Seanad Éireann debate -
Thursday, 27 Jun 1946

Vol. 32 No. 2

Hire Purchase Bill, 1946—Committee.

Sections 1 and 2 agreed to.

SECTION 3.

Mr. Duffy

I move amendment No. 1:—

Before sub-section (2) in page 3, to insert the following new sub-section:—

(2) Before any hire-purchase agreement is entered into in respect of any goods, the owner shall state in writing to the prospective hirer, otherwise than in the note or memorandum of the agreement, the total hire-purchase price at which such goods are being offered for sale:—

Provided that this sub-section shall be deemed to have been sufficiently complied with—

(a) if the hirer has inspected the goods or like goods and at the time of his inspection tickets or labels were attached to or displayed with the goods clearly stating the total hire-purchase price, either of the goods as a whole or of all the different articles or sets of articles comprised therein, or

(b) if the hirer has selected the goods by reference to a catalogue, price list or advertisement, which clearly stated the total hire-purchase price either of the goods as a whole or of all the different articles or sets of articles comprised therein.

This section provides that the cash price shall be marked on the goods in certain cases. The amendment seeks to ensure that the hire-purchase price will also be marked, as showing the total sum. The usual practice with firms dealing in hire purchase is that they tell you a suite of furniture is £100 for cash, and so much per month for three years. The hire-purchase agreement itself will set out the total hire-purchase price, but in the memorandum which is handed to the hirer, in the first instance, there is no obligation to state the total hire-purchase price. The obligation is to state the cash price and the amount of the instalments. I suggest that this amendment would improve the structure of the Bill inasmuch as it would ensure that the hirer will know not merely the cash price but the total sum for which he will be liable under the hire-purchase agreement which will be made subsequently.

Minister for Industry and Commerce (Mr. Lemass)

I confess that I cannot see the necessity for this amendment. I think that Senator Duffy must have misread the provisions of sub-section (2). The memorandum of agreement, which is to be made under that sub-section and a copy delivered to the hirer within seven days of the making of the agreement, must contain a statement of the hire-purchase price, the cash price, the amount of each instalment by which the hire-purchase price is to be paid, the date on which each instalment is to be paid and a list of the goods to which the agreement relates. Personally, I cannot see what further particulars the hirer of the goods requires. In my view the sub-section places sufficient obligations upon the owner of the goods, and it is not necessary to add to them.

Mr. Duffy

The first sub-section deals with the cash price. The memorandum, which will be handed to the hirer before he purchases the goods under sub-section (2), deals with the agreement which is made after he has purchased the goods. I am merely asking that the information which will subsequently be given to him in the hire-purchase agreement should also be given to him in the memorandum which is handed to him before he purchases.

Mr. Douglas

I think the Minister is right in this case although I think I can see what Senator Duffy is getting at. When I first read the amendment I did not. I am afraid the amendment would not work out in practice and would lead to serious complications. I think that Senator Duffy has in mind a certain type of trader who is not a bona fide cash trader at all. He only exists for the purpose of getting as much as he can for goods in the way of hire purchase.

There are, of course, genuine and useful hire-purchase arrangements made by firms which do a large proportion of their trade in cash. Occasionally, they convenience a person by agreeing to a hire-purchase price. It would be extremely difficult, and I think almost impracticable, in the case of a firm that prefers to do, and that intends to do, a cash trade to insist that it must have all its goods marked not only with the cash price but with the hire-purchase price as well. That would mean that it would have to instruct its assistants that if a person asked for goods under a hire-purchase arrangement the assistant would have to take out a memorandum and hand it to the intending purchaser. I am assuming now the case of a bona fide trader who has, or ought to have, his goods marked with the cash price. If he has not done that, then he must hand a memorandum or a pro forma invoice to the intending purchaser. That is a perfectly proper provision but, generally, the hire-purchase customer does not say anything about hire-purchase until afterwards. He may come in and examine, say, a wireless set two or three times. He eventually decides to purchase a particular make and he mentions that he proposes to do so by hire-purchase. Such a provision as Senator Duffy contemplates might be onerous on the trader and cause a great deal of trouble for no purpose except to save the purchaser the trouble of adding up. If the purchaser cannot, from all the particulars supplied him, ascertain the hire-purchase price, I am afraid it would be almost impossible for the State to help him.

Mr. Lemass

The owner will not allow the goods out of his possession until the memorandum contemplated in sub-section (2) is signed by the hirer. If the memorandum is not signed by the hirer and if the provisions of sub-section (2) are not complied with, the owner will have no right to recover the goods from the hirer. Before the hirer gets possession of the goods, he will have signed the memorandum containing all the information set out in subparagraph (b).

Mr. Duffy

We are dealing with two aspects of this matter. Sub-section (1) provides that, before any hire-purchase transaction is entered into, certain things will have to be done. The prospective hirer will be told the cash price, the number of instalments and the amount of each instalment.

Mr. Lemass

Not under sub-section (1). Under sub-section (1) he will be told the cash price. He may decide to buy the goods on the hire-purchase system and the firm may agree to sell him the goods on that system. Before the hirer gets possession of the goods, he will have to sign a memorandum which will set out the hire-purchase price, the cash price, the instalments he has to pay, the dates on which he will pay the instalments and a description of the goods he is buying. I do not think that any more effective method could be adopted of bringing to his notice the nature of the arrangement he is entering into.

Mr. Duffy

The instrument mentioned in sub-section (1) is "a note or memorandum"—

Mr. Lemass

The words in sub-section (1) are "otherwise than in the note or memorandum". That is the note or memorandum referred to in sub-section (2). What sub-section (1) provides is that the hirer will be informed in writing of the cash price or be given an opportunity of seeing the goods marked clearly with the cash price or provided with a catalogue setting forth the cash price. If he decides to buy on the hire-purchase system, sub-section (2) comes into operation. Under sub-section (2) before he gets the goods, he must sign this memorandum of agreement in which is set out the cash price, the hire-purchase price, the instalments he has to pay, the dates on which he has to pay them and a description of the goods he is buying.

Mr. Duffy

The Minister may not be aware that all the houses concerned in this business are not of the best type. A case was brought to my notice some time ago in which a customer living in the country came into a Dublin house and bought certain articles of furniture for the sum of £75 under a hire-purchase agreement. The customer took the goods home and discovered that they were not what they purported to be. He wrote to the traders and asked them to take the goods back. They agreed. They told him to come along and they would give him goods in substitution. The assistant who was dealing with the transaction brought the customer around the shop and showed him goods which were to replace those he was returning. The manager came on the scene in the course of the discussion with the customer and the customer asked him how much the goods were. The manager butted in before the assistant could say anything and said £95. They were the same goods but an additional £20 had been added to the price for the trouble of taking back the goods sent out. I can give the Minister the name of the firm and the names of the people concerned if he wishes. That is why I thought it would be desirable that a person should be told the total hire-purchase price as he is told the cash price.

Mr. Lemass

He is not only told that but he has to sign an agreement containing it.

Mr. Douglas

The case Senator Duffy makes is met by the provision that the cash price must be shown or marked on the goods. That is a wise and proper provision. I notice shop windows where you see a certain article marked "This as so much weekly". That has misled thoughtless people. They think they are getting something much more cheaply than they are really getting it. If the total cash price is marked, the hire-purchase price can be arrived at quite simply.

Amendment, by leave, withdrawn.

Amendments Nos. 2 and 3 not moved.

Mr. Douglas

On the section, in sub-section (2), there is reference to a note or memorandum which is commonly called the hire-purchase agreement. I am concerned about the interim period in regard to this agreement. The persons engaged in this business have hire-purchase agreements drawn up and it may take some time to get new agreements printed. It would seem to be desirable to provide for an interim period of about two months during which it would be sufficient to have a memorandum of the kind prescribed typed. Otherwise, you would hold up the completion of hire-purchase agreements until new forms could be printed. The matter is only a small one.

Mr. Lemass

An addendum to the present agreement form could be printed containing the schedule.

Mr. Douglas

I am not sure that that would comply with the provisions.

Mr. Lemass

I do not read the provisions as meaning that the whole memorandum must be on the same sheet.

Mr. Douglas

Neither do I, but I am not sure that the attaching of another sheet to it would satisfy the law. I am only thinking of the interim period.

