I am not going to press an amendment on this section but the banks are not the only institutions that are involved in this. Any recipient of a promissory note expressed in £sd who overlooks this section, whose solicitor or barrister overlooks this section, will find himself with a worthless piece of paper. I should have thought there would be some saver for instruments of this kind. I should like to make that point so that perhaps on the Report Stage we could frame an amendment. It would save innocent persons, bona fide persons, from being robbed by people who are aware of this section and choose to draw up their promissory note in terms which would make it invalid. I am unwooed by the fact that the English have not chosen to cover it.
Decimal Currency Bill, 1970: Committee Stage.
Could I ask what would happen in the case of a post-dated cheque?
This is covered in subsection (3) of section 2. It has to be brought to a banker to be certified. This should cover the Senator's point.
How can a banker certify that a cheque was drawn before the 15th if it was post-dated to a later date than the 15th?
He would have seen it before Decimal Day?
Supposing he does not see it before Decimal Day, how can the banker certify it? That is what I do not understand.
Whose bank certifies it?
The point is if anybody gets a post-dated cheque before Decimal Day he should bring that cheque to a banker to have it certified at that time.
Otherwise it is invalid?
That is not clear.
Is that definite? Must it be the bank of the drawee or will either bank do it?
It can be any bank.
The Parliamentary Secretary has just said that the bill of exchange or promissory note would be in order if it were certified in writing by the banker before Decimal Day. What about a bill of exchange or promissory note which is dated on 15th or deemed to have been drawn or made before the 15th and which cannot be certified because the person does not even look at it until after Decimal Day? Surely this is intended to provide for certification after Decimal Day by a banker to give authenticity to a document which would otherwise have been without it. If there is doubt about it should that not be written on it?
There are two situations here. There is the question of a cheque which is drawn before and possibly well before the 15th and is post-dated. That is the case that Senator Russell was speaking about, and under the section as it stands, that does not seem to require any certification from anyone provided there is in some way proof that it was made out before the 15th of February. Then there is the case of a cheque drawn on the 15th or later which is certified by the bank. There are two separate and distinct points in this.
On section 3, notwithstanding the fact that three of the days mentioned in subsection (1) of section 3 will not be non-business days, subsection (1) will allow bankers to present to each other for payment on the days in question, cheques and other payable instruments drawn on them. This will enable the banks to clear £sd items lodged on or before Wednesday, 10th February, which is the last business day before Decimal Day. Having done this they plan then to balance customers' accounts in £sd and convert the balances to decimal terms. Although Saturday is not now a working day it is still technically a business day in the bank for the purpose of the Bills of Exchange Act, 1882. Saturday, 13th February, 1971 has been declared as a non-business day because it is desired to give banks full legal cover in respect of this day as well as the two previous days. The banks in Britain and Northern Ireland, which do not open on Saturday either, have been given similar cover under British legislation. In subsection (2) the days are fixed on which bills of exchange and promissory notes shall be payable if they fall due on the days the banks are closed. This provision applies to bills of exchange or promissory notes which are payable at a fixed future time, unlike cheques which are payable on demand. Under section 14 of the Bills of Exchange Act, 1882, the day on which such bill falls due is determined by adding three extra days, known as days of grace, to the time fixed by the Bill. There is special provision in the Act of 1882 for cases where the last day of grace falls on a Sunday or bank holiday. This subsection makes special provision for the exceptional circumstances of the closed period before Decimal Day. The provision is designed to be as equitable as possible and bills of exchange or promissory notes for which the last day of grace falls on Thursday, 11th, or Friday, 12th February, 1971, will be payable instead on Wednesday 10th. Bills or notes for which the last day of grace falls on Saturday, 13th February, 1971, will be payable instead on Decimal Day, 15th February, 1971.
The Parliamentary Secretary was dealing with section 3 but in fact the queries we put to him related to section 2.
Could I ask Senators not to speak until they are called? The staff need to have the names of the Senators as the record is being taped.
There are two types of cases about which I am worried. The first one is cheques which were drawn, say, this month or last month and which are not payable until next March or April. This is a common occurrence in solicitors' offices where large amounts of money are collected running into thousands of pounds and a number of post-dated cheques are received for hundreds of pounds each. I have in my office substantial cheques which are drawn in pounds, shillings and pence and will not become due or payable until next April. I should like to know what I can do with those cheques. I cannot submit them to my own bankers because they are not yet payable and they will not be payable during this particular period from 12th to 15th February. Must I travel with those cheques to the banks of the persons who drew them and who live at very considerable distances, inform them that here is a number of post-dated cheques drawn on their bank which are not payable until after Decimal Day? Those cheques therefore, although I have accepted them and given receipts for them, in so far as the law stands will be invalid. Where do I stand? This is something on which I should like to have a definite ruling. I cannot see where it is provided for in the Bill. Can I on the other hand take those cheques to my own bankers and say: "Here are cheques which will not become payable until next March or April. Can you certify them for me and convert them into decimals"? My own bank does not know whether the cheques will even be honoured. This is worrying me considerably.
