morritt’s Case was looking at whether a bill of sale ‑ ‑ ‑
McHUGH J: It was a bill of sale over personal chattels.
MR AITKEN: It was. It is not the tricycle case, which was an interesting one, it is the subsequent one. But the passage ‑ ‑ ‑
GUMMOW J: If we just forget about the passage for a minute, how does the case bear upon ‑ ‑ ‑
MR AITKEN: It only bears upon it in terms of whether or not the holder of a bill of sale, which was affected by two regimes, one in 1878 and one in 1882 which was the new Conveyancing Act being entered, whether or not the fact that certain things had been left out of the bill ‑ ‑ ‑
GUMMOW J: The difference being what?
MR AITKEN: I think an express power of sale in one and an implied power under the later legislation – whether or not it was possible to imply a power of sale and whether or not, if that was referred to, that took the legislation outside the protection of the Bills of Sale Act because it no longer complied with the relevant form. There was a great to‑do ‑ ‑ ‑
GUMMOW J: But what relevance has this passage got to anything?
MR AITKEN: Well, none at all, we would say, except for this ‑ ‑ ‑
KIRBY J: Well, his Lordship is giving what he takes to be the essence of and distinction between the pledge and a mortgage of a personal chattel.
MR AITKEN: With respect, that is completely correct, your Honour, but at 233, with respect, as I read him, which is the passage your Honour just referred me to at the first three lines, what he is really saying is that the mortgagee under a bill of sale cannot be in a worse position than the pledgee in terms of the application of the power of sale and he is not going to lose that entitlement simply because of the way in which the particular legislation operates. That is what he is really saying. He is answering a question being put, with respect, to the compliance, and, of course, it was a very strict formal compliance with the Bills of Sale legislation. Your Honour will see it then provokes a great controversy, because Lord Justice Fry then takes the contrary view. Clearly, this legislation was not operating very effectively. I gave your Honour, I think, Ewart’s Case and the subsequent cases.
GUMMOW J: The legislation was then changed, was it not?
MR AITKEN: I do not know whether it was changed, but your Honour will see in Calvert v Thomas, which is on my list ‑ ‑ ‑
KIRBY J: Where are you referring in your written submissions?
MR AITKEN: I am sorry, your Honour. My written submissions, it is at paragraph ‑ ‑ ‑
KIRBY J: It is paragraph 14, I think, you refer to Calvert v Thomas.
MR AITKEN: Thank you, your Honour. It is page 4. And I say that the context was the recondite operation of the bills of sale legislation, but I will not take your Honours into those cases. It appears from reading ‑ ‑ ‑
KIRBY J: What does “recondite” mean exactly?
MR AITKEN: I think it comes from the Latin ‑ ‑ ‑
KIRBY J: It is a word that is not used every day in this place.
MR AITKEN: It comes from the Latin. It means difficult or hidden or complex.
KIRBY J: That is what you are trying to do this statute.
MR AITKEN: No, I am not. It really was a recondite operation, because when one looks at those cases – I will not take your Honours to them for reasons of time – but they make interesting reading because they reveal on the English Court of Appeal, which was at that stage staffed, of course, or manned, by the ‑ ‑ ‑
McHUGH J: It is not you that is trying to do it to the statute. You say it is your opponent. Before this case I never ever heard it suggested that if you got the title to property it was a pledge or pawn.
MR AITKEN: No. Well, that is right. That is right.
McHUGH J: It is the first time I have ever heard that proposition.
MR AITKEN: Well, if your Honours perhaps ‑ ‑ ‑
GUMMOW J: You get some advantage, though you might not regard the memory as a happy one, from Associated Alloys 202 CLR, do you not? The question there was whether a regulatory scheme which fixed upon charges, fixed upon trusts.
MR AITKEN: Yes.
GUMMOW J: We said no.
MR AITKEN: Yes, and that, of course, has been the course of I think all the registration requirements with respect to company charges; pledges, liens, all forms of security are excluded from the charge regime, as I remember the section.
GUMMOW J: Now, property law is very complex, and statutes have to be drafted with it in mind.
MR AITKEN: They do.
McHUGH J: I mean take the lease of chattels these days. They were brought in simply to avoid the Hire Purchase Act. I mean that was the ‑ ‑ ‑
MR AITKEN: Indeed.
McHUGH J: It is a dead letter, the Hire Purchase Act. When I first came to the Bar it was a fertile source of litigation.
MR AITKEN: I think leases of chattels have become very popular in a number of trans‑national areas.
KIRBY J: Yes, but one thing has happened in the meantime, and that is the instruction of this and other courts that we should endeavour to give effect to the purpose of Parliament.
MR AITKEN: Yes, your Honour.
KIRBY J: And when we look at the purpose of this legislation, its purpose is to address, as its short title indicates, the Pawnbrokers and Second‑hand Dealers Act.
MR AITKEN: Yes. But the main mischief, your Honour ‑ ‑ ‑
KIRBY J: And the methodology of your client was, save for the provision of the document, the methodology of a pawn shop. You bring the goods in, you sign a document, you get the money, the goods go up into a shelf or out the back, then you get the money back when you – and possession is the essence of it.
MR AITKEN: Can I just address the anterior point which your Honours raised ‑ ‑ ‑
KIRBY J: Delivery of possession.
MR AITKEN: Is the mischief of the statute. The main mischief ‑ ‑ ‑
KIRBY J: It is not as if you have simply passed the title and walk away with the goods, the mortgagee having the benefit of the passage of the title. The mortgagee has the possession of the goods which is the essence of pawning.
MR AITKEN: It is, but it is unfortunate the way in which the matter unfolded below.
KIRBY J: That is why you kept clear of the evidence.