Mr. Lemass

I am afraid that any change of the law will mean the scrapping of some documents prepared in relation to the previous position.

Mr. Douglas

I am not objecting to that. This Act will require a certain amount of consideration. I understood from the Minister that the object of this Bill is to protect the hirer and that the owner of the goods can protect himself, provided he does not commit a breach of the Act. That is a perfectly sensible point of view. I am not much interested in this business and frankly I am not bothering personally, but I know from those who are a little bothered that they want to get some legal advice in regard to their new purchase agreements and to protect themselves in the way that seems desirable. That may take two or three months and I want to be sure that in the meantime pending the printing of new forms that it will be all right to attach a memorandum to this effect.

Mr. Lemass

I should think it would.

Mr. Duffy

Might I say that this section is already operative in Britain? It has been in operation there for some years. A number of the firms which finance hire-purchase in this country are, in fact, British Finance Corporations. I understand they have these forms in use at the moment. They have been in use for some time because they happened to have used them in Britain so I do not think the section is going to create any difficulty.

Mr. Lemass

This Bill has a much wider scope that the British Act. It applies to many classes of commodities to which the British Act does not apply.

Mr. Duffy

But to the extent that it applies to goods which are covered by the British Act, these forms are already in use.

Mr. Douglas

I think the situation will be met by the statement made by the Minister because it really means that for a short period he would not take any action.

Mr. Lemass

It is not a question of my taking action.

Mr. Douglas

I am well aware of that, but the opinion which he has expressed will probably meet the case. It is only a question of whether the Act should be applied strictly in the first month or so.

Mr. Lemass

I certainly interpret the section as meaning that all the documents constituting the memorandum would be the memorandum.

Liam Ó Buachalla

Is it not a common practice for insurance companies to paste additions to the terms of the policy over the policy?

Mr. Douglas

Yes, but they have not got an Act like this. I am not trying to make a lot out of it.

Mr. Lemass

The same problem will have to be faced by people who sell motor cars on this system. They will have to make their agreements subject to the provisions of the Bill.

Question put and agreed to.

SECTION 4.

Mr. Duffy

I move amendment No. 4:—

In sub-section (1), page 4, line 9, to delete the word "five" and substitute the word "two".

This section deals with credit-sale agreements as distinct from hire-purchase agreements and it provides that before making any credit-sale agreement under which the total purchase price exceeds £5, the seller shall state in writing to the prospective buyer what is required in the section. I am endeavouring to secure that the provisions of the section shall apply where the total purchase price exceeds £2. The Minister, in fact, mentioned in the Dáil certain commodities which form the subject of such sales—for instance, books like Dalton's History of Ireland. If I remember aright the sale price of that book on the instalment system was £2 5s. 0d. There are also some encyclopædias which are sold on the instalment method.

Mr. Lemass

But not on the hire-purchase system. Under hire-purchase the ownership of the books does not pass to the hirer until the transaction is completed. I think it is extremely unlikely that there are very many credit sales under £5. Even if there were, the purpose of this Bill is to prevent undue hardship on persons entering into such transactions. It seems to me that there is no likelihood of hardship arising out of a credit sale for an amount less than £5 amongst the class of persons who are likely to get credit sale facilities. I think the Senator is mixing up hire-purchase and credit sales. In the case of credit sales, the ownership of the goods passes to the buyer forthwith and he is under an obligation to pay for the goods by instalments. In the case of such transactions under £5, the people who get those credit sale facilities are not likely to suffer undue hardship I should think.

Mr. Douglas

I take it that the credit sale agreement refers only to a case where there is a specific agreement to pay an instalment of £5 or more. If the Minister goes into a shop and orders a suit and they gave him credit there is no agreement. He might pay at once or he might pay in five instalments.

Mr. Lemass

It would not be desirable to reduce the limit mentioned in the section. In fact the limit of £5 is small having regard to the purpose of the Bill.

Amendment, by leave, withdrawn.

Mr. Duffy

The other amendments to the section are consequential.

Amendments Nos. 5, 6, 7 and 8 not moved.

Section 4 agreed to.

SECTION 5.

Mr. Douglas

I move amendment No. 9:—

In sub-section (3), page 5, lines 11/12, to delete the words "wrongfully retains possession of the goods" and in lieu thereof insert the words "fails to return the goods to the owner".

I put down this amendment to raise a point which to me involves some little difficulty. Sub-section (3) says:—

"Where a hirer having determined a hire-purchase agreement under this section, wrongfully retains possession of the goods ..."

It seems to me that if he were to hand the goods to his neighbour next door and did not retain possession of them himself, he would defeat the object of this section. I think that if he fails to return the goods to the hirer, then he should be ordered by the courts to deliver the goods to the owner. Incidentally, I am told by people carrying on this business that one of the difficulties with which they have to contend is that when they go to take back certain goods, they find that they are not there and that a neighbour has taken care of them. This involves the question of what is retaining possession. My wording seems to meet the case better than the present wording of the section as to what a hirer is obliged to do when he terminates an agreement. When the hirer wishes to determine a hire-purchase agreement, it seems to me that the proper thing to do is to return the goods to the owner.

Mr. Lemass

I think it would be more unreasonable to put on the hirer the obligation to return the goods. If the hirer has bought a grand piano on the hire-purchase system, it is not reasonable to expect him to hoist that on his back and trot up with it to the trader's door. In any case, it would be a considerable hardship to expect him to be responsible for the physical return of the goods to the trader's door. I should not like to express a legal opinion as to what is the exact significance of the phrase "wrongfully retains possession of the goods" but I think that all that it is necessary to secure is that the owner of the goods has the right to get them back—in other words the right to go to the hirer's house to collect the goods. It would I think be going too far in the other direction to expect the hirer of the goods to deliver them back to the trader particularly in a case where the goods might consist of a suite of furniture.

Mr. Sweetman

At the same time though I can see the point of view of the Minister this is a section by virtue of which a hirer can say at a particular point: "I do not want to continue this transaction" and having said that he is not put under any liability at all. It is finished. Supposing for example the hirer wanted to take a dishonest view. He is doing something on his own, something on his own volition, as Senator Douglas said, and having done something on his own volition and having given notice he then does not retain possession of the goods. The goods are next door and I do not see how he can be brought within the terms of sub-section (3).

Mr. Lemass

Perhaps if I drew attention to the provisions of sub-section (8) it would clear this up. That places on the hirer the obligation to tell the owner where the goods are and makes it an offence if he fails to do so.

Mr. Douglas

That does not get over my point at all. Under Section 8 he can say: "I have not got them any more: they are with the neighbours." He is obliged to do that but that does not get over the difficulty. It seems important to me to have this provision correct. The Minister could possibly pick a hole in my wording but I do not think it is a very serious hole because no owner is such a lunatic as to prefer to go to the court instead of sending out a van for the grand piano, for instance. Surely it is unlikely that he would do that. I could not conceive it. There are better minds than mine in other places concerned with this thing but I think it should not be hastily passed over. It should be given some further consideration. I want to be sure that the hirer has refused to hand the goods to the owner when the owner has taken whatever steps he should take to get them. That is one of the difficulties which arises here, I think.

Mr. Lemass

When the hirer has determined the agreement and has paid half the purchase price then it is unlawful for him to retain possession of the goods when the owner comes to collect them. He must under sub-section (2) take good care of the goods or be liable to pay damages for his failure to do so. If the owner requires the information, the hirer must tell the owner where the goods are. Taking all three points I think the owner is sufficiently safeguarded under the circumstances.

Mr. Douglas

My only object was to draw attention to this matter and to try to make the provision workable. I still think that that point was not taken advantage of fully when the drafting took place, but I am not going to press this. I am fully in favour of this Bill and I read it through only to see if I could improve it.

Mr. Lemass

That section is similar to a corresponding section in the British Act. As I already said, we had, in the preparation of this Bill, the advice of people concerned with the administration of the British Act and they brought to our attention sections in the British Act which, in application, had proved to be weak. This was not one of the sections in connection with which they mentioned that any difficulty arose.

Mr. Duffy

As far as I see, what Senator Douglas is proposing is to reverse the idea of the Bill. The idea in the Bill is that a person may not retain goods where he is given notice that he is terminating the agreement. Apparently Senator Douglas wants the person concerned to be responsible for returning the goods.

