Amendments Nos. 1 and 2 might be discussed together. If there is a desire expressed for a division on amendment No. 2, I will save it.
In Committee on Finance. - Hire-Purchase Bill, 1946—Committee Stage.
Section 1 agreed to.
SECTION 2.
Perhaps I will curtail discussion by intimating my willingness to accept the amendment in Deputy O'Connor's name which deletes the limit altogether. I think that is the amendment which is widest and most likely to be acceptable to the Dáil, having regard to the views that were expressed here on Second Reading.
I supported that on Second Reading and I am glad the Minister has accepted it.
Who is moving it?
I will move it. I move amendment No. 1, standing in the name of Deputy O'Connor:—
In line 7, to delete all words from the word "under" down to and including the word "pounds" in line 9.
Is it accepted just as it stands?
As it stands.
Amendment agreed to.
Amendment No. 2 not moved.
I move amendment No. 3:—
In paragraph (b), line 12, after the word "Teoranta" to insert the following: "(The Irish Sea Fisheries Association, Limited)".
This is a drafting amendment. It appears that the official title of this Sea Fisheries Association is not merely the Irish name but includes the English name in brackets. In order to avoid any possible doubt as to the organisation indicated, it is desirable to put in the full official title.
It hardly has any rival.
Amendment agreed to.
Section 2, as amended, agreed to.
SECTION 3.
Amendments Nos. 4 and 5 not moved.
On behalf of Deputy Coogan. I move amendment No. 6:—
In sub-section (1), line 22, to insert before the word "inspected" the words "either expressly or by implication made known to the owner the purpose for which he requires the goods and".
The purpose of this amendment is, I think, to obviate any difficulty arising from a difference between the sample of the goods and the article supplied. The words make more clear that the obligation is on the hirer to explain explicitly the purpose for which he requires the goods.
Perhaps on this amendment I may express a view which applies to many of the amendments tabled to this Bill—that is, that the legislation should be confined to dealing with the abuses which have arisen, or which may arise, in connection with hire-purchase transactions and that it is not necessary to give to persons acquiring goods under hire-purchase agreements safeguards which are not considered necessary in the case of persons buying goods for cash. What we propose in this section is that the obligation on the owner of the goods to make known to the prospective hire-purchaser the cash price of the goods will be fully discharged if the hire-purchaser, having entered the owner's premises, sees the goods on the premises, or similar goods, with the price clearly marked on them either by means of a ticket or the other devices used by shopkeepers for the purpose of indicating the sale price of commodities. I think that that is a sufficient safeguard. It is the only safeguard which the person has who is buying for cash. The person buying on a hire-purchase agreement has the same opportunity which the cash buyer has of inspecting the goods and satisfying himself whether they meet his requirements and whether they are value for the money or not. The primary intention of this section is effected when it is made known to the purchaser what he is paying for the hire-purchase facility—in other words, the difference between the cash price and the hire-purchase price. He knows precisely how much the facility of hire-purchase is costing him.
I could not agree to Deputy Coogan's amendment because it would introduce a number of complications. It is desirable that this legislation should be as simple as possible because many of its provisions will, no doubt, be contested in court and, the more complications we introduce into it, the more likely it is that at some stage a court decision will arise which will have the effect of limiting the operation of the Bill or facilitating those who want to evade its provisions. Deputy Coogan's amendment would introduce a variety of obligations which would be unnecessary, having regard to the general circumstances with which this section is intended to deal. I think that we shall have met our obligations fully if the person buying goods on a hire-purchase agreement has brought to his attention their cash price in the form of a written statement or is shown other like goods with the cash price clearly marked upon them.
Amendment, by leave, withdrawn.
I move amendment No. 7:—
In sub-section (1), line 22, to delete the words "or like goods".
I should like to know from the Minister what the necessity is for the words I propose to delete. If an individual goes into premises and inspects the goods, surely the transaction should end there. I am sure the Minister will appreciate that, with these words in the section, there is the possibility of abuse. I can see no reason for the addition of those words in the case of a purchaser who goes into the premises and selects the goods. Those are the goods he requires and not goods of a different and, perhaps, inferior quality which might be supplied at a later stage. I am afraid that the addition of those words to the section leaves it open to abuse.
No more than in the case of a cash purchase. Take the ordinary run of goods which are bought under hire-purchase agreements— bicycles, wireless sets and so forth. They are usually of a standardised type. A man decides to buy a bicycle at so much down and so much per week. He selects a well-known make of bicycle, inspects it and says: "I will buy that particular type of bicycle". When the bicycle delivered to him is of that type, the transaction is completed. Whether the actual bicycle he inspected is the bicycle delivered to his house might be difficult to prove. The hire-purchaser is in no different position in that regard from that of the cash purchaser. In each case, the transaction is settled with the delivery of the goods. It would be unwise to put on the owner of the goods the obligation to deliver the precise article that was inspected, with the possibility of legal proceedings arising out of the issue, whether, in fact, the bicycle or wireless set which was delivered was the exact bicycle or wireless set demonstrated in the shop. If the article delivered is of an inferior type, both classes of customers have means of redress. The only question that arises here is that of the disclosure of the cash price. What we are requiring is that the hirer shall have an opportunity of inspecting the article he proposes to hire with the cash price marked on it or a similar article with the cash price marked on it, so that he will know what the cash price is and what the hire-purchaser facility will cost him.