MR AITKEN: No, for this reason, I ‑ ‑ ‑
KIRBY J: You did not want to get into the evidence. The evidence did not help you at all except for your little document.
MR AITKEN: No, the evidence would have helped us. If all the evidence had been available, it would have helped us because it would have revealed that ‑ ‑ ‑
KIRBY J: Well, we are dealing with the evidence that is there. People said they just took it along to “Hock ’em”. That is what ordinary Australians call pawning, “Hock ’em”.
MR AITKEN: No, your Honour, we had a large number of transactions where we did not take possession ‑ ‑ ‑
GUMMOW J: Ordinary Australians are uneducated about the legal necessities of it all ‑ ‑ ‑
KIRBY J: Yes, but we are applying the statute.
GUMMOW J: If I can continue ‑ ‑ ‑
MR AITKEN: But, can I just ask ‑ ‑ ‑
GUMMOW J: If I can continue, they are uneducated about the legalities of it all and if the Parliament wishes to enter into the field it must do so accommodating that by spelling out what precisely it is doing to depart from technical, legal considerations when creating crimes; it has not done so.
MR AITKEN: We would also – if I may just respond in terms of what Justice Kirby put, the two purposes as appears from Ms Lo Po’s second reading speech ‑ ‑ ‑
GUMMOW J: She talked about streamlining.
MR AITKEN: She talked about streamlining. She was talking about ‑ ‑ ‑
GUMMOW J: This may be an example of what happens when you streamline.
MR AITKEN: Well, stolen goods, there is no suggestion of that, and also, your Honours, will see ‑ ‑ ‑
KIRBY J: But that is not the point. The point is the statute is addressed to the problem of stolen goods and people dealing with stolen goods. That is why the statute is to be addressed in terms of an endeavour to streamline, as it has been put. This is the language of ordinary people. They are applying a statute made by ordinary people to apply to ordinary people. I thought the instruction of this Court was that we then endeavour to give effect to the purpose of ordinary people. We are the citizens of this country who make the laws in Parliament.
MR AITKEN: Yes, your Honour, both points are addressed. First of all, there is no suggestion here in terms of the sort of goods which were being mortgaged that there is any problem with stolen goods. Secondly, it ‑ ‑ ‑
KIRBY J: But that is irrelevant, Mr Aitken. The point that is being made by the Solicitor in the submissions is that is the object of the statute and the purpose of a court is to give effect to the object of the statute as far as we can ascertain them, which is that we know that people who deal in hocking and pawning can sometimes have relationships with criminal elements and, therefore, there is a need where people pass - what they have to give is possession. I mean, as it happens one of the factual circumstances here emerging in the evidence was that the person did not have ownership of the goods. She gathered goods of other people and then signed your little document; but the essence of it from her point of view was giving over of the possession of the goods. That is the essence of it and that is where the statute attracts the notion of pawning.
McHUGH J: Well, it is a debatable proposition, is it not, even in that particular case that she did not have ownership of the goods?
MR AITKEN: Yes.
McHUGH J: There is no question of title by registration in respect of goods. I mean, possession is title against the whole world except the true owner.
MR AITKEN: Yes, so unless someone intervened or some jus tertii had been pleaded she was – yes. Well, that is a matter that was not ventilated ‑ ‑ ‑
McHUGH J: It is debatable.
MR AITKEN: The passage which is more, I think, in my favour in Morritt’s Case is Lord Justice Fry at 234 and 235, your Honours, where there is a clear distinction drawn between the two types of transaction.
KIRBY J: Your proposition, as I understand it, is a simple one. If a mortgage is signed, which purports to pass title in the chattel, it cannot be a pledge or pawn, end of issue.
MR AITKEN: It cannot exist simultaneously‑ ‑ ‑
KIRBY J: It walks straight out of this Act.
MR AITKEN: Yes, it cannot exist ‑ ‑ ‑
GUMMOW J: The Act never walked into it.
MR AITKEN: It cannot exist simultaneously ‑ ‑ ‑
GUMMOW J: It is a metaphor which is mischievous to say that.
MR AITKEN: It cannot exist simultaneously with the ‑ ‑ ‑
KIRBY J: The possession walked into it.
MR AITKEN: Possession ‑ ‑ ‑
KIRBY J: The possession walked straight into the Act. The passing of possession walked straight into the Act, but it walks out of it by the little device of a purported passage of the title in the chattel.
MR AITKEN: With respect, it is not a little ‑ ‑ ‑
KIRBY J: Walked straight out of the purposes of this Act which is designed to address the very substantial problem ‑ ‑ ‑
MR AITKEN: It is not a little device ‑ ‑ ‑
KIRBY J: ‑ ‑ ‑ of pawnbrokers being involved with criminal elements who only have possession and do not have title and they pass the possession, put it up on the shelves, pass it on to unsuspecting purchasers. That is the object of this Act, to address that social problem.
McHUGH J: But it is more than that though, is it not? Possession does not get you in the door. It is possession giving a special property to the pawnee that constitutes the pawn. That is the critical factor. It is not possession, not a transfer of possession. That does not take you anywhere. It has to be possession coupled with a special interest or as they used to say, a special property in the goods which arises out of the fact that the goods are a security and you get certain rights as a ‑ ‑ ‑
KIRBY J: I am sure the criminal classes as they go down with their television sets say to themselves on their way to the pawn shop, “I have a special property in this, I have a special interest ‑ ‑ ‑
MR AITKEN: Well, of course. No, he does have a special property ‑ ‑ ‑
KIRBY J: They have the possession. They have the goods. From Roman law times that has been the essence of it.
MR AITKEN: But from Black v Freedman I think, your Honour, in the High Court in 1913 the Court has held that someone who has made off with your television would against some other person seeking ‑ ‑ ‑
KIRBY J: It would not have been a television in 1913.