Mr. Lemass

I think what Senator Douglas really meant was that the hirer must give every chance to the owner of the goods to collect them.

Mr. Douglas

That is all.

Mr. Duffy

But that is not what the amendment suggests in its present form.

Mr. Douglas

I am not an expert on amendments, but I put that down to draw attention to what might be a difficulty. I am in a similar position as the Minister inasmuch as the advice I got in this matter came from people who operated on the other side.

Amendment, by leave, withdrawn.

Sections 5 and 6 agreed to.

SECTION 7.

Mr. Douglas

I move amendment No. 10:—

In sub-section (1), line 52, to delete the word "four" and in lieu thereof to insert the word "seven."

This is a very small point. I consulted some people in relation to it and the actual fact is that in many cases, with the week-end intervening, it would not be possible to do this in four days. I am well aware of the fact, of course, that there is no big penalty if you do not do it but I think we ought to make the provision more general there.

Mr. Lemass

There is no penalty unless a month elapses.

Mr. Douglas

It seems to me that we should do something that is practicable in a Bill of this kind. Where you are dealing with a lot of accounts in some cases on a Friday morning or a Saturday, it is not possible to guarantee that this will be done in four days. Seven days would, in my opinion, be better. You will be able to carry out that obligation in that period. I know of course that a person would not be penalised until a month elapsed.

Mr. Lemass

I consider that four days is ample. This is only a simple copying job and having regard to the fact that the penalties do not operate until a month elapses I think it is better to leave the Bill as it is.

Mr. Douglas

I am not going to press this but I still think that it might be impossible for anyone carrying on a considerable business. I do not however place much importance on it.

Amendment, by leave, withdrawn.

Mr. Duffy

I move amendment No. 11:—

At the end of the section, in page 6, to add the following new sub-section:—

(3) It shall not be lawful upon the termination of the default mentioned in the preceding sub-section or at any time to require from the hirer or buyer the payment otherwise than by an extension of the time within which under the agreement payments are required to be made of any arrears which may have accumulated during such default.

I want to say at once that this amendment is not satisfactory to me. I want to draw attention to a matter which I think requires looking into. The section itself deals with a case of failure —where the owner of the goods fails to deliver particulars asked for by the hirer and one of the penalties is that no payment will be made while the default continues. If the default continues for a month, in the case of weekly payments, four weeks' arrears will have accrued at the end of that month. I want to ensure that the owner will not be entitled to go to the hirer at the end of the month and demand four weekly instalments in one lump sum. That is what is aimed at in the amendment. I do not think the amendment is very satisfactory but that is its purpose.

Mr. Lemass

I could not agree with that. As a matter of fact, I am somewhat perturbed at the provision of Section 7 myself. It is taken from the Moneylenders Act and seems to put a rather severe obligation on the owners of goods engaged in hire-purchase transactions and I would not like to add to its severity. If the owner fails to give information requested by the hirer under this section that does not alter the hirer's obligation to pay instalments as they become due. We do not relate the failure to any provision of the agreement, but we say that if for a month he fails to do this he is guilty of an offence and is liable to prosecution and fine. I think there is little reason for believing that the owners of goods will fail to provide the information, realising the severity of the penalties involved for them. I would hesitate to go further than we have gone—to go the length suggested by Senator Duffy—because I think it might become an abuse and be used, perhaps, by hirers to their own detriment.

Mr. Duffy

But he may not be a defaulter.

Mr. Lemass

That is true.

Mr. Duffy

Supposing someone enters into an agreement to pay £1 a week on furniture or on some other article and the owner for some reason fails to supply the particulars which are asked for, then under this section he can come along at the end of a month or before the expiration of a month and ask the hirer to pay four weekly instalments, £4. That might be a very substantial sum for the hirer in that case. I am seeking to provide that, if this default takes places, the hirer on resuming payment, will continue to pay £1 a week but will pay for four weeks longer than provided in the agreement.

Mr. Douglas

In practice, the person paying a weekly instalment knows quite well and, if there is the slightest doubt, the shop would send the account to him two or three times to remind him. That is the usual case. It is only necessary in the case of death or illness, where another person requires information, and it will be sent at once. The very odd case is where there is a wrong entry in the books, or where it is credited to the wrong address, and the wrong account is sent. That is a rare case. I do not want anything that provides undue harshness. I know there are some firms who take a rather brutal line, but the majority of traders want to keep their customers, and to do so they must pay attention to their circumstances. That is a commonsense attitude. Of course, there are some individuals one may never want to see again and they are treated harshly. I do not want anything that would provide for non-payment, as that would be very much to the detriment of both sides. My own experience with some of the poorer customers is that they are very anxious not to hold up payment and it is sometimes even a nuisance that, instead of monthly instalments, they want to pay by smaller amounts more often in the month. The staff do not want it, but I say they will have to put up with it, as anything that accumulates may mean hardship.

Amendment, by leave, withdrawn.

Section 7 agreed to.

SECTION 8.

Question proposed: "That Section 8 stand part of the Bill."

Mr. Sweetman

I raised a point on the Second Reading, and the Minister met me quite well by his reply, but I want to get it perfectly clear. The provision in the hire-purchase agreement that the goods are not to be taken out of the jurisdiction is a legal provision?

Mr. Lemass

That is so.

Mr. Sweetman

Such a provision is not avoided by this section. Similarly, a provision that the hirer is at all times bound to give information if he changes his residence, his ordinary home in the ordinary sense, is also a legal provision, I take it, for the purposes of the Bill.

Mr. Lemass

An agreement can require the hirer of the goods to keep them in his personal possession, or any such provision can be attached to the agreement, including a provision that the hirer shall give notice if he changes his address.

Mr. Douglas

I rather had the view that anything that was legal in the way of protection for the owner is still legal unless prohibited by this Bill and that is the correct attitude to take.

Mr. Lemass

That is correct.

Question put and agreed to.

SECTION 9.

Mr. Duffy

I move amendment No. 12:—

In sub-section (1), page 6, to delete all words after the word "quality" in line 48 to the end of paragraph (d), line 54.

The paragraph with which I am concerned reads something like this:—

"In every hire-purchase agreement there shall be an implied condition that the goods shall be of good merchantable quality, so however that no such condition 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 or, if the hirer has examined the goods or a sample thereof, as regards defects which the examination ought to have revealed."

I have been told that in Great Britain this has given rise to many difficulties. One example mentioned to me was that of someone going into a shop and buying furniture which was alleged to be mahogany but which in fact merely had a veneer of mahogany. No one but an expert could have seen that defect until he brought the furniture home and then discovered he had purchased something which was not of the type he thought he was buying. I was endeavouring to meet that, and it occurred to me it could best be met by taking out all the words after "quality" and finishing there. I see no weakness in that, but I think there is a good deal of weakness if we insert the words after "quality", particularly the last paragraph, where a sample can be taken as an indication of the quality of the goods. One is not always sure that the goods are supplied in accordance with the sample, and there is, further, the fact that many a person going in to buy furniture would not be an authority on the quality of the goods exposed in a furniture shop.

Another type of case was mentioned when a similar clause to this was going through the British House of Commons. Someone complained of an incident where a customer went in to buy a mattress and believed he was buying a hair mattress, but when he took it home he found it was filled with shavings. It is not easy for an ordinary person to discover that without more minute examination than can be given when you see only a sample in the furniture shop.

Mr. Summerfield

May I suggest that an article of furniture made of veneer is still of merchantable quality? The two cases he has set out come under the heading of false description. A mattress is merchantable, even if filled with shavings. I think the paragraph is absolutely essential.

Mr. Duffy

Why?

Mr. Summerfield

Goods are covered by warranties in a general sense. If an article is described as being of mahogany and turns out to be something else, the person can be prosecuted.

Mr. Lemass

Under the Sale of Goods Act. What is proposed is to extend to goods purchased under the hire-purchase system the same protection as is provided under the Sale of Goods Act, 1893. I think Senator Summerfield is quite right, that that does not protect the owner of goods who misdescribes them. If he passes off the veneered furniture as solid mahogany, or a mattress filled with shavings as a hair mattress, they are, certainly, defects in the goods of which the owner was aware, or should be aware, when selling them. The only protection we are giving here is a reasonable protection. The agreement must be interpreted as implying that the goods are of merchantable quality.