I appreciate the Minister's point so far as it relates to standard or proprietary articles. He mentioned a bicycle. A man who desired to buy a bicycle and wanted a particular make would, I admit, be satisfied if, desiring a Raleigh bicycle, he were to be supplied with a bicycle of that make, even though it was not the bicycle he inspected in the shop. I do not know, however, whether the Minister is an expert in furniture any more than I am. There are no two commodities. I think, in respect of which the ordinary individual can be so easily humbugged as furniture and jewellery. Generally speaking, there is no standard type of furniture, though there were a few firms making furniture of a special type here. If the furniture were of standard type, there would be substance in the Minister's point but I am afraid that the insertion of those words will place a disability on the purchaser so far as articles like furniture are concerned.
We have extended the scope of this Bill to cover all hire-purchase transactions and we must keep that fact in mind when considering matters of this kind. In the case of a motor car—motor cars are frequently the subject of hire-purchase agreements—the normal practice is to have a demonstration car which the prospective purchaser inspects and the performance of which he is in a position to judge, it being understood that he will get delivery of a similar car from the works at some later time, when available. You could not, in that case, require that the demonstration car must be the car to be delivered. If that were done, no hire-purchase agreement would be possible at all, because the effect of the deletion of those words would be to make it an offence for the owner of the goods—in this case, a motor car—to effect a hire-purchase sale unless the purchaser had an opportunity of inspecting the exact car which was to be delivered to him.
The safeguard which this section is intended to provide is the limited safeguard of making known to the purchaser the exact cash price. Having regard to all the circumstances of the various types of cases which might arise, that purpose is served if the hire-purchaser has an opportunity of inspecting the goods, or like goods, on which the cash price is clearly marked.
Amendment, by leave, withdrawn.
I move amendment No. 8:—
At the end of sub-section (1) (b) to add the words "and is supplied with a warranty which states that the goods are similar in every detail to those described in the catalogue, price list or advertisement, as the case may be".
This matter was referred to also on the Second Reading, and I would like to draw the Minister's attention to the fact that a considerable amount of this business is done by means of catalogue or advertisement and there is no opportunity for personal inspection. In these circumstances, I suggest that the individual concerned should have a warranty along the lines suggested in the amendment, that is, that the goods are similar in every detail to those described in the catalogue, price list or advertisement, as the case may be. I suggest that that is a reasonable precaution in the case of the business of a widespread character which takes place under advertisement or catalogue.
My first answer to the Deputy is that the person who buys from a catalogue or advertisement under a hire-purchase agreement is in no worse position than the person who buys for cash; and the purchase of goods from a catalogue for cash is an everyday transaction. I have explained that I do not think it is necessary, and from many points of view I do not think it is desirable, that we should impose, in relation to hire purchase sales, more onerous conditions on the trader than apply in the case of cash sales, except where they are clearly necessary to eliminate abuses associated with hire-purchase. I would refer the Deputy to Section 9 (1), paragraph (d), which gives a reasonable safeguard to the hire-purchaser. It provides that, except where the goods are hired as second-hand goods, every hire-purchase agreement shall contain an implied condition that the goods shall be of merchantable quality, so, however, that no such condition shall be implied as regards defects of which the owner could not have reasonably been aware at the time the agreement was made or, if the hirer has examined the goods, as regards defects which the examination ought to have revealed. We are providing there that the hire-purchase agreement shall be deemed to contain in it a condition to the effect that the goods are of merchantable quality. That gives the purchaser of the goods on a hire-purchase agreement a right against the hirer if, in fact, the goods on delivery to him are not of merchantable quality.
My main objection to the Deputy's amendment is that it puts restrictions on hire-purchase sales which do not apply to cash sales, and I think that is undesirable. I expressed here on the Second Reading the view that, while we should endeavour to eliminate the abuses that have been associated with or might arise in connection with hire-purchase agreements, we must not go so far as to make that form of trading impracticable or unduly risky for traders. I think it is a form of trading which has social advantages, if properly supervised; and certainly very many people in this country have been enabled to raise their standard of living by reason of the existence of hire-purchase facilities. The putting into legislation of that idea involves the acceptance of the limitations to which I referred upon the provisions of this Bill, namely, that they should not put, in respect of these transactions, restrictions on hire purchase sales which do not apply in the case of cash sales. In the case of persons buying goods from a catalogue for cash, they rely on the reputation of the firm and upon their rights if the goods are mis-described in the catalogue. The hire-purchaser has precisely the same rights, but it is not proposed to give him any additional ones.
In view of the terms of Section 9, I will withdraw the amendment.
Amendment, by leave, withdrawn.
On behalf of Deputy Coogan, I move amendment No. 9:—
In sub-section (2), paragraph (b), line 46, to insert before the word "and" the words "including a calculation of the rate of interest taken into account on arriving at such purchase price".
I move it merely for the purpose of ascertaining if the Minister is satisfied whether the definition of "hire-purchase" in Section 1 includes the total amount of interest payable under an agreement of this kind. In sub-section (2) of Section 3, paragraph (b), it is stated that the note or memoranda shall contain a statement of the hire-purchase price. Will that include the interest for which the hirer would be liable?