MR AITKEN: Well, whatever, it might have been a bakelite wireless or ‑ ‑ ‑
KIRBY J: Unless Mr Baird was in advance of himself.
MR AITKEN: ‑ ‑ ‑ would be able to resist a claim for possession. So, with respect, that position is entirely congruent. The thief would be able to say, “Give me back my television”.
KIRBY J: We have the learned Magistrate, we have Justice Sperling and we have three learned judges of the Court of Appeal regarded the statute as applicable to this case, because this is the mischief that the statute is addressed to.
MR AITKEN: That is because of this activity of the transactions stigmatised.
KIRBY J: They seem very ordinary transactions. You gives your goods, your goods go on the shelf, you get some money and you have hocked it.
MR AITKEN: But not all the goods went on the shelf.
KIRBY J: Well, the car went around the back. They could not put the car on the shelf, but the goods that ‑ ‑ ‑
MR AITKEN: I do not think so. No, no, the car remains ‑ ‑ ‑
KIRBY J: The microwave oven went on the shelf.
MR AITKEN: No, I think the car remained ‑ ‑ ‑
KIRBY J: Very typical pawnshop stuff.
MR AITKEN: That is correct, but there is no doubt that these were valid mortgages, no doubt at all, and so, with respect, the key question is whether the two things can be co‑extensive or can live in some hybrid way - that should mean there is a fifth category of security. We simply say that cannot be right, and ‑ ‑ ‑
KIRBY J: But the mortgage passes the title.
MR AITKEN: Indeed.
KIRBY J: Why did you not let them go away with their goods? You have the title, that is the essence of the mortgage.
MR AITKEN: Why did we not?
KIRBY J: Yes. Instead you required them to “request” you to keep the goods.
MR AITKEN: Yes.
KIRBY J: Keep possession and keep safekeeping of them for us please, a microwave on the shelf. It is going to be very useful to us and to you on the shelf.
MR AITKEN: Yes, but, with respect, why should we not do that if they request it?
KIRBY J: It certainly is. It is a real question. You did it because you are a hock shop. You are just pretending. You got a little document ‑ ‑ ‑
MR AITKEN: That has got a rather dyslogistic flavour to it saying we are a hock shop. We are reputable Queensland and east coast moneylenders who lend money on short term to people who otherwise would not be able to find the funds for a glass of beer or the bus fare home. We are not talking large sums of money here so, with respect, we may be a “hock shop” but we are providing a valid service to the customers, no police have ‑ ‑ ‑
KIRBY J: Of course you are, exactly the service that this statute is designed to address.
MR AITKEN: But we are already caught. No one suggested we are fencing goods, to use another ‑ ‑ ‑
KIRBY J: No, there is no suggestion whatever of that but the point I repeat for the third time – and I will not say it again – is that that is the mischief the statute is addressed to. You have to look at the statute in globo. You have to look at its purpose that Parliament enacted it for and it is to address this problem that people who are in criminal classes get possession of goods. That is what they have got to offer to get cash and the essence of it is the deposit of the possession with somebody in exchange for the cash. That is what the Parliament is addressing here, seeking to regulate that mischief.
MR AITKEN: That is perfectly correct, but the three-page document that appears at 29, 30 and 30A is so far beyond the usual ticket that one gets when “popping something at your uncle’s”, as they say in Victorian times, and also, of course, is in the detailed terms and conditions. We simply say, with respect, that Justice Sperling found it was a mortgage, the Court of Appeal found it was a mortgage ‑ ‑ ‑
GUMMOW J: What do you say about Justice Hodgson’s alternative argument, his concluding paragraphs in his reasons, because I think your opponent may be relying on that?
MR AITKEN: Yes. Justice Hodgson had a second ground ‑ ‑ ‑
HEYDON J: Page 45.
KIRBY J: Paragraph 37.
MR AITKEN: Thank you, your Honours. I suppose one would say, with all due respect, that the law does require a legal, technical analysis. That is why we are in the Court of Appeal.
HAYNE J: It does if people are being criminally punished for it.
MR AITKEN: Yes. I do not think, with respect, I can say more than that.
GUMMOW J: Anyhow, it is a technical term.
MR AITKEN: It is, and there would be no problem with the draftsman simply interpolating in paragraph 6…..this catches any attempt to do X,Y and Z but ‑ ‑ ‑
GUMMOW J: Or the robust language of section 6 of the 1872 English Act which ‑ ‑ ‑
McHUGH J: In Gamer’s Motor Centre (1987) 163 CLR 236, this Court held that even in the case of a code, one was entitled to look at the common law meaning of the word “delivery” because it was a technical term. Notwithstanding that it was a ‑ ‑ ‑
KIRBY J: I see a fault line emerging here, Mr Aitken, in terms of a different approach. I will be faithful to Kingston v Keprose.
MR AITKEN: I do not know about a fault line. I would like to convince everybody, your Honour. Of course, as your Honour Justice McHugh just pointed out, a large amount of offshore finance and the like would collapse if pawns, leases, pledges and the like were not treated ‑ ‑ ‑
KIRBY J: I do not think a lot of offshore dealings will collapse because of a construction of the moneylenders and pawnshops legislation.
MR AITKEN: With respect, I do not want to sound too ‑ ‑ ‑
KIRBY J: These are a particular mischief to which the Parliament has addressed its attention.
MR AITKEN: With respect, if your Honour has introduced by some side wind the notion that you can have simultaneously a pawn and a chattel mortgage, goodness knows what that will do to the whole system. There must be clear fault lines – using the term in another context – between the various legal categories, otherwise there will be some fifth hybrid category which Lord Justice Millett, as he was, could not contemplate in Cosslett’s Case.