Mr. Duffy

Except?

Mr. Lemass

Except the defect is one which the owner of the goods could not be reasonably expected to know of or the buyer of the goods, having inspected the goods, had an ample opportunity of discovering any defect in the goods for himself. A defect may cover suitability of goods for the particular purpose for which the hirer requires them. I said, on the Second Reading, that I did not think it was desirable to go any further than to extend to persons buying goods on hire-purchase the protection which is at present available to a person buying goods for cash. That is what the section sets out to do, to give to such persons the protection which the other class of purchaser has under the Sale of Goods Act.

Mr. Duffy

Except that there is the danger that people buying goods on hire-purchase and paying for them at £1 or £2 a month are very likely to be less discriminating than the customer who can pay £100 cash down. I think that is recognised in the Bill. I am in agreement with part of what the Minister has said, but I suggest to him that the latter part of this paragraph, which says, "or, if the hirer has examined the goods or a sample thereof, as regards defects ..." I think that these words ought not to be in the paragraph because they pretty well deprive the hirer of any protection, once he has examined the goods or a sample of the goods. I would ask the Minister to look into the matter.

Mr. Lemass

We must give some protection to the trader, too. I think we cannot leave him completely defenceless.

Mr. Douglas

I have a certain amount of sympathy with Senator Duffy's point of view as regards the words "sample thereof", but I do not think that, otherwise, he has made a case for his amendment. I am all in favour of a hire-purchase customer being put in the same position as a cash customer as far as warranty and everything else is concerned. If he carries out his obligations, he should have the same warranties and be as well off as the cash customer. I understand from the Minister that is what the Bill does. I am in agreement with the Minister on that. Senators must bear in mind that, with the very best will in the world, it is not possible for a trader when he buys goods from a manufacturer to examine everything. I know, of course, that in the case of a cash customer if the goods turn out to be unsatisfactory they come back to you, and the trader then gets on to the manufacturer. He backs his own customer against the manufacturer and the thing is settled. If the penalty under a hire-purchase agreement were to be that if such a thing happened it invalidated the agreement, then I think business people would hesitate about having hire-purchase agreements at all.

Mr. Summerfield

It very often happens that the actual article the hirer is going to get is not in stock at the time the purchase is made. That happens very often in the case of commercial transactions when people are buying for cash. They make their purchase by examining a duplicate of the article they require. Therefore, I think there is a lot of wisdom in the retention of these words which at first sight may seem to be to the disadvantage of the hirer. We all know that it very often happens that the actual article, whether it be a suite of furniture or a motor car, that a person is going to get may not be in the shop at all at the time the purchase is made. The purchaser will see a duplicate of it, and on that will enter into the agreement. So long as a person gets an article that is no less good in quality than the one he has inspected, I do not see that there is any hardship in this provision.

Mr. Lemass

I think that if this provision were to be deleted it might lead to some abuse. One can contemplate a person going to a cycle shop and entering into negotiations to buy a bicycle under a hire-purchase agreement. He notes that a spoke in the bicycle is broken. The trader has not detected it, but the intending purchaser says: "O.K., I will take it in a hurry," knowing that he can claim that the bicycle was defective when he got possession of it, and in that way he could invalidate the hire-purchase agreement. I think there must be some protection, namely, that the defect was one that the trader could not be reasonably expected to know of himself, and, secondly, that the buyer did not know about when he was buying.

Mr. Duffy

I think the Minister's point is not relevant to this amendment because even though the spoke in the bicycle was broken the bicycle was still merchantable. This paragraph relates to warranty, that the article is of merchantable quality except in particular cases and where these considerations apply there is no warranty. In other words, there is no warranty where the hirer sees the goods if he could be reasonably expected to know of the defects, or if he has seen a sample. I am stressing the word "sample". If someone goes into a shop to buy goods under a hire-purchase agreement, and if he is not sufficiently skilled to see the defects, he is deprived of his warranty because of the later provision in this paragraph.

Mr. Lemass

I would be very dubious of the effect of deleting this provision. It could easily bring hire purchase to a standstill.

Amendment, by leave, withdrawn.

Sections 9 and 10 agreed to.

SECTION 11.

Question proposed: "That Section 11 stand part of the Bill."

Mr. Sweetman

Would the Minister say what the section means?

Mr. Lemass

I asked that question myself.

Mr. Douglas

I asked two lawyers and I could not get an answer.

Mr. Lemass

This section is designed to simplify the proofs required, and consequently to reduce the costs involved, in actions for the recovery of goods let under hire-purchase agreements. In such actions, proof of demand by the owner and subsequent failure or refusal to deliver, by the person in possession of the goods, is invariably required, and may entail the production of a considerable volume of evidence. This section provides that proof that a written demand for the return of the goods has been made by the owner, after the right of possession accrued but before the commencement of the action, and that the hirer continues to retain possession of the goods will be sufficient evidence on this point.

Mr. Douglas

That would seem to be in favour of the owner.

Mr. Lemass

Yes.

Mr. Sweetman

It appears to me that what the section does is that instead of proving (a) you must prove (b). I quite appreciate that, in the ordinary way, if an action is started for possession of an article you must prove that before you commence the action you demanded possession and that possession was refused. Now, instead of proving that, you have got to prove that you made a request in writing to get the goods.

Mr. Lemass

The point is that evidence that the demand was made and that the hirer failed or refused to return the goods must be produced in the action. A great deal of evidence is very often necessary to establish that point. The purpose of the section is to simplify that procedure by making the mere possession of the goods by the hirer, after a demand for their return has been furnished, evidence of the fact that he has failed in his obligations, and that his retention of the goods is adverse to the owner.

Mr. Sweetman

I have got it now. What it really means is that whereas, in the ordinary way, you had to prove a demand for possession, you will still have to prove that demand but you are being let off proving refusal to give possession. It has been drafted in the most abstruse manner.

Section 11 agreed to.

SECTION 12.

Mr. Duffy

I move amendment No. 13:—

In sub-section (1), line 33, to delete the word "one-third" and substitute the word "one-fourth".

This section deals with the case of a person who has paid part of the hire-purchase price of the goods and then defaults. Sub-section (1) states: "Where goods have been let under a hire-purchase agreement and one-third of the hire-purchase price has been paid ... the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by action". That deprives the owner of one of the privileges he enjoyed of sending somebody around with a van and seizing everything he could get in the house, including goods which were not his. The purpose of my amendment is to prevent his recovering possession if the hirer has paid one-fourth of the price instead of one-third.

If the hire-purchase price of the article was £100 and the hirer has paid £25, I am endeavouring to secure that the owner will have no right to seize that article without going into court and obtaining an order. Under the Bill, there is no obligation on him to go into court unless the hirer has paid one-third of the purchase price, which is £33 6s. 8d. in the case I have mentioned. That is the difference between what the Minister proposes and what I am endeavouring to secure. I am proposing to give to the hirer who has paid 25 per cent. of the purchase price the security which the Minister is offering the hirer who has paid one-third of the purchase price.

Mr. Lemass

It is a question of judgment as to the point at which hardship begins. We are trying in this Bill to establish a proper balance of rights as between the owner and the hirer of the goods. It is, obviously, a hardship on the owner of goods if somebody enters into a contract to buy them on the hire-purchase system, gets delivery and pays one instalment and no more.

Mr. Duffy

One instalment.

Mr. Lemass

At what stage are we to shift protection from the owner to the hirer? What the Bill proposes is that the owner will not be able to recover possession of the goods, except through court action, after one-third of the purchase price has been paid. Let us consider the position from the point of view of the owner. He has goods for sale. By entering into this agreement and delivering the goods to the hirer, he denies himself an opportunity of selling the goods to somebody else. He loses possession of the goods for some time. He takes a chance that the goods may be damaged or that some situation may develop which will involve him in loss. He may get the goods back after only a few instalments have been paid with a very reduced re-sale value. I think it is a tradition of the motor trade in normal times that a new motor-car loses one-third of its value when the owner drives it home for the first time. It is quite clear that we must give the owner certain protection, too, and recognise that people will often rush into those hire-purchase agreements and regret them on payment of the first instalment or after only a small number of instalments have been paid.