So far as the hire-purchase price is concerned, the safeguard we give the purchaser is that he is informed, in a specific personal way, what the hire-purchase facilities will cost him. We are not proposing under this Bill to control the cost of hire-purchase facilities. There is a Control of Prices Act in operation and it may be that that Act will be extended and amended in the future. If it should be considered necessary at any time to control the price of hire-purchase facilities, it will be done under a control of prices measure and not under this measure. What Deputy Coogan's amendment suggests, however, is that the purchaser should be informed of the method of calculating the interest, which is a most complicated business. There are different methods by which interest can be calculated and, if the Deputy's amendment were accepted, very elaborate provisions would have to be inserted in the Bill. There is a very substantial difference between the effective rate of interest and the nominal rate of interest and the calculations that would be involved in determining the difference between one and another would be far outside the capacity of the average person buying under a hire purchase agreement.
I think it is undesirable that this amendment should be accepted. We have satisfied the requirements of this legislation if we let the purchaser know the precise amount in cash that he is going to pay for the hire-purchase facilities. If at any stage it should appear necessary to limit the cost of hire-purchase facilities, the rate of interest that may be charged or the difference between the cash price and the hire-purchase price allowed in any particular case, it would be done under the control of prices legislation and not under this legislation. Ordinarily, I think we should maintain the principle that, so long as the buyer knows precisely what he is doing, what goods he is getting and what price he is paying for them, it is for himself to decide whether the transaction is in his interests or not.
Amendment, by leave, withdrawn.
Section 3 agreed to.
Amendments Nos. 10 and 11 not moved.
Section 4 agreed to.
SECTION 5.
I move amendment No. 12:—
In sub-section (1), page 5, line 3, to delete the word "one-half" and substitute the word "one-third".
As set out in the explanatory memorandum, under the minimum payment clause a hirer must pay one-half of the value of the goods whether he continues to hire them or not. Actually that is the position under the 1938 Bill in Great Britain. I pointed out on the Second Reading why the question of "one-half" was introduced. The Bill there was a Private Members' Bill, and was subject to minor restrictions, and the mover in order to preserve it had to give way on many principles. This is one that she did not like. I suggest that it would be a hardship for an individual to have to continue paying if, in certain circumstances, he wanted to make other arrangements, provided the goods were not of a type that would be subject to depreciation in any great measure. I think it would be well if the figure were "one-third" rather than "one-half".
This is a matter on which one has to exercise individual judgment. I expressed the view that whatever provision you put into the Bill, you should have in mind the dual purpose, of protecting against abuses while, at the same time, facilitating a form of trading which has social benefits. I think that if we were to adopt the Deputy's amendment we would face the risk of making hire-purchase trading impossible for a very considerable range of goods. The difference between the price of many articles sold as new, and the price of the same articles sold as second-hand, is often considerable. I suppose the earliest form of hire-purchase trading with which most Deputies came into contact was the sale of books, such as D'Alton'sHistory of Ireland, the Encyclopaedia Britannica and similar books sold on the monthly payment system. I am sure that no Deputy would agree that volumes of that kind which were acquired and read should be returnable to the hirer after one-third of the purchase price had been paid, the buyer of the books either regretting having entered into the transaction or having read everything in them that interested him. But the books would no longer be saleable by the hirer at anything like two-thirds of the original price, because books, like a motor-car, or certain other commodities do deteriorate considerably in value once they have been used, and once they can no longer be sold as new.
I think it is a reasonable protection for a trader to ask a person proposing to make a purchase under a hire-purchase agreement to remember that, once he enters into agreement, he is liable for one-half of the purchase price, even if he subsequently regrets the transaction and desires to avoid full liability under it. I think it is protection for a buyer to be able to return goods when he has paid half the amount. I believe it would stop a great deal of hire-purchase trading if we were to reduce the figure from one-half to one-third, as over a very wide range of commodities traders could not sell goods on hire-purchase without loss falling on them, in view of the possibility of the goods being of very reduced value if returned when only one-third had been paid.
This particular amendment fell down in the British Parliament but that does not mean that it did not gain a good deal of backing. I think there is a pretty big volume of opinion that one-third of the payment is a substantial amount, while it gives the individual a chance of breaking away on what would be regarded equitable terms.
Amendment put and declared negatived.
Section 5 agreed to.
Amendment No. 13 not moved.
Section 6 agreed to.
Amendment No. 14 not moved.
Sections 7 and 8 agreed to.
SECTION 9.
Amendment No. 15 not moved.
I move amendment No. 16:—
In sub-section (1) (d), line 54, to delete the words "the examination ought to have revealed" and substitute therefor the words "in the opinion of the court the examination ought to have revealed to a trained observer".
Here I am trying to protect the individual who, obviously, is not an expert on the value of things, particularly of furniture. I can only point to the fact that young people making a purchase in the early stage of their career accept what might appear to them to be an exceedingly nice article, but eventually find that it is not all that it appeared to be. As the Minister stated on the Second Reading there are certain types of people who must be protected from themselves, and I suggest that this is what the amendment proposes to do. It is only people who are experts in the business will be able to assess the value of articles.