KIRBY J: There is no hybrid. The essence of it is possession, the passing of the possession in goods.
MR AITKEN: We would simply respond to that, if that were the case ‑ ‑ ‑
KIRBY J: From Roman law times up till this very day. That is the essence of it.
MR AITKEN: May it please the Court.
McHUGH J: They are your submissions?
MR AITKEN: They are my submissions, your Honour.
McHUGH J: Thank you, Mr Aitken. Yes, Mr Solicitor.
MR SEXTON: If the Court pleases. Your Honours, the question in this case, in our submission, is not whether there is a difference between a pawn and a chattel mortgage at common law, but whether the statute is intended to require a licence in the case of the transactions in question.
McHUGH J: But you do have to give it a strained construction, do you not, to reach that conclusion, given the meaning of the pawn or pledge at common law? When I was at the Newcastle Bar, I had some acquaintance with the Pawnbrokers Act 1902. Has it ever been suggested in any case that there could be a pledge or a pawn where the person lending money or taking possession also got the title to the goods? I thought the essence of the pawn or pledge was that possession passed and with it a special interest or special property in the pawnee, and that was the essence of a pawn. What is there in this statute that overcomes that?
MR SEXTON: What your Honour says in terms of the common law must be right, but we say the question ‑ ‑ ‑
GUMMOW J: What do you say the words “on the security of pawned goods” mean in section 6?
MR SEXTON: Your Honour, in the context of this statute ‑ ‑ ‑
GUMMOW J: The legislators have not taken the trouble of defining “pawned goods”. They have taken the trouble of putting in section 5, though, which deems some steps to be a pledge and a loan. If they are slovenly, why is it our task to do what they did not seek to do?
MR SEXTON: Your Honours, I am conscious of what I can describe as the current of discussions. I do not want to, in a sense, traverse some of those grounds that have been gone over with my learned friend, but can I put our argument in terms of the statute. But our essential submission is that, in the context of this statute, that term – albeit at common law – may have a more strictly technical meaning, in the context of this statute, would extend to the transactions that took place.
GUMMOW J: Yes, but how do we read the words? It is no good saying extend to this particular fact situation. How do we read the words? We are construing a statute, not making a mood poem.
MR SEXTON: Well, your Honour, to cover a situation where possession has in fact been taken, as it was in this case, and where all of the elements of a pledge are present, but there is also the additional element of the passing of title in terms of the documentation.
GUMMOW J: Well, all the elements of the pledge involves what Justice McHugh has put several times; the notion of the special property. If you have a mortgage you are in a different ball game. So the two do not – you are mixing oil and water. You want to extract some elements from the oil and then say, “Well, that’s okay. We’ll mix that with the water.” Well, that is the trouble, and you do not escape it just by evoking some sense of mood or tone.
MR SEXTON: Well, in terms of the common law what your Honour says is, of course, correct, but we come back to the statute. Your Honour says that it requires a meaning to be given to the word “pawn” in the statute in section 6 ‑ ‑ ‑
GUMMOW J: Which includes something less than a pawn, because it does not include the special property, because it includes transmission of title.
MR SEXTON: Yes. We have to say that in this case, your Honour, that is right.
GUMMOW J: What about a lien?
MR SEXTON: Well, it would ‑ ‑ ‑
GUMMOW J: That fitted in this scheme. No power of sale, you see?
MR SEXTON: Depending on the ‑ ‑ ‑
McHUGH J: And no right of property passes to the person exercising the lien.
MR SEXTON: Your Honour, in our submission, the statute ‑ ‑ ‑
GUMMOW J: Well, no. Would a lien fall within the expression “security of pawned goods” in section 6?
MR SEXTON: If it is a situation where possession has passed, your Honour. What we need to say is that when possession has passed so that in a sense the elements of a pledge or a pawn - accepting, as your Honour says the question of special property - we have to say that in those circumstances the statute is applicable because that is its intention.
HAYNE J: Well, I understand that is the result you want. What is the content you are giving to the expression? What are the elements that either have to be there or are sufficient to bring a transaction within the statutory expression?
GUMMOW J: And to be proved on prosecution. Well, that is what we have been talking about.
MR SEXTON: Yes. The lending of money on the security of the goods, the possession of which has been handed over to the lender.
HAYNE J: So loan security, hand-over, possession. If the drafter of the Act wanted a very plain English version of that they had a wonderful example in the old English Act which would have conveyed the meaning perfectly.
MR SEXTON: Well, I will come to the drafting or the history of the drafting, your Honour.
KIRBY J: Maybe the drafter was putting his faith in the modern interpretation of statutes, did not think he had to go back to the 19th century English statutes. Perhaps he does?
HAYNE J: Yes, to learn how to draft in plain English, in the plainest possible words, rather than using technical terms having technical meanings.
MR SEXTON: Yes, your Honour. Your Honours, can I say something just briefly ‑ ‑ ‑
KIRBY J: Could I just ask you, in terms of section 7 – the prosecution here was under section 6 - section 7 involves dealers in second-hand goods to be licensed. Is there any possibility, leave aside what has actually happened, that this would be caught by section 7, buying and selling second-hand goods? If they are getting the property in the goods what would be the reason why it would not fall within 7?
GUMMOW J: Well, they are not buying or selling, they are mortgaging.
MR SEXTON: Yes, I think that is the point, your Honour.
KIRBY J: Well, they are buying it. They are getting the title and they are selling it ‑ ‑ ‑
MR SEXTON: Well, it is a loan transaction, on its face here, which would presumably exclude section 7.
KIRBY J: Yes.