On the other hand it is clear that, where a substantial amount has been paid, the hirer of the goods is entitled to protection. It is only when a substantial amount has been paid that hardship is likely to be experienced by him if, for any reason, he defaults in payment and the owner recovers possession of the goods. I think that one-third of the price is reasonable, having regard to all the circumstances, in the case of the hirer, and I think that, if we went below one-third, we would be acting unfairly to the owner. For that reason, I should not like to accept Senator Duffy's amendment. As the Bill stands, once one-third of the purchase price has been paid, the owner has no longer the right to recover possession of the goods, on default by the hirer, except through the court, and the court may make various types of order. The order of the court may mean that the owner will not get back the whole of the goods or there may be some alteration in the agreement to the detriment of the owner. In my judgment, it would be moving the point of balance too far from the owner if we were to reduce the figure from one-third to one-fourth. I agree that, if the hirer has paid one-third, he is entitled to the protection the Bill gives. If he has not paid one-third, the owner is entitled to get recovery of the goods in the normal way. If the figure were altered to one-fourth, I think that we should be acting unfairly to the owner, who is, inevitably, bound to suffer loss if the transaction does not go through.

Mr. Douglas

I gave this matter some consideration when I read the Bill and I agree with the Minister. One of the difficulties is that this Bill applies to cheap wireless sets, costing £6 or £7 in normal times, and to an expensive motor-car. If the majority of wireless sets sold on hire-purchase terms were to come back after one-third of the price had been paid, hire-purchase would cease. The loss would be too great. We must leave hire-purchase a workable proposition for the trade, while protecting the hirer. In the case of hire-purchase, I know most about wireless sets. If a wireless set came back in normal times after one instalment had been paid, a trader would be very lucky if he got half-price for it. That is apart from any loss he might suffer by having his money out. As a rule, the instalments are not pressed for a month or so after they are due. If the figure were changed to one-fourth, one set of traders would get out of hire-purchase and the other would add to the total charge in order to cover unsatisfactory purchases.

The net result, if you fine the thing too closely, would be to defeat the very object you are seeking to achieve, because it will add to the cost of these goods and, therefore, impose a hardship on poorer people. I think, as I said before in this House, that as a general rule the experience is that the poorer people of the artisan class are the most satisfactory in payments. I would not think that they are by any means the most difficult customers.

Mr. Duffy

I think that if Senator Douglas considered the purpose of the amendment, he would not talk of the problems that would arise if too many articles sold under a hire-purchase agreement are returned. He spoke of goods being returned after one instalment had been paid. That has nothing to do with the amendment. I think the Minister was right when he said that what is involved is a matter of judgment—whether the court should intervene when one-fourth of the purchase price is paid or whether it should be ousted until one-third is paid. Let us assume that somebody buys £100 worth of furniture and that he pays £30 in three instalments, and then defaults. There is no protection for the hirer under the Bill, as I understand it, any more than there is to-day. The owner or the finance corporation who is collecting the instalments then has the right to send his van to the home of the hirer, to send a few strong men to take possession of the goods.

Mr. Lemass

He has the right to recover under the terms of the agreement. But the point I was making is that the hardship we are eliminating under this Bill really arises in the case of a person who has paid 60, 70 or 90 per cent. of the purchase price and then defaults. Under his existing agreement, he is liable to lose the goods. At the present time, hire-purchases are carried out under the law of contract and the hirer may not fully appreciate the obligation he is entering into when he signs the contract. The contract may give the right to recover the whole of the goods, if there is any default in payment at any stage of the transaction. It is because cases have been reported of hirers who have paid three-fourths or perhaps 90 per cent. of the purchase price and then lost the goods because of inability to complete the transaction, owing to unemployment or something of that kind, that we are legislating to protect them. We are bringing that protection right to the point where they have paid only one-third of the purchase price.

I think that is as far as we can reach and if we go further we shall be acting unfairly to the owners of goods, and the consequences will be as Senator Douglas suggests. Some traders will cease to engage in this trade because they cannot make a profit and others will remain in it by increasing the price of goods sold on hire-purchase to those who have to buy their goods by that method. The owner of the goods generally loses if the transaction is not completed. He loses by reason of the fact that he denies himself the opportunity of selling those goods to somebody else and because, when they come back, they are second-hand and cannot be sold at the same price at which they could be sold when new. Then he has the additional trouble of delivering the goods and collecting them again when the transaction is terminated. I think we would be taking an undue risk of being unfair to owners if we reduce the limit set out in this section below one-third of the purchase price. The recovery of the goods cannot be secured except through the courts after one-third of the value has been paid and it would be unreasonable to go below that.

Mr. Douglas

I do not think I was quite as clear as I might have been when I spoke earlier on this amendment, as clearly Senator Duffy did not understand me. My point is that the trader does not want back his goods during the first instalment periods because, if he takes them back, he loses on the transaction. He will not be anxious to get them back during the period while the first one-third of the purchase price is being paid because he may lose on the transaction. Generally he will lose if the goods come back before one-third of the price is paid. It will be with the greatest reluctance that he will take them back. When it comes to the time, however, that he has received two-thirds of the price, he may be getting something out of the transaction and if he is not too scrupulous he may be anxious to take them back. If you are going to reduce the fraction of the purchase price from one-third to one-fourth for the purposes of this section, you are only going to add to the total cost of the goods, particularly having regard to the fact that the owner will have to take into account the possibility that he will have to incur the legal expenses of going to court should he wish to recover the goods if there is a default in payment.

Mr. Duffy

There is nobody contemplating the owner taking back the goods at all except——

Mr. Lemass

Except it pays him to do it. It only pays him if a substantial amount of the purchase price has been paid.

Mr. Duffy

I wonder. Take a case where a man buys £100 worth of furniture under a hire-purchase agreement. Three instalments of £10 each, or £30 in all, are paid on that furniture. Under the Bill the owner can send his van to the house of the hirer and take that furniture back into his shop. He has then £100 worth of furniture again.

Mr. Douglas

It is not worth £100 then.

Mr. Duffy

I have shown here from actual experience of cases in the City of Dublin that the profit which the hire-purchase trader has on the cost price of the goods is over 100 per cent.

Mr. Summerfield

That is ridiculous.

Mr. Duffy

It is ridiculous but it is true.

Mr. Summerfield

I do not think it is true.

Mr. Duffy

I have had experience of talking to a certain Dublin shop craftsman who made furniture here in Dublin. He identified for me, a suite of furniture which he had made. He told me the cost price, the price at which it could be bought in an ordinary cash sale, and the hire-purchase price. The hire-purchase price showed a profit of well over 100 per cent., so that this suite of furniture would not cost the trader more than £50. I am prepared to say that in some cases it did not cost more than £40. After £30 has been collected in instalments on a hire-purchase agreement the stuff is taken back again into the shop. Is that not the kind of conduct we should stop? I agree with the Minister that there is a point at which we can allow the owner to seize the goods, because that is what he is doing, but we ought to make that point as near as we can to the starting point. I do not think I am putting it unduly low when I suggest that that point should be 25 per cent. of the purchase price. Let us bear this in mind. We are not depriving the owner of the right to get his goods. We are only prescribing the procedure under which he is entitled to get the goods. If two members of this House were to have a quarrel about the ownership of a horse they would be obliged to have that quarrel resolved in the court, no matter how strong one of them might consider his claim to be.

Mr. Douglas

And get one-third of the horse back?

Mr. Duffy

Let us say it is a greyhound. He at any rate must submit his claim to the determination of the court. Under my amendment we are not asking the owner of the furniture to submit his claim to the court unless the hirer has paid more than one-fourth of the price which he contracted to pay.

The Minister takes the same view, only that he is prepared to allow the boys with the van to come along and, without leave or licence from anybody, to exercise the right to seize goods if less than one-third of the value is paid. That is just what is between us.

Mr. Lemass

They have no right to seize goods unless the hirer has defaulted on his part of the contract.

Mr. Duffy

Or the owner alleges he has defaulted.

Mr. Lemass

The Senator is basing his argument on the assumption that a trader in furniture, under the hire-purchase system, makes 100 per cent. profit. Let me say in support of his contention that there has been the complaint during the war years that traders in furniture under hire-purchase agreements were unduly disposed to exercise the right to recover property on default of payment particularly when substantial sums had been paid because furniture had risen very steeply in value and the re-sale prices might be substantially above the price at which it was sold originally. In normal times, however—and we must relate this Bill to normal times—there has been no trade in this country which suffered so much from price-cutting and sweated labour conditions in order to have cheap prices, than did the furniture trade.