Here again a question arises whether a person acquires goods on hire-purchase should not be asked to rely on his own judgment, at least to the same extent as if buying goods for cash. My main difficulty in relation to the amendment is the problem that would arise if we were to attempt to define in this Bill what constituted a trained observer. We could not possibly have the phrase there without attempting to define it. Having regard to the general nature of the Bill, it would be almost impossible to get a definition which would stand a test of legal action. The scope of the Bill is so wide that we could easily see a position where persons would become professional trained observers in cases of legal actions arising out of the measure. Whether they would be accepted by the courts as such I could not determine. I think the section as it stands is reasonably adequate. The agreement under which the hire-purchase transaction is made is assumed to have in it an implied condition that the goods are of merchantable quality.
The section continues further.
Yes.
"so, however, that no such conditions shall be implied by virtue of this paragraph as regards defects of which the owner could not reasonably have been aware at the time when the agreement was made..."
That is the same protection as is available to the seller of goods for cash. Under the law as it stands he is not regarded as having misrepresented the goods or misled the buyer, and if any defect found subsequently were of such a character he could not reasonably be expected to know it.
Similiarly, there is no obligation upon the seller of goods to pay damages to a purchaser, where he sells for cash under a hire-purchase agreement, if the purchaser of the goods has examined a sample of the goods and claims in respect of a defect which should have been apparent during the examination. I would remind the Deputy that I have expressed the view that we should not, in matters of this kind, endeavour to put the purchaser of goods under a hire-purchase agreement in a different position from that of the purchaser of goods for cash. The purchaser of goods for cash has to protect himself by inspecting the goods. He is not entitled to claim a refund of the purchase price on the ground that the goods have defects of any kind which he should have seen when he bought the goods. We think it is undesirable to put the hire-purchaser in a different position. We do say to him that "the goods are of merchantable quality, your agreement so specifies, even though it does not say so in so many words, but it will be so interpreted by the courts; the seller of the goods will not be liable to you if the defect of which you complain is of a kind of which he could not have been expected to know; you will have no complaint if the defect in respect of which you claim is one that you should have seen when you were buying the goods." Defect, in this connection, may not mean inferior quality. It may refer to the unsuitability of the article purchased for the particular purpose for which the buyer requires it.
I do not suppose that people buy bicycle tyres under hire-purchase agreements, but it would not be a ground for a claim if a tyre was of the size that a purchaser requested but found, when he went home, not to fit his bicycle. One can easily see circumstances in which a similiar issue would arise in respect of articles of greater value. Clearly, while most traders will endeavour to meet the wishes of their customers if they can do so without loss to themselves, we think it is sufficient to prescribe in the law that the complaint must be in regard to a defect of which the purchaser was not aware when he was effecting the purchase.
Amendment, by leave, withdrawn.
Section 9 agreed to.
SECTION 10.
I move amendment No. 17:—
Before Section 10 to insert the following new section:—
(1) In respect of any goods to which this Act applies the rate of profit charged by the owner thereof shall not exceed such rate as may be prescribed by the Minister from time to time.
(2) In prescribing a rate of profit under this section the Minister shall have regard to the manufacturer's price of the goods concerned but in any case the Minister shall not prescribe a rate of profit which exceeds 50 per cent.
The Minister will recall that, on the Second Reading of the Bill, I drew attention to another side of this hire-purchase business, namely, the rate of profit. This Bill undoubtedly makes provision for a good deal of protection so far as the hire-purchaser is concerned. It contains quite a number of features in regard to protection that did not operate heretofore, but I suggest to the Minister that these will, in a certain sense, be negatived, if the vital precaution is not taken of controlling the rate of profit so far as particular goods are concerned. Here again arises the tendency there is for trading of this particular kind. Young married couples at the outset are concerned to set up a house. Their only consideration is to get a suite of furniture. They are not so much concerned with the question of price. At least, at that stage price is not of such great importance to them because they know that the payments are to be spread over a considerable period. It is, however, important, because of the extent of this trade and at the stage in their lives when so many people enter into these contracts, that they should be rigidly protected from anything in the nature of excessive or inflated prices.
My information is—I cannot vouch for anything by way of a positive statement—that the rate of profit covering certain sections of this trade runs to about 100 per cent. If that be so, then obviously it is an exorbitant rate. It is also clear that it is capable of being cut down considerably. On a previous occasion I indicated that, in my view, the only way of getting around that was by means of a system of licensing. The Minister did not seem to fall in with that suggestion. As an alternative, therefore, I suggest some measure of internal or domestic control, so far as cost is concerned, so as to ensure that all the other beneficial sections of this Bill shall flow in favour of the hire-purchaser, and so that he may be protected at the very earliest stage in respect of the cost of the articles that he purchases. The amendment that I have put down may not be the ideal one. I am putting it forward as my point of view on this matter, because I think there is a real necessity to control the rate of profit in regard to the class of transactions contemplated under this Bill.