MR SEXTON: Your Honours, can I say something just briefly about the legislation itself, the scheme of it. Your Honours will see section 6, the licensing requirement. Section 8 deals with the qualifications needed for a licence and Part 5 with revocation, suspension, variation of licences, but your Honours appreciate the purpose of the legislation is to regulate an industry that traditionally was on occasions in receipt of stolen goods and also in this case to deal with questions of consumer interests in terms of those who are taking out the loans.
KIRBY J: What is the sort of circumstance for revocation? Conviction for dishonesty and ‑ ‑ ‑
MR SEXTON: And failure to comply with the requirements of the record keeping under the legislation. If your Honour looks at sections 15, 16 through to 19, for example, there is evidence that is required to be taken when the goods are brought in. The records that need to be kept, duties to report suspicion of stolen goods, for example, section 22 to similar effect. So, it is a regime that is obvious in its ‑ ‑ ‑
KIRBY J: And you are going to take us to the difference from the Pawnbrokers Act of 1902. I do not like this word “streamlining” any more than Justice Gummow, but what was the essence of the change from the 1902 Act to the 1996 Act?
MR SEXTON: Well, the regime is still essentially similar, your Honour. I will come to that Act in a moment but perhaps in terms of its definition. I your Honour looks at the bundle of legislation, the 1902 Act is at page 43.
KIRBY J: Should you start with the Act of the Victorian era, of 1849?
MR SEXTON: Well, I do it for this reason, your Honour, to look at the definition which is at the bottom of that page.
KIRBY J: Which page?
MR SEXTON: Page 43.
KIRBY J: Yes.
MR SEXTON: And your Honour will see in section 2 ‑ ‑ ‑
McHUGH J: That is what you want to do. I mean that was a very wide definition. It would have caught this case.
MR SEXTON: Yes, that is right, your Honour, and I just have a point to make about that, but I do not want to go in detail through these but your Honours will see there that the phrase used in lines 5 and 6 is:
by way of pawn pledge or security ‑ ‑ ‑
GUMMOW J: With the words “or security”.
MR SEXTON: Yes.
GUMMOW J: They have gone by the streamlining.
MR SEXTON: Yes, your Honour.
GUMMOW J: Was 44A, which is now in the Act, was that in the Act at the time of these events?
MR SEXTON: If your Honour looks at the ‑ ‑ ‑
GUMMOW J: I have print No 2, which is ‑ ‑ ‑
MR SEXTON: The first item in the legislative bundle is the legislation as it was at the relevant time and there is no 44A there, your Honour.
GUMMOW J: No. Now, it may be that 44A would – well, that is another question I suppose, for another day.
KIRBY J: Is this 44A of the 1996 Act?
MR SEXTON: As it is at present, your Honour.
KIRBY J: That is not at page 35 of the print.
MR SEXTON: That is correct.
KIRBY J: Has that been added since, has it?
MR SEXTON: Yes, it is a reprint that is in force as of 7 September 2004.
KIRBY J: What does it provide?
MR SEXTON: It provides that there is to be no contracting out of the legislation.
KIRBY J: But that has been added by Parliament since these events.
McHUGH J: Is not the problem that you have to face this, that you just could not get around the Pawnbrokers Act 1902. I was consulted more than once about how you could get outside the Act if you were carrying on a pawnbroking business, but there was no way around it because of the definition. In this Act, the definition has changed. I mean the 1902 Act and its predecessors overcame the common law, in effect, and gave it an extended meaning. You just do not have that definition or deeming provision in this Act, so you have to say that Parliament really had just intended to re-enact the earlier statute.
MR SEXTON: Yes. I mean our question would be why would the Parliament have intended to limit the definition that had been in operation for such a long period ‑ ‑ ‑
HAYNE J: Because it took its place in a wholly different legislative scene; you had consumer credit legislation which was a national code. The consumer protection provisions that existed at the time of this legislation were just a tad different from what was available in 1902.
MR SEXTON: But the consumer credit legislation, your Honour, is not really designed to deal with the problem that the Pawnbrokers Act was designed to deal with and still is ‑ ‑ ‑
HAYNE J: It was designed to deal with some of them. It was designed to deal with some protections of those who resort to credit providers.
MR SEXTON: It is, your Honour, but not to deal with the problem of stolen goods.
HAYNE J: Just so, and why does the problem of stolen goods mean that you give this meaning to pledged goods that departs from the recognisable and recognised technical meaning the expression has had for centuries? Why?
MR SEXTON: We would say, your Honour, to give the legislation its purpose, that that is its intention.
GUMMOW J: How do we discern the intention?
MR SEXTON: In part, your Honour, from the legislative history and part from the statute itself, from what its regulatory scheme involves. Justice McHugh has referred to the 1902 Act at page 54. The same definition – I will not repeat it – at the bottom of page 54 in the definition of “pawnbroker” and at the bottom of page 68 – this definition runs through until the change in this legislation. I am sorry, no, if your Honours look at page 91, there is actually an expanded definition which was introduced in 1980. If your Honours see towards the bottom of the page, subsection 2(b) refers to:
takes an article in pawn, if he takes possession of the article as security for the repayment of a loan made ‑ ‑ ‑
KIRBY J: When was that added?
MR SEXTON: It was added by the Pawnbrokers (Amendment) Act 1980.
GUMMOW J: Have you got the text in the 1980 Act or just this reprint?
MR SEXTON: Just this reprint, your Honour.
McHUGH J: Does the present Act still – I mean, one of the problems that pawnbrokers used to face under the old Act was that goods had to be sold at public auction, and they were prohibited from buying, if I remember rightly. There were all sorts of problems.
MR SEXTON: That is still true in that legislation.
McHUGH J: It is still true, is it, in the current ‑ ‑ ‑
MR SEXTON: Yes. There is a monetary threshold, I think, in relation to the public auction and there are some provisions, but I think section 29 is in the Act as it was at the relevant time. There have been some changes since then, but the scheme is still essentially similar.