We have had many discussions in the House concerning these small back-room furniture factories that were operating and which were so detrimental to the interests of the better and larger concerns. So I think it is true to say that in that particular trade before the war competition was so intense that 100 per cent. profit could not have been made.

Mr. Duffy

Competition was intense in the manufacturing end only.

Mr. Lemass

Intense in the trade too. I will say this in support of my contention: that there was no class of goods more consistently advertised in the newspapers than furniture, particularly furniture available on the hire-purchase system.

Mr. Duffy

Which proves that they had the money, and had money available for advertising.

Mr. Douglas

I do not know if they pay for advertising until they see can they keep it up. Seriously, however, my chief objection to this is that if you make it too tight the net result will be it will be only the firms such as described by Senator Duffy that will do the business. You have to make it easy for the firm which does a bona fide cash business so that it can sell hire-purchase furniture at a reasonable price and make enough money just as if they sold it for cash. If you make it very difficult and if you cut into their rights to have the goods back again, all that will happen is that only those who can by trick methods sell at a big profit will do this trade and you will not be helping the people who want to keep as near as they can to the conditions of the cash customer.

Amendment, by leave, withdrawn.

Mr. Douglas

I move amendment No. 14:—

To add to the section a new sub-section as follows:—

(4) Nothing in this section shall prevent an owner from taking temporary possession of goods for the purpose of repairs or other agreed purpose.

Mr. Lemass

The answer to that is that there is nothing in the Bill which prevents it.

Mr. Douglas

That is the point I wanted to raise and I think it is well that everybody should be satisfied that that is so. It all depends on the meaning of the words. In the first place, it talks about enforcing the right to recover and then it goes on to say: "if an owner recovers possession of goods in contravention of the foregoing sub-section...." I put down this amendment, which may not meet the point I want to cover, in order to get this thing clarified.

It is rather important for the operation of this Bill that the people interested in operating it should know exactly where they stand. There should be nothing whatever to prevent an owner from sending his van and taking an article at any particular time and having it put in order and repaired. He may require to do that if he wants to keep the article in order and the hirer wants that done in his own interest because he wants the article kept in proper order.

There is another form of this practice I have come across particularly where people not in such good circumstances but who are scrupulously honest are concerned. I know of several cases where the hirer came to the owner and said: "I am out of work. I am sorry I cannot pay the instalments, but I will pay them ultimately. Would you mind taking this thing back and keeping it safe for me?" A decent trader will do that for the hirer. He knows he is losing some interest, but he wants to keep his customer, and that has in fact happened. I would like to be quite sure that that thing can still be done. I am not sure that it cannot and it may well be that it can. I was a little doubtful about that matter and I am anxious to see that there will be no suggestion that there is a danger that hirers will lose their rights when an article is taken back for repairs in that way. If there was any question of them losing their rights they would be indeed chary of sending the article back, but instead they might get a man to do temporary repairs which would not be satisfactory.

Mr. Lemass

I am advised that there is nothing in this section which prevents the owner and hirer agreeing as to the repair of an article by the owner, or even for the periodic inspection of an article by the owner. The section relates to the recovery of possession of an article and only to that.

Mr. Sweetman

But possession would be recovered if a wireless set, for instance, was brought into the shop of the owner for repair. Possession would then be parted with and would then go back to the owner.

Mr. Lemass

I should say "the right to recover possession".

Mr. Sweetman

I can see a particular case happening quite easily. Supposing all the instalments have not been paid and the owner sends out notice that he will take over possession unless the instalment is paid. Then at the commencement of the enforcement of the right to possession, the hirer says that if the wireless set is put in order it will be all right. The owner then only goes and gets that wireless set by agreement with the hirer, and I think that under the previous sub-section—sub-section (1) of Section 2— there has been there a contravention of the section, that the owner is recovering in contravention and is liable to the penalty.

Mr. Lemass

If I understand the Senator properly, he is contemplating a situation in which the owner cannot recover possession of the goods except through the court, because more than one-third of the purchase price has been paid, but there has been a default on some subsequent instalment. Instead of going to the court for the recovery of the goods, however, he persuades the hirer of the wireless set to send it down to him to be repaired and, having got it in his possession, holds on to it.

Mr. Sweetman

No; he is going to send it back, but he is confronted with this section.

Mr. Lemass

And he would have recovered possession by means of a trick only.

Mr. Sweetman

It is not a trick to keep goods sent back for repair. The owner finds that these goods of his want repair and he brings them back to his shop for a fortnight. He repairs them and then redelivers them to the hirer, but he has then broken the provisions of this section.

Mr. Lemass

He has not; no.

Mr. Sweetman

That is clearly my reading of it.

Mr. Douglas

I am not sure how far the fortnight would come into it. I think that that may often happen. You take a wireless set, but it could apply just as much to a motor car, especially at the present time. It is the time taken for the purpose of repairs that counts. You may have certain types of wireless, American and other classes, and you cannot get the necessary parts for them. It is useless for anyone to think that the repairs may be done in a fortnight. It may take six or seven weeks to get the repairs done. During that period I am not at all certain that the trader would not run a danger by keeping that article even though it was understood and agreed on. Nobody will agree that it will take seven weeks for the purpose of repairs even though it is agreed that it should be repaired. I must confess that from the discussion we have had on this I would be very much inclined to advise our mechanics to be very careful if they were to take anything back for repairing. I am not at all happy about it.

Mr. Lemass

I do not see where the Senator's difficulty comes in. I do not know how that section could be read to imply that the owner and the hirer could not agree for the repair of the goods, or why the original hire-purchase agreement could not provide for inspection of the goods to ensure——

Mr. Douglas

Inspection is quite different.

Mr. Sweetman

We are all quite happy about inspection.

Mr. Douglas

I am referring to taking back to the premises of the goods for repair. That is in the case of many articles of furniture, probably in the case of a motor car and certainly in the case of a wireless set, the only really satisfactory way of doing proper repairs of any serious kind.

Mr. Summerfield

I am becoming a little alarmed about this, now that it has come to the question of a motor car. In the case of a motor car, it is the common practice that the payments extend over 18 months or two years, in normal times. After 18 months, it will happen that a car will come in in the ordinary way for extensive engine overhaul. If I am to read into Senator Douglas's remarks that there is a danger that, in doing that, even though we ourselves would not be doing the hire-purchase business——

Mr. Douglas

That is different.

Mr. Lemass

What you must not do is enforce a right to recover possession of the goods.

Mr. Summerfield

I am worried about the danger which Senator Douglas seems to envisage. If he is correct, one could not even repair a car.

Mr. Sweetman

That is what I am afraid is the position.

Mr. Lemass

It seems to be quite clear. Sub-section (1) merely debars him from enforcing a right to recover, a right he might have under the contract. He cannot enforce that right if one-third of the purchase price has been paid. It is only where he acts in contravention of sub-section (1), that is, enforces a right to recover, that he becomes liable to the penalties set out.

Mr. Douglas

Take the case of a motor car. Suppose I have a motor car on hire-purchase from Senator Summerfield. I do not want to go into the position in which somebody else is doing the financing for him, because that is a complication. So far as I am concerned, the contract is with him. Suppose I drive that car into his garage and say that I want an overhaul, telling him that I want it in a fortnight's time. I know a little about the motor business and I know that, with the best will in the world, it will not always be done in the time specified. Suppose, at the end of a fortnight, I walk in and find that the engine is down and then tell him that I must have that car back again, that he must send it back to me. He cannot do it and I then say that he has refused to deliver it. This may seem a little fantastic, but I want to know what is enforcing a right to recover. I think that getting hold of it in the street, or getting it into a garage and keeping it, would be held to be enforcing a right to recover. At what point is it to end?

I am only arguing for a provision that nothing will prevent its being brought in for the purpose of repairs. I am not arguing that it is a bad section and I am not arguing against the section. I am arguing that it would be wise to put into the section some such amendment as I suggest. From what Senator Duffy and Senator Sweetman have said, I am convinced that it would be wise.

Mr. Lemass

It convinces me of this: if you buy a car from Senator Summerfield, pay three instalments and then default in the fourth instalment, get it repaired somewhere else.