Before the war there was a Control of Prices Act. That Act could have been used to limit the profit on hire-purchase transactions, or to fix the prices at which goods could be sold under a hire-purchase agreement, either generally or in relation to individual cases. At the present time, of course, price control is operated under the Emergency Powers Act. This matter of hire-purchase agreements was considered in that regard. There are enormous complications in any attempt to regulate the cost of hire-purchase facilities in a general way, having regard to the enormous variety of goods that are sold under such agreements and the various circumstances of their sale. I hope to be able to introduce, some time this year, further legislation which will amend and extend, in some respects, the pre-war Control of Prices Acts to provide for the time when the normal machinery of control will be substituted for the present emergency system. If there is to be control of the cost of hire-purchase facilities generally, or in relation to particular commodities, it should be under the general prices control system, and not under this Bill. Clearly, if the Deputy's amendment were to be accepted we would have to put in a number of consequential provisions to direct how the power of the Minister should be operated, the penalties that would apply for non-compliance, and so forth. These provisions are in the Control of Prices Acts at the moment and will be in the new legislation. I suggest to the Deputy that, while I would not dispute with him the possibility that in various circumstances it may be necessary for the State to take action to control hire-purchase facilities, it should take that action under its general powers to regulate prices, and not in this Bill.
The Minister's assurance meets my point.
Amendment, by leave, withdrawn.
Section 10 agreed to.
Section 11 agreed to.
SECTION 12.
I move amendment No. 18:—
In sub-section (1), line 37, to delete the word "action" and substitute the words "legal proceedings in a court of competent jurisdiction".
The object of the amendment is to make it clear what is meant by the word "action". The word does not necessarily exclude legal proceedings. Obviously legal proceedings are intended, but there is no definition of the word "action" in the Bill. There is a definition of it in the Sales of Goods Act. I suggest that the word be added so as to make it perfectly clear what is meant.
This is a drafting amendment. I had the matter examined by the Parliamentary Draftsman's office, and they have advised me that the additional word suggested by the Deputy is not necessary: that the word "action", as it stands, means any form of legal proceedings for possession. They have also advised me that the words "legal proceedings in a court of competent jurisdiction" are not necessary, since the jurisdiction of the appropriate court is laid down in the Courts of Justice Acts. I will ask the draftsman to examine the Deputy's observations in this connection, if he will let the matter stand over. I am sure the Deputy will agree with me that it is a drafting matter solely and we can rely on the draftsman's decision.
Amendment, by leave, withdrawn.
Amendments Nos. 20, 22 and 23 are consequential.
Section 12 agreed to.
SECTION 13.
I move amendment No. 19:—
Before Section 13 to insert the following new section:—
(1) It shall be an offence under this Act for any person to communicate otherwise than by a sealed letter or verbally with a hirer regarding any transaction to which this Act applies.
(2) Any person who contravenes the provisions of the immediately preceding sub-section of this section shall be guilty of an offence under this section and shall be liable on conviction thereof to a fine not exceeding £20.
Here again the Minister will recall that I mentioned that a certain sort of practice obtains, I hope in an isolated form, with certain firms engaged in this business; that is, bringing undue pressure to bear on the domestic circumstances of the hirer to such an extent that his credit might be destroyed in his local area. There are reputable firms engaged in this business and I know they would not resort to such practices. I am informed, however, that this sort of thing does take place and it is desirable that steps should be taken to ensure that the personal position of the hire-purchaser is not prejudiced. I think communications should not be sent through the open post or by telegraph. It is a private transaction and should be regarded as such and any communications should be by sealed letter or by a verbal arrangement.
I must say that I have been unable to find any evidence of the prevalence in this country of a practice which would render necessary or desirable action along the lines suggested by the Deputy. For reasons that I have stated already, I have an objection to placing a hire-purchase transaction in a special or privileged category. Furthermore, if we considered there were grounds of public policy why we should require traders selling goods on hire purchase agreements to carry on their business on a confidential basis, in order to make that effective we would have to go much further than the Deputy suggests. It occurs to me that the mere sending of a letter in a sealed envelope does not protect anybody, unless we specify what shall appear on the outside of the envelope, because the outside could reveal, as much as the plain van taking away the furniture, the nature of the business in which the recipient had been engaged.
I presume we would also have to provide that the oral transaction would have to take place otherwise than in the presence of witnesses. You could tell a man verbally in the middle of O'Connell Street that he owed you money in circumstances far more embarrassing to him than if you were to send him a telegram about it. Apart from the impracticability of avoiding entirely the difficulty the Deputy has in mind, I am not at all sure that it is desirable that we should require that hire-purchase transactions should be carried on in that confidential way so that there should be in relation to them obligations between the parties concerned which do not apply in ordinary business transactions.
Amendment, by leave, withdrawn.
Amendment No. 20 not moved.
As regards amendment No. 21, the Circuit Court limit is gone now and the amendment, therefore, is not being moved.
Amendments Nos. 22 and 23 not moved.
I move amendment No. 24:—
In sub-section (4) (c), line 24, after the word "goods" to add the words "and subject to the fulfilment of such other conditions by the hirer or guarantor as the court thinks just".
I would like to discuss amendments Nos. 24 and 25 together, because one hinges on the other.
They may be discussed together.
Amendment No. 25 seeks to delete sub-section (6). The Minister will note that sub-section (4) (b) sets out that the court may,
"(b) make an order for the specific delivery of all the goods to the owner and postpone the operation of the order on condition that the hirer or any guarantor pays the unpaid balance of the hire-purchase price at such times and in such amounts as the court, having regard to the means of the hirer and any guarantor, thinks just, and subject to the fulfilment of such other conditions by the hirer or a guarantor as the court thinks just, or."