McHUGH J: Section 30, I think: “must be sold by public auction”.
KIRBY J: What was the purpose of that provision? What was the purpose of requiring public auction? To prevent ‑ ‑ ‑
MR SEXTON: To try and obtain a fair price, I presume, your Honour.
McHUGH J: Yes.
KIRBY J: I see, yes.
McHUGH J: And again, section 32, I see in this 1996 Act says that the pawnbroker is not permitted to buy goods that have been pawned.
MR SEXTON: Your Honours, just two further points, really, for information, about the bundle of legislation. The first is that the second reading speech that is contained at page 111 was given when a slightly earlier version of the 1996 Act was introduced and the Parliament was then prorogued, so there was, in fact, a later second reading speech, which I will hand up copies of to your Honour. In our submission, it is not different in any way by substance and makes the same points, but I will hand up seven copies of that for your Honours.
Finally, your Honours will see extracts from the interstate legislation, which can be summarised as saying that, essentially, the other States and Territories have what is now the definition that is operative in New South Wales, except for the ACT, which appears to have a definition that is rather similar to the old form in New South Wales.
KIRBY J: Does that mean that if this point of the appellant is correct, it will undermine the effectiveness of the regulatory scheme in all of the States of the Commonwealth?
MR SEXTON: Presumably, the effect would be the same, your Honour, in relation to the other States and Territories, except for the ACT. In other words, the documentation of this form would ‑ ‑ ‑
KIRBY J: Why, apart from a suggestion that “pawn” had taken upon itself a meaning by the end of the 20th century, were the words “or security” deleted from the legislation?
MR SEXTON: I cannot answer that question, your Honour. There is nothing in the second reading speech to ‑ ‑ ‑
GUMMOW J: This word “streamlining” and insufficiently educated draftsmen, that is the problem.
MR SEXTON: But there is nothing in the second reading speech and no other extrinsic evidence that I have been able to ‑ ‑ ‑
KIRBY J: It is fashionable to denounce draftsmen, but perhaps the draftsmen thought that the word was sufficiently clear in the English language.
GUMMOW J: Which meant they were wrong.
KIRBY J: Depending upon the interpretation the Court gives to the statute, whether we are here to uphold statutes or to destroy them. Answer, “We’re here to uphold statutes according to their correct interpretation.”
MR SEXTON: Can I just say one other thing about legislation from ‑ ‑ ‑
GUMMOW J: There was no Law Reform consideration of this, was there?
MR SEXTON: Not that I am aware of, your Honour, no. It seems not, your Honour.
KIRBY J: You cannot add denunciation of Law Reform Commissions to denunciation of the legislative draftsmen in this case.
MR SEXTON: Your Honours, there was a reference earlier to the Bills of Sale legislation. Presumably the reason why these transactions would not fall within that legislation is that there is the registration requirement there is 30 days, and these transactions are all to last for seven days only, otherwise they would seem to fall within that legislation, and presumably they are not intended by the drafters of the documentation to fall within the legislation.
GUMMOW J: Where do we see the seven days?
MR SEXTON: If your Honour looks at the example which is at page 29 in the appeal book, you see the agreement is made there on 9 February.
GUMMOW J: Yes.
MR SEXTON: And then it is to last until 16 February, just about the middle of the page. It is described as a bill of sale.
GUMMOW J: I notice that.
MR SEXTON: But presumably it was never registered.
GUMMOW J: And what is the provision in the Bills of Sale Act which would not require registration?
MR SEXTON: Your Honour, what section 4 provides is that a bill that falls within the legislation is to be registered.
GUMMOW J: Is this the 1898 Act still?
MR SEXTON: Yes, section 4(1) begins:
Within thirty days after the making or giving of every bill of sale –
and then goes on ‑ ‑ ‑
KIRBY J: Do we know that it was not registered? Is that proved by the evidence or the evidence is silent on this matter?
MR SEXTON: It is silent, your Honour.
KIRBY J: Why are we being taken to this point? It does not seem to ‑ ‑ ‑
GUMMOW J: Because I asked.
MR SEXTON: Only because there was a reference to other regulatory regimes, and it is, in a sense, an obvious question here as to why it would not fall within the Bills of Sale Act. We are not sure of the answer, but we think the answer is that the documents do not go for 30 days and, therefore, on that basis, do not have to be registered under section 4. Whether that be right or not, it is ‑ ‑
GUMMOW J: But does failure to register involve an offence under the Bills of Sale Act? It does not, does it?
MR SEXTON: No, it is an enforceability.
GUMMOW J: It just goes to enforceability.
MR SEXTON: Yes.
KIRBY J: But if you got the possession, it used to be said that was nine points of the law.
MR SEXTON: We would say 10 here, your Honour.
KIRBY J: Could you help me on this. There was some debate in the special leave hearing concerning the question of sham and Justice Sperling found that he would not treat the whole transaction as a sham, but apparently he had said something to the effect that some aspects of it were not as they appeared in the written document.
MR SEXTON: Yes. If your Honours look at paragraph 3.1 of our written submissions, we just set out there some findings from the magistrate on that question, where he said that the documentation was at odds with reality in some aspects and in particular the notion of the borrower being required to insure the goods, for example, given that the – and the notion that the goods were to be stored with the lender.
KIRBY J: At the request.
MR SEXTON: Yes, at the request of the ‑ ‑ ‑
KIRBY J: “Please keep my goods away from me. Keep my microwave away from me”.