Mr. Summerfield

Under the law, as Senator Sweetman knows, a motor repairer has a lien for repairs, irrespective of any agreement.

Mr. Sweetman

You cannot have a lien on your own property.

Mr. Summerfield

But it is not.

Mr. Sweetman

It is.

Mr. Summerfield

It has been sold through a hire-purchase firm.

Mr. Sweetman

We are assuming that you are doing your own hire-purchase financing.

Mr. Summerfield

I hope the Minister is right in his contention.

Mr. Sweetman

I hope so, too.

Mr. Duffy

In this case, if a conflict arises, as it probably will in rare cases, it must be determined eventually by some court of competent jurisdiction. I think that is the answer to the whole point.

Mr. Lemass

No, it could undoubtedly be so, but what Section 12 provides is that if the owner enforces a right to recover, where one-third of the purchase price has been paid, the hirer becomes absolved from the terms of the contract and has the right to recover from the owner through the court whatever he has previously paid under it.

Mr. Duffy

Will the issue not arise for decision in the court whether the owner acted properly or not?

Mr. Lemass

Certainly.

Mr. Douglas

It is not a question of whether he acted properly or not, but whether he exercised a right to recover.

Mr. Lemass

Enforced a right to recover.

Mr. Douglas

I think it is worth a little consideration as to whether some such proviso would not be advisable.

Mr. Lemass

When I got the Senator's amendment, I had the point examined, and I was assured that, on a purely legal interpretation of the section, it did not preclude the possibility of the owner and hirer agreeing to have repairs carried out and that that would not involve under any circumstances, an enforcement of a right to recover.

Amendment, by leave, withdrawn.

Section 12 agreed to.

SECTION 13.

Amendment No. 15 not moved.

Mr. Douglas

I move amendment No. 16:—

In sub-section (4), line 30, after the word "part" to insert the words "the length of time that instalments had remained unpaid after the due date".

The amendment raises a point which I think is of some importance. Where the court has to deal with the distribution of the goods between the hirer and the owner, it seems to me that it is essential that the court should take into consideration the relative cost up to that date, and that, in order to do that, it must be allowed to take into consideration the amount of interest which the owner will have paid on his money through instalments not having been paid. On the previous amendment, Senator Summerfield made reference to a hire-purchase company. It is well known that in many cases, particularly in the more important transactions, the person who sells the goods, and who would normally sell them for cash, if they happen to be sold on a hire-purchase basis, goes to a particular firm. There are various types of agreements, but in most cases the person who sells the goods will have to pay cash to that firm which is carrying out the cash transaction if the hirer does not meet the instalments.

For instance, if I sell an article on the basis of 12 months' instalments— in normal times, it would be convenient for me, but I am sorry to say at the moment stocks are so small that it is not much advantage—the article is handed out to some reputable hire-purchase firm and I have to meet them by means of payments over 12 months. There are, of course, other methods. If on this article A.B. is six months in arrears, I am paying interest at 5 per cent., 5½ per cent. or whatever rate the hire-purchase company has and I am losing actual money all the time. If you do not let the court take that into consideration, you force the owner to take action very much sooner than he otherwise would. That is my main concern.

I am looking at this matter from the point of view of a person who has had only a very limited experience of hire-purchase, but who, because of that limited experience, has learned enough to talk about this Bill to a number of other people who have very wide experience and who have come to see me. I look at it from the point of view of the ordinary cash-trading firm which does a limited amount of hire-purchase. In practice, we would never dream of enforcing any right to recover or go to the courts, probably for six months. Possibly, if it were a large article or an easily perishable article, it may be sooner. The general tendency is to be very reluctant indeed to use any undue pressure, as one does better business and one is able to keep the customer. Also, one may get one crook and will not do any more business with him, while the majority of hire-purchasers are going to pay and will pay if given time.

As this Bill stands, the firm which is most lenient and which waits longest before pressing for recovery will lose most, if the court cannot take into consideration the length of time during which the instalments have remained unpaid. The length of time is the main factor in the cost of hire-purchase and, if that is excluded and the court cannot do anything about it, this is not going to work satisfactorily and will work against the hirer. I am pretty well convinced that that is right, though I have not consulted a Senator like Senator Summerfield to see his point of view about it. The only answer that would satisfy me would be that the court can do it.

Let me make it clear. A person comes in and takes a 12 months' hire purchase and makes it into a two-year one. If they had asked for a two-year period, they would have had to pay a higher rate of interest. If they take two years on the 12 months' agreement the court should be able to take that into consideration and allow the rate in apportioning it as though it ought to be 18 months or two years. Otherwise, the effect of this will be to tempt people to take a 12 months' agreement when they know it will really be 18 months.

Mr. Summerfield

I am willing to join Senator Douglas in asking the Minister to look into this matter, as at the end of his remarks the Senator did produce a very vital factor in the cost of hire purchase. There are different scales where the cost of the article itself is very considerable and, human nature being what it is and as we are not all angels, there will be people deliberately taking advantage of the situation if there is no penalty incurred in so doing, to buy a motor car on hire purchase spread over 12 months and have the payments extended to two years. It would be well if the Minister could consider some wording whereby, in the event of payments being delayed, the hirer would become responsible for the scale of payments that is normally laid down on the form originally furnished, that is, if the agreement signed was for 12 months and he took 18, I think in equity the court should be obliged to make him pay on the 18 months' scale. Otherwise, there will be a reaction which will affect adversely the scheme outlined in the Bill.

Mr. Lemass

We are not attempting in this Bill to lay down in precise form what a hire-purchase agreement must contain or may not contain. We are making it the law that, no matter what is in the agreement signed by the hirer, he will have certain rights and that certain clauses in the agreement may be void. It seems to me that whether the court can take into consideration any delay in making the payments must depend on what is in the agreement.

So far as the Bill is concerned, it provides that where the owner is taking an action for recovery of the goods, one-third of the purchase price having been paid, "he shall not take any step after the action has been commenced to enforce payment of any sum due under the hire-purchase agreement, or under any contract of guarantee relating thereto, except by claiming the sum in the action." It is quite clear that the court can take into account whatever may be due to the owner and the length of time which it is due and the amount of interest, under the provisions of Section 3, which requires the court, in making an order for the transfer of ownership of portion of the goods to the hirer, to have regard to the amount already paid in respect thereof.

Having regard to those provisions and having regard to the power still left to the trader to draw up the agreement in a form which protects his interest, and the obligation of the court to take it into account, it seems to me that the danger does not arise. The agreement can be in whatever form the owner wishes, subject only to the provisions of the Bill. We provide here that, once the owner has taken action for the recovery of the goods, he cannot press for payment of any instalments except by claiming whatever sum is due or may become due before the case is determined and the court, on making an award under (c), has to have regard to the amount already paid under the agreement.

Mr. Sweetman

Has to have regard to the matters mentioned in clause (c) and only those matters.

Mr. Douglas

My trouble is that, when you are making an order under (c), the Minister says you can protect yourself. I doubt very much if that is a matter where you can protect yourself under this Bill. I do not think you could put in a proviso that there will be interest added, as you have to state the cash price.

Mr. Lemass

There is nothing to prevent putting in the agreement a provision for interest on unpaid instalments. Even if the instalments are not paid, we do not compel the owner to go to court. If he thinks he will get paid eventually by the hirer, he may let the additional interest accumulate.

Mr. Douglas

I cannot conceive a hire-purchase agreement in which the interest accumulates and it would not be workable. We are dealing now with the operation of (c) in this section. I can see the possible difficulty in putting into a hire-purchase agreement that, in the event of this operating, interest will be calculated on the unpaid instalments. It is not the practice, nor would it be practicable to provide the calculation of interest day to day, as it may be for only two or three days or even a month. No one would want to do it. It is only when you come to apportion the value where the owner is to retain one section and the hirer the other, that in calculating the cost of the unpaid portion, the time is a factor that is recognised in this section. The length of time the hirer has the use may be taken into consideration, but you cannot take into consideration in the value the additional cost to the owner by the period of default.

I put this forward in a helpful way and have not been pressing any amendments I put down. It seemed to me to be a possible flaw. The clause has not been operating sufficiently long in England. I made some inquiries, but was not able to find a case of division.