I am suggesting that, in addition to these words being included in paragraph (b), they should also be attached to paragraph (c), which says that the court may:—
"make an order for the specific delivery of a part of the goods to the owner and for the transfer to the hirer of the owner's title to the remainder of the goods."
I suggest adding the words as they appear in paragraph (b). This is very much linked up with sub-section (6) and I regard it as one of the most important of my amendments. This relates to the recovery of goods. Heretofore there has been no protection of the individual hirer, but he is now protected to the extent that once one-third of the purchase price is paid the owner cannot attempt to recover until he takes action through the courts. An important point arises as to the power of the court to decide what portion of the goods should be returned in certain circumstances to the owner. Certain powers are vested under paragraphs (b) and (c). The court may order certain sections of the goods to be returned to the owner and, in certain circumstances, some of the goods become the property of the hirer. In sub-section (6) it is stated:—
"The court shall not make an order transferring to the hirer the owner's title to a part of the goods unless it is satisfied that the amount which the hirer has paid in respect of the hire-purchase price exceeds the price of that part of the goods by at least one-third of the unpaid balance of the hire-purchase price."
I suggest that in the lower ranges of payments, that is, payments that are just border-line with the one-third, there is no protection for the hire-purchaser. In fact, under that formula it is possible, and it will happen, that after a substantial sum has been paid the hire-purchaser will have no right to the goods at all and, by direction of the court, they will be handed back to the owner.
The formula is obviously a mathematical formula—one-third of the unpaid balance. I suggest that is unduly favourable to the owner and will act with extreme severity on the hirer, particularly in the lower ranges. I will give an illustration. Say a man buys goods to the value of £100 and one of the articles is assessed at £20. In order to get the protection of the courts he must have paid one-third of the price. Let us assume that he has paid £35. The formula comes in and we calculate one-third of the unpaid balance, £65, and it works out at £21 13s. 4d. To get the value of the goods which the man desires to retain, you will have to deduct one-third of the unpaid balance from the actual price paid, £35. It will be found that he is below the figure at which he may be permitted to retain the article which he desires to retain.
"...the amount which the hirer has paid in respect of the hire-purchase price exceeds the price of that part of the goods by at least one-third..."
The Minister will find that it is based on the formula graded down and that is how it operates. For instance, suppose a man has purchased a suite of furniture and, say, a table and the table costs £20. He has paid £35 for the two and he is seeking to retain the table. The court decides that his domestic circumstances are such that it is no use trying to continue the contract and the man says: "Let me have the table. I have paid £35". The court immediately proceeds to this formula and reckons that, on the basis of the formula, the goods he may retain would be to the value of about £13. The man will lose the table, plus the £35 he has paid. If the fraction in that formula is altered to one-quarter of the unpaid balance, he is still caught, to the extent of about 30/-, but, if it is altered to one-fifth, he gets out, and I therefore suggest that there is a case for an alteration of the formula in favour of the hirer in the lower ranges of payments to at least one-fifth.
Otherwise, what will happen is—and this is in line with the illustration I have given—that there will be a continuation of the disability or hardship under which hire-purchasers are now suffering. They have paid a certain price on the goods. Court proceedings follow and their payments are void and the goods forfeited. That is pretty serious, and it is my reason for seeking to delete that sub-section entirely and for adding to paragraph (c) of sub-section (4) the clause:—
"and subject to the fulfilment of such other conditions by the hirer or guarantor as the court thinks just."
My idea was that the power of determination in respect of goods to be returned to the hirer on the breakdown of a contract should rest with the court on the merits of the case. That will not operate so long as sub-section (6) is retained and I ask the Minister to look into that paragraph, because it is the kernel of the whole question of hire-purchase.
There are two amendments in the Deputy's name. Amendment No. 24 relates to sub-section (4) of Section 13. I do not agree with that at all. I think it would be detrimental to the interest of the hirer of the goods to make the change which the Deputy proposes. Sub-section (4) provides that, when an action comes before the court, the court can do one of three things: it can make an order to the effect that all the goods go back to the owner of the goods; it can make an order for the delivery of all the goods to the owner of the goods, but delayed, subject to whatever payment the court considers reasonable by the hirer or guarantor and to the fulfilment of conditions imposed by the court, which, presumably, will be conditions designed to protect the goods and to safeguard them from damage while they remain in the possession of the hirer; or it can say: "This transaction is over and done with. There is no good in expecting that the hirer will, in some weeks' time, be in a position to resume the transaction. We must divide up the goods in the way which is most equitable between the owner and the hirer" and then say of these goods purchased under a hire-purchase agreement that such-and-such shall go back to the owner and the balance shall remain with the hirer.