McHUGH J: It is difficult to think though, Mr Solicitor, that the deletion of the term “lending on security” was accidental. Correct me if I am wrong, but the 1902 Act specifically exempted merchants, bankers, commission agents, brokers, licensed auctioneers from the Act, but that exemption is no longer part of the 1996 Act, is it? There are exemptions. They are in section 4, that people can hold a licence under another Act but, for example, merchants, commission agents, brokers would seem to be caught by this Act in one – unless they are licensed under some other Act.
KIRBY J: But that is in favour of your construction, is it not? That is suggesting the most comprehensive application of the Act.
MR SEXTON: We would say that it is hard to see why the Parliament would want to narrow the definition.
HAYNE J: Because section 4 of the 1902 Act was geared according to a maximum rate of interest. Now if you want to find out what credit providers can charge, where do you go? You do not go to the Pawnbrokers Act; you go to the Credit Providers Code.
MR SEXTON: I think I have answered this before, your Honour, to say that yes, but that does not deal with the problem of licensing, record keeping, reporting of stolen goods, et cetera, but that is perhaps the main purpose of this legislation, as your Honour says, given that the interests of the borrowers has probably been transferred to other legislation, not entirely ‑ ‑ ‑
HAYNE J: But a major historical purpose for pawnbroking legislation was to regulate interest, was it not?
MR SEXTON: It was, yes, your Honour.
HAYNE J: That is, to regulate in favour of persons who are pledging their goods.
MR SEXTON: There are still some protections in this legislation, but, as your Honour says, the particular credit regulation is now in other statutes and of a highly detailed kind.
KIRBY J: Is it inherent in the appellant’s argument, and contrary to yours, that by the simple device of adding, perhaps by a rubber stamp, to every pawn slip that the property passes to the pawnbroker, but nonetheless the deposit of the possession will still continue – “We will look after it for you at your request” – that that would be a way of walking out of this legislation? The legislation would be completely removed throughout the Commonwealth of its effectiveness?
MR SEXTON: I do not think it is any secret, your Honour, that presumably the purpose of the drafting of the documentation here is designed to take it outside this legislation.
GUMMOW J: That is why you put in 44A, I suppose.
KIRBY J: But that will not help you; 44A will not help if you are not in the Act at all in the first place. Section 44A is going to help you not contracting out of the Act, but it is not going to enhance the scope of the Act or the applicability of the Act. The argument of the appellant is ‑ ‑ ‑
MR SEXTON: Your Honour, I have not looked closely at section 44A, because, of course, it came in later, but the question whether it would deal with this situation – there may be a matter for argument there.
KIRBY J: I do not think 44A deals with it at all. At least, that is my current thought.
GUMMOW J: What is this national legislation you have talked about? The pawnbroking legislation? You seem to be saying there was some national system of legislation of which this was a part.
MR SEXTON: Only that essentially the same definition is used in the other States and Territories, except for the ACT. As Justice Hayne points out, there is effectively national consumer credit legislation, because it is uniform in the different jurisdictions ‑ ‑ ‑
McHUGH J: For instance, the Second‑Hand Dealers and Pawnbrokers Act (Tas) defines a pawnbroker as:
a person who carries on the business of advancing money on the security of pledged goods –
So I suppose it ‑ ‑ ‑
MR SEXTON: Yes. If your Honour tracks through those definitions – I have not gone to them individually – in the other States and Territories, your Honour will find that, except for the ACT, they seem to reflect the current concept or style in New South Wales. The ACT is in the old style.
KIRBY J: But the definitions, lending money on the security of “pawned goods” – if the appellant’s argument is correct about what are “pawned goods”, then you avoid the whole regime of regulation which the legislatures of Australia have enacted by the simply device of saying that the property in the goods has passed, and, though you have possession, you are only really holding that possession at our request and for the purpose of safeguarding our goods, even though it is a microwave up on the shelf.
MR SEXTON: Your Honours ‑ ‑ ‑
KIRBY J: Every now and again, we have to allow the sunlight of reality to enter this place.
MR SEXTON: True, your Honour, we, of course, focus on what we say is the substance of the transaction and the intention of the legislation ‑ ‑ ‑
HAYNE J: And insofar as you seek to pray in aid references to other States, it is rather necessary to play close attention the language used in the other States’ legislation, is it not? So, for example, if we go to page 143 with the Western Australian Act, the provision of section 3(3), particularly paragraph (a), would provoke some question about its application in a case of this kind.
MR SEXTON: Yes.
HAYNE J: So it is just not good enough to make broad and sweeping statements about the construction of the New South Wales Act inevitably spilling over to the construction of other States, is it?
MR SEXTON: Some of them have additional provisions, your Honours.
HAYNE J: Just so, and they have to be construed as a whole, do they not?
MR SEXTON: Of course, your Honour.
HAYNE J: Yes.
MR SEXTON: Your Honours, there is, in our submission, in the cases probably no conclusive statement even as to the common law position whether these notions are in fact completely mutually exclusive. I know what your Honour Justice McHugh ‑ ‑ ‑
HAYNE J: Well, that is a startling proposition, Mr Solicitor, in the light of Story on Bailment. Paragraph 287 of Story on Bailment, I would have thought was to the contrary of that submission but ‑ ‑ ‑
GUMMOW J: He is dead and in another country, so why do we bother about him?
MR SEXTON: I do not take that point, your Honour.
HAYNE J: The argument has to proceed by way of reference to principle and authority, not by reference to broad and sweeping generalisations, Mr Solicitor.
MR SEXTON: Your Honour, there are some statements in the text, as your Honour points out, and Justice Gummow referred to the statement in Goode earlier this morning and we accept that, but only saying at this stage that I was not going to go to ‑ ‑ ‑
GUMMOW J: He is in another country, too. The fact that he is probably the most celebrated commercial lawyer in England for some years that probably does not matter either.