Mr. Lemass

Paragraph (c) has been altered considerably from the scope of the English Act.

Mr. Douglas

In conversation, I asked if there were a case where there had been a division and I could not come across one, but that does not say there has not been one.

Mr. Sweetman

We assume an agreement where there is a clause providing that interest shall be payable on overdue instalments. Let us take the Minister's point of view that such can be incorporated. Such an agreement comes to the court for consideration under this clause (c). I suggest that, if the Minister reads line 28 to the end of the clause, he will see that, even though there is that clause in the agreement, the court cannot consider it, because the court is bound under this clause to have regard to the amount already paid. That does not bring in the question of interest. It is not to have regard to the amount already paid and the date of payment. It says:—

"Having regard to the amount already paid in respect thereof, the price of that part, the use which the hirer has had of the remainder of the goods and their depreciation in value, as the court thinks just."

The court is bound to take these four things into consideration, and only these four. Though there may be other terms about over-due interests in the agreement the court could not take that into account as it would mean in effect as I see the situation that the court would never think in a case where there has been delay that it was just to make the order at all and, therefore, clause (c) would not achieve what is intended.

Mr. Lemass

I do not think the Senator has read paragraph 4. It says that the court may make an order for the specific delivery of all the goods to the owner, may make an order for delivery subject to the arrangement contemplated in paragraph (c), or

"make an order for the transfer to the hirer of the owner's title to a part of the goods and for the specific delivery of the remainder of the goods to the owner, subject, if the court thinks fit, to the condition that the hirer or any guarantor pays to the owner within a specified time such further amount in respect of the hire-purchase price as the court, having regard to the amount already paid in respect thereof, the price of that part, the use which the hirer has had of the remainder of the goods and their depreciation in value, thinks just."

In other words, these conditions relate to the court's determination of any further sum——

Mr. Douglas

That is where the instalments have been paid. It is apportioning the proper amount to be paid. The court must, in fact, take that into consideration. The more I think of it the more I think I am right.

Mr. Lemass

The owner of the goods has a claim on account of the sum due to him in respect, to unpaid instalments, and whatever other payment of interest the agreement may provide for.

Mr. Duffy

In the British courts, where people have gone to court to enforce payments of sums due in this manner, the court has regard to the cost price of the goods. In one case the court made an order for payment of an amount at 1d. per week, and it was calculated that it would take 3,000 years to pay it off.

Mr. Lemass

Such an order would come under paragraph (b).

Mr. Sweetman

Would the Minister not agree to look into this between now and the next stage? We will give him all stages on Wednesday next.

Mr. Lemass

I will examine the point. I think Senators are leaving out of account the fact that the agreement will protect the owner. The owner may have rights under the agreement which are not invalidated by this Bill.

Mr. Douglas

I think the Minister is forgetting that he is forced to try to protect himself in this matter by introducing interest on the payment of instalments. That is not done. It might be done, but it would also be to the disadvantage of the hirer.

Mr. Lemass

It would be to the disadvantage of the hirer.

Mr. Douglas

On consideration I am prepared to say that it could be done. Personally I would hate to see that practice started. People might be obliged to do it.

Mr. Lemass

Is not the Senator asking, if the owner of goods fails to take action under Section 12, when there has been default, or delay in exercising his rights, that he should be recompensed for that delay by the court when the matter is decided by the court?

Mr. Douglas

You could put it that way if you like. What the Minister calls delay I call a reasonable attitude towards the hirer. It is true that if this provision works out unsatisfactorily—and I do not want to see that happen—it would kill hire purchase as a useful adjunct to business, and would hit some people extremely hard, particularly those who cannot get cash easily. But I am sure Senator Summerfield will bear me out when I say that the general experience is that we do not go to court unless there is a clear case. As far as I am concerned I had to go to the court in only one case, and that concerned the director of an extremely well-to-do company who paid up before the case came on. That is the only case I allowed to occur, and I think that is the general attitude.

This is a case where a person cannot go on, where, for various reasons, he is unable to continue the agreement. The court has to decide what is to happen in that case. It does not give all back to the owner. It gives portion to the owner, portion to the hirer, and decides what further sum the hirer must pay. My contention is that it would be much better if it could take into consideration the factor of interest. That is what I ask the Minister to consider. I think I am safe in saying that no further amendment will be put down to this Bill. He may take it that if he says there is no need for further amendment I will be satisfied. The whole attitude here was to make this Bill a success. There is no attempt to obstruct.

Mr. Lemass

I have no objection to leaving over the Report Stage until Wednesday, assuming that I will not be then engaged in the Dáil.

Mr. Sweetman

I am afraid we will be sitting on Wednesday, Thursday and Friday next.

Mr. Lemass

I am not sure if Senators gave full weight to sub-section (1), which provides that where action is taken for recovery of possession of the goods, action may be taken also for recovery of any sum due under the agreement.

Mr. Douglas

That is the whole point that I wanted to make clear. It is true that if a man makes a hire-purchase agreement for 12 months, when he should have made one for 24 months, there is only the amount for 12 months due, unless he introduces a new system to provide interest, which is not the practice. Under the old system, if he was an extremely hard trader, he just took the goods back. If he was a decent trader he did what was done in some businesses. Nine months out of 12 had been paid; he took the goods back, agreed as to what was the second-hand value of the goods, and handed the difference to the customer. Certain firms did that. The trader, of course, took into consideration what it cost him and said: "There is the second-hand value of the goods; that is the amount I can get for them; if you can get that, well and good, but all I want is to get the thing settled."

That was really ultra legal, but that is the kind of thing for which you are making provision under the law now. You are providing what I contend a good trader, who wanted to keep his customers, would have done in any event.

Mr. Lemass

When the case comes to court, the court can settle it as it thinks equity requires.

Mr. Sweetman

Within the four walls.

Mr. Lemass

Exactly. It can order the delivery of the goods to the owner but it can postpone the delivery and it can make such adjustments in the terms of payment as it thinks fair to the hirer; or it can divide the goods. This section was amended in the Dáil because it was pointed out there that division of the goods might not be a practicable solution. If, for instance, the goods consisted of a dining-room suite, a court could not take one certain piece of furniture and say that it represented the value of the total amount which should be allowed to remain with the hirer. In order to meet that practical difficulty, we amended the section so as to provide that the court could order that one piece of furniture would remain with the hirer, subject to the hirer paying a certain sum to make up the actual difference between the value of the piece and the value to which he was entitled in the judgment of the court. Part of paragraph (c) is intended to provide for that contingency. I do not see that that affects the case made by Senator Douglas in any way. In fact I am not at all sure how that case can be made.

Mr. Douglas

I am afraid my power of argument is exhausted.

Amendment, by leave, withdrawn.

Section 13 agreed to.

Amendments Nos. 17, 18 and 19 not moved.

Sections 14 to 22, inclusive, put and agreed to.

Question proposed: "That the Schedule stand part of the Bill."

Mr. Douglas

I should be glad if the Minister would look into the point I made at the beginning with regard to the persons in the Schedule and the wording of the Schedule as to the way in which they can be attached.

Mr. Lemass

The Bill, of course, will come into operation on a date to be fixed, and that date will be some date subsequent to the enactment of the Bill; therefore, there will be some notice to traders.

Mr. Douglas

If it is going to be a couple of months I would be quite satisfied.

Mr. Lemass

I would not say a couple of months, but some weeks.

Mr. Douglas

You would be very clever if you could get a new agreement drawn up in two months at the present time.

Mr. Lemass

Any trader who is interested in this matter knows now that the Bill is going through with the Schedule in it and can make arrangements accordingly against the date upon which the Bill will come into operation.

Mr. Sweetman

That is true, but possibly the Minister does not know the difficulties of getting anything done at the present time.

Mr. Lemass

What is more, there are traders all over the country who will never realise that this Bill is passed until they are prosecuted under it.

Mr. Douglas

The only thing is that such traders buy the printed hire-purchase agreement and it is with that in view that I raise the point. I personally do not like the business. I would be quite content not to do any for three months, if the Government passes this Bill.

Question put and agreed to.

Title put and agreed to.

Bill reported without amendment.

Report Stage ordered for Wednesday, 3rd July, 1946.

The Seanad adjourned at 9.10 p.m. until 3 p.m., Wednesday, the 3rd July, 1946.