That closes the whole business. I think that paragraph (c) should be final and definitive. It is intended that if the court proceeds under paragraph (c), it is bringing the transaction to an end, and it is both unnecessary and undesirable to provide there for the imposition of conditions by the court, which means that the business may be carried on further, possibly involving further legal proceedings on the question of whether these conditions were observed or not. Having regard to the provisions of paragraph (b), it is unnecessary to do that, bearing in mind the three things the court can do—to decide that the man who purchased the goods under a hire-purchase agreement has no intention of paying any more for them and that he fairest thing to do is to send the goods back to the owner; to postpone an order to that effect, taking into account the possibility of the man, who has perhaps been temporarily unemployed, getting his job back and making that postponement subject to certain future payments and conditions as to the protection of the goods and the owner's interest in the goods; or to wind up the whole transaction by dividing the goods between the parties. I think that section should remain as it stands. The words which the Deputy proposes to add would in fact be, if anything, against the interest of the hirer of the goods.
Except for the existence of sub-section (6).
I want to come to sub-section (6). What happens when the court decides to split up the goods— that the transaction is over and done with and that it will terminate it on the fairest possible basis by splitting the goods up between the owner and hirer? If account was taken merely of the amount which the hirer had paid and he were allowed to retain that proportion of the total goods, it would be quite clear that the hirer of the goods would have had the use of the balance of the goods over a period without charge, and that would be unfair to the owner. It is proposed, therefore, that there should be a formula. The Deputy has given an illustration of how that formula would work in a particular case and the case he chose was the case in which the total amount paid by the hirer under the agreement barely exceeded the one-third which gives to the hirer the protection of the court. In that case, it is clear that the formula will not permit of the hirer of the goods getting any substantial proportion of the goods on an order from the court.
In the particular case the Deputy mentioned, the total value of the goods purchased under the agreement was £100 and the amount paid by the hirer, £35, the balance unpaid being £65. One-third of that balance is roughly £22, and consequently the total amount of goods which could be left in the possession of the hirer of the goods by the court would be £13, the amount paid, less £22, being one-third of the balance unpaid, or £13 worth of goods. That proportion of the total amount of the goods which is being left with the hirer may appear small in relation to the amount he set out to buy, but remember that he paid only £35 on the £100 worth of goods he got, and the owner was, first of all, deprived of the opportunity of selling them to somebody else and was getting back, for his £35, £87 worth of goods which are now second-hand and consequently not of the same value to him as a trader as they were originally and for which he cannot hope to get, on resale, anything approaching the original price which he asked for them.
In other cases, where the proportion of the purchase price paid by the hirer is a greater proportion of the total, the result may be more favourable to the hirer of the goods. I have here an illustration. I have assumed that the total purchase price is £60 and that the amount paid was more than half— namely, £36—leaving a balance of £24 outstanding. One-third of the balance is £8 and £8 is deducted from £36, which was the amount paid, which leaves £28. Now the court can order that goods to the value of £28 should remain in the possession of the hirer. What the owner of the goods is getting is £8 in consideration of the fact that the hirer of the goods had the use of the whole £60 worth up to the time that the matter reached the court. It is clear that the owner of the goods should get some payment for the fact that the goods have been delivered to the hirer and have been in use by the hirer for a period of time and that he has been denied the opportunity of selling them to somebody else and that the goods have deteriorated in value by reason of the user of them by the hirer.
The calculation of one-third provided in paragraph 6 is intended to provide that, even if the court directs that proportion of the goods should go back to the hirer, he will still get some compensation for the fact that these goods were in use by the hirer over a period of time and that their value has deteriorated by reason of the fact of that use by the hirer. It seems to me that the provision we propose to allow here is fairly moderate compensation for the deterioration in the value of the goods because of their use by the hirer during the period in which the transaction was alive. In my view, if we were to attempt to make it less-to provide for a lower rate of compensation for the owner of the goods—many people who are engaged in business of that kind would not engage in it at all because the risk of loss would be very greatly increased. If I, as a trader, have a suite of furniture and I sell that suite to a purchaser under a hire-purchase agreement and after three, four, six, or eight months the purchaser of that suite of furniture comes to me and says: "I cannot go on with this transaction" and there is a court proceeding which decides that, instead of getting back my £100 (which was the purchase price of the suite in the first instance) I am only to get back some of the furniture, after it has been nine months in use, clearly I am entitled to some compensation for the depreciation in value as well as for the fact that during the nine months, or so, during which this transaction was alive the purchaser had the use of the furniture and I had not. I think it would be unreasonable to cut it down.
I can understand the point of view of the Minister that when you go up this scale progressively it is in favour of the hirer; but what I am concerned with is the lower ranges just bordering on the one-third, which brings the man into court and in which, under the illustration I have given, there is no protection at all and it simply means the man will forfeit the goods as well as the payments. I am quite prepared to admit that during some period of time the man had the use of the whole of the furniture and that, of course, the contract will be exercised; but the Bill proceeds to exercise that contract rather arbitrarily to the extent of the provision of that one-third. I am anxious to protect the individual in the lower ranges of these payments in order to ensure that the position which obtains to-day where the individual can come in at will and seize the goods, because of a breakdown in payments, without any compensation shall not be continued under this Bill. Because of the matters which I have brought to the notice of the Minister and the manner in which this formula is working, might I ask the Minister to take this particular paragraph back and let us have another look at it on the Report Stage?