MR SEXTON: Of course, we accept that.
KIRBY J: We are here not to have panegyrics to celebrated authors, but to construe a state of the New South Wales Parliament operating in practical circumstances in this community for particular purposes.
MR SEXTON: The one reference that I was going to make was to the Dublin Distillery Case [1914] AC 823 which we have put in our written submissions where Lord Parker, and Lord Halsbury agreed with him, said that in that case there was a question of a pledge and a charge, I think, on the company where he said that for this purpose for that case because he thought that the object of the legislation was to give notice to those who are dealing with the company of anything that affected the company’s credit. At 854 he said:
For this purpose no distinction can be drawn between a pledge at common law and a mortgage or charge -
a question, in our submission, that goes to the intention of the legislation in the way that we would say here is an important question. Your Honours, I think, understand our argument.
McHUGH J: Yes. It is a very short point.
MR SEXTON: I do not want to prolong it except to say this, which is really something that Justice Sperling said at first instance – at second instance, perhaps – that it would be, we would say, extraordinary if transactions of this kind could be taken out of legislation simply by the drafting of the documentation in this way and that it is important, therefore, to look at the purpose of the legislation and at its history and that, in effect, the substance of the transaction as it was found by the magistrate.
There may be some collision in all of that with the concepts at common law of these two kinds of transactions, but, in our submission, that collision has to be resolved in this case. We, of course, say that it should be resolved by a finding that the requirement under the statute, the licensing requirement here, would extend to transactions of this kind.
KIRBY J: Could I ask you, Justice Hodgson at the end of his reasons, as Justice Gummow pointed out earlier, gives an alternative way in which he would reach the same conclusion. Would you just explain his Honour’s, as it were, supplementary or alternative approach?
MR SEXTON: I think, your Honour, it is only a variant – I say only a variant – it really amounts to the submission that we have been putting this morning about the intention of the legislation and the substance of the transaction. In effect, what his Honour is saying is that while technically at common law these may be distinct concepts, for the purposes of this legislation, these transactions would fall within it. He would have adopted that approach if he had not adopted the approach that in fact, the whole Court of Appeal did, that these two concepts were not mutually exclusive, that a transaction could be both.
KIRBY J: So the first point was, “These are not mutually exclusive”, and the second point was, “Even if technically they are, the purpose of this legislation is so clear that it is intended to require licensing of this form of business that it falls within the legislation and the offence is proved”. Is that how his Honour reasoned?
MR SEXTON: That is how we ‑ ‑ ‑
GUMMOW J: How do we discern the purpose? Does he explain that?
MR SEXTON: He does not in that paragraph, your Honour.
GUMMOW J: No. It seems just to come to one as a philosopher king.
KIRBY J: Well, presumably he takes the view that if the essence of it is possession and you pass possession, get your money and it goes up on the shelf, then that is the kind of activity that this statute is designed to regulate in the public interest and there is not any apparent reason why it should not be, except for what is suggested to have been a technical goof on the part of the legislative drafter.
MR SEXTON: His Honour, in our submission, was making an addendum at that stage, after having set out the main point in his judgment, but, in our submission, if that was expanded, it would really take the form of the argument that we have set out today. Unless there are any other matters, your Honour, those are our submissions.
McHUGH J: Thank you, Mr Solicitor. Anything in reply, Mr Aitken?
MR AITKEN: No just this, your Honours, that the learned Solicitor referred to the various other pieces of legislation, which I have looked at. It might help your Honours to note that the Queensland definitions are at page 119, Tasmania is at 122, Victoria is at 131, Western Australia is at 143 and the ACT is at 147.
GUMMOW J: What do you say about costs? It is obscurely dealt with at page 50 of the notice of appeal.
MR AITKEN: I would say, your Honour, that we are entitled to all our costs if we are successful before your Honours.
HEYDON J: It is criminal, is it not?
MR AITKEN: Well, it is criminal but it has got a ‑ ‑ ‑
KIRBY J: The Crown neither seeks nor receives costs. Is that not the rule?
MR AITKEN: The Crown, we are ‑ ‑ ‑
GUMMOW J: Well, Mr Gowans is not Her Majesty.
MR AITKEN: No, he is not. Mr Gowans is ‑ ‑ ‑
KIRBY J: He is not wearing a crown or robe or a sceptre ‑ ‑ ‑
MR AITKEN: It is quasi‑criminal, I suppose we would say.
KIRBY J: ‑ ‑ ‑ but he still takes on the role of upholding the criminal law.
HAYNE J: What is the position in New South Wales? Are costs awarded in Local Court prosecutions that fail?
MR AITKEN: Yes.
HAYNE J: The practice in Victoria is that they are, but what is ‑ ‑ ‑
MR AITKEN: Yes. Mr Greenaway is the master of that area, your Honour. Perhaps I might ask him to ‑ ‑ ‑
KIRBY J: I notice the Court of Appeal ordered them to pay costs below, so I think it should be tit for tat, should it not?
MR AITKEN: Yes, it should be. Yes, it can be.
McHUGH J: Well, could we have a note from counsel then as to the statutory ‑ ‑ ‑
MR AITKEN: Yes. Thank you, your Honour, we will, yes.
McHUGH J: ‑ ‑ ‑ provisions that govern the matter.
MR AITKEN: Might we have a couple of days to do that?
McHUGH J: Yes. Thank you.
MR AITKEN: Thank you, your Honours.
McHUGH J: The Court will now adjourn until 10.15 tomorrow.
AT 11.35 AM THE MATTER WAS ADJOURNED
Key Legal Topics
Areas of Law
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Civil Procedure
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Administrative Law
Legal Concepts
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Judicial Review
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Standing
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Abuse of Process
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Appeal
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Procedural Fairness
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