Certainly. I am quite willing to discuss it, but I am anxious that the Deputy should look at it from the point of view of the owner of the goods. Let me repeat what I said already on the Second Reading. It is not intended to prohibit this form of trading but, rather, that we should enable such trading to continue. Clearly we will not do that if we impose such an onus on the traders that they cannot continue in business without incurring losses. If we desire people to continue selling bicycles, suites of furniture, and motor cars on the hire-purchase system, then clearly we must protect them against losses involved in cases where the transactions are not completed. In the ordinary case the transaction is completed and the ownership of the goods passes automatically and everybody is satisfied. But in cases where the hirer of the goods pays only one-third of the price and then wants to call the whole thing off, clearly the risk of loss to the trader is very considerable because, instead of having a new bicycle, or a new wireless set, or a new motor car, he now has a second-hand article and the possibility of selling that at a profit is considerably less than the possibility of selling it when it was new. We must, therefore, compensate him, not merely for the use of the bicycle, or the wireless set, or the motor car by the hirer during the period in which he held them, but also for the deterioration in value of the goods by the time they revert to the original owner. In any case where I myself have worked out the calculation it seems to me, taking a fair view of the interests of the hirer and the owner, this method of calculation works reasonably well. However, I am quite agreeable to adopting the Deputy's suggestion.
I am very interested in what the Minister says. What strikes me about the whole matter is that the section ignores the condition of the goods on return. I think the Minister is right if the condition of the goods on return is bad; but I think Deputy O'Sullivan is right if the condition of the goods on return is excellent.
It is the court which decides it. We put this limitation on the power of the court.
A higher amount may be fixed.
Oh, no. The court has discretion within the limits set out here; one of the limits is that it cannot make an order transferring to the hirer unless it is satisfied that the amount which the hirer has paid in respect of the hire-purchase price exceeds the price of that part of the goods—that is, the part that is given to the hirer—by at least one-third of the unpaid balance. That seems to be a reasonable calculation in normal circumstances. But there might be a case where the condition of the goods has so deteriorated that the court would take a different view and say: "Give the whole of the goods back to the owner", with no part of them at all for the hirer, because that would be a fair thing to do.
I withdraw the amendment and will re-enter it on the Report Stage.
Amendment, by leave, withdrawn.
Amendment No. 25 not moved.
Section 14 agreed to.
SECTION 15.
I move amendment No. 26:—
In sub-section (1), line 47, after the word "agreement" to insert the words "to which this Act applies".
This is a drafting amendment for the purpose of making it clear that this section does not apply any further than the Bill itself applies.
I am advised that it is not necessary. Section 2 decides the type of agreements to which the Bill applies and it does not apply to any agreements except those specified in Section 2.
There is a practice among business people when quoting sections from an Act to quote just one section and send a copy of that particular section to a customer, saying: "This is the law". The customer has not got a copy of the Act and will, in the majority of cases, accept the copy of the section by itself. It appears to be rather an absolute and complete prohibition and for that reason I suggest the putting in of these words would not do any harm and would make it clear at the same time that the section does not go any further than the Bill itself intends to go.
Section 2 clearly defines the types of agreement to which the Bill applies.
I think it is the custom to repeat that and say: "In any section to which this Act applies". The difficulty here is that this is based on the English Act and that may have been accepted as the best-quality draftsmanship because of its being English; but I think myself that the quality of our draftsmen is much higher than that prevailing in England.
Nobody can quote this Act against an agreement unless it comes within Section 2, anyway.
Amendment, by leave, withdrawn.
Section 15 agreed to.
Sections 16 to 19, inclusive, agreed to.
SECTION 20.
I move amendment No. 27:—
In line 61 to delete the word "twenty-five" and substitute therefor the word "fifty".
The object of Section 20, as explained in the memorandum, is to reduce the cost of litigation and to give certain powers of jurisdiction to the District Court. I suggest that that policy of reduction of costs, so far as litigants are concerned, might more usefully be met by a figure of £50 rather than £25.
The Deputy understands that what we are doing here is bringing actions for the recovery of goods let under hire purchase agreement into line with actions for the recovery of ordinary debt. I am not sure that we should go further than that. If we are to go further than that I think it should be considered by the Minister for Justice and the amendments made to the Courts of Justice Acts. What we are doing here is merely bringing hire purchase cases into line with cases for the recovery of ordinary debt and I would not like to take upon myself the extension of the jurisdiction of the District Court to the extent the Deputy suggests because it would appear to involve, in order to maintain the principle of uniformity, the extension of the jurisdiction of the District Court generally. It may be that there will be proposals affecting the jurisdiction of the District Court, in which case the Deputy could make a point on such legislation but here I think we are doing enough if we bring actions for the recovery of goods let on hire purchase agreement within the jurisdiction of the District Court subject to the same limit as applies in the case of ordinary debt.
Amendment, by leave, withdrawn.
In regard to amendment No. 28, I accept that and will introduce an amendment on Report Stage. Deputy Coogan raised a point in discussion on the Second Reading which, on examination, appears to have some substance in it. An amendment will be necessary to clear up the matter.
Amendments Nos. 28 and 29 not moved.
Section 20 agreed to.
Amendment No. 30 not moved.
Sections 21 and 22 agreed to.
SCHEDULE.
Amendment No. 31 is related to amendment No. 8, which fell.
Amendment No. 31 not moved.
Schedule and Title agreed to.
Bill reported with amendments.
Report Stage ordered for Tuesday, 4th June.