A similar situation arises with promissory notes. Many times one makes out a promissory note payable 12 months' hence. Promissory notes have been drawn last May, June or July for substantial amounts. Sometimes shillings and pence are included because provision has been made for interest which does not work out evenly in pounds. How does one deal with those promissory notes? Strictly speaking they are valid only until the 15th February. I cannot see that there is any provision in the Bill which will validate either the post-dated cheques or the promissory notes to which I refer.
The position regarding a post-dated cheque is quite simple. This is dealt with in subsection (3) of section 2. A cheque must be presented to a banker to be certified under section 3 (2). The same position exactly applies to promissory notes.
Can a person holding such cheques submit them to his own bank or must he submit them to the bank of the person who drew the cheque? In some of those cases the banks are in Leitrim or Wexford.
No, what I am trying to get on to the record is that any bank will do. It does not have to be the bank of the payee or the person who sent it. Any bank can certify this for the purpose of conversion into decimal currency.
I am still not quite clear as to how a bank can certify a cheque. How can a banker, seeing a cheque for the first time, certify that it was in fact drawn before the 10th February which is the first day of closing? If a cheque is written during the three closing days the banker cannot certify it before Decimal Day and is the cheque valid when it comes into the post-Decimal Day period?
There will be a limited banking service during the three days, but the main thing is that once the banker receives the cheque and certifies it, then any other bank will agree to round it off according to the Schedule after Decimal Day.
Can it be certified after Decimal Day?
In most cases the last time for certifying it would probably be the 10th February.
The point I was making is this. If a cheque is written during the three closed days it cannot be certified before Decimal Day. Therefore that cheque is invalid. Is this true?
No. I might mention here that the banks have agreed to provide a limited service during these days if people find themselves in difficulty. That is an arrangement everyone will have to make with his or her own bank.
Could I just put this point? It is provided in subsection (3) of section 2 that, if there is a certificate in writing by a banker, a bill of exchange or promissory note for an amount wholly or partly in shillings or pence which is dated the 15th February or a later date, will be deemed to have been drawn or made before the 15th February. That only refers to bills of exchange or promissory notes which are dated the 15th February or a later date. My query is in two parts. Where is the provision which requires the certificate from the bank regarding the date to be placed on an instrument before a particular date? If the Parliamentary Secretary says it must be done by the bank before the 10th, how can it relate to any instrument which is dated the 15th or later?
The onus is on the person with the cheque to satisfy the bank that the cheque was drawn before the specified date. That is where the onus should lie. While the changeover in banks will be on the 15th and the banks will not then be trading other than in the decimal system I have been told that in relation to cheques in particular the banks will be as co-operative with their customers as they possibly can be. This section is put in in order to ensure that people who have post-dated cheques or promissory notes could have them certified by the bank. After the 10th February they would have to make private arrangements for the limited service which will be available. It seems clear enough to me.
The Parliamentary Secretary has been very helpful. Do I understand, following on Senator Nash's point, that any post-dated cheques now in circulation or circulated between now and, say, the 10th or 15th February must be brought back for certification before they become valid?
That is right.
I have one case in mind where a settlement was made with the Revenue Commissioners and three or four post-dated cheques covering various dates over 1971 were issued and sent to the Revenue Commissioners. Would those cheques have to come back from the Revenue Commissioners to be certified before they can be paid?
Might I ask the Parliamentary Secretary if these instruments must bear a certificate in writing? Can you not think of situations in which it is extremely difficult to get a hold of bills of exchange or promissory notes? You might, for example, have taken promissory notes in consideration of something you have sold or given or let; then you might have gone off with these and had them discounted by houses that were not aware of this and you might have difficulty in getting them from them. Admittedly, it would be in the interests of these bodies so to act as to get the benefit of the section. Another question is: what would be the liability and responsibility of a bank which certifies an instrument as having been drawn before the date and which subsequently proves not to have been?
Unless they get the date.
Yes, of course, that is right.
In relation to the first question, if the Revenue Commissioners have post-dated cheques it is up to them to get these cheques certified. As I pointed out at the start of this debate the banks are prepared to take whatever risks may be involved in exercising discretion in dealing with cheques drawn in £sd after Decimal Day. It is not clear that there are any risks. The Bill does require that post-dated cheques should be certified and the banks are prepared to use discretion.
Think of the situation in which you cannot actually get the promissory note or bill of exchange. Say you have let yourself run to 9th February and you simply physically cannot get it because there is a postal strike or something of that kind. Under this section the instrument itself must bear the certificate. Surely there should be a provision under which a certificate given by a banker would in fact be as good as if the instrument itself was certified in such cases where a customer trusted by his bank was able to satisfy his bank that although he was not able to produce them to the banker, in fact, they were so drawn or made.
It is a question of satisfying the banker. If you cannot get hold of a promissory note at once you should go to the banker when you do get it afterwards and satisfy him, and the banks say they will be lenient on this. The banks have no liability under section 2 (3) because if the banker's certificate is given, then the cheque is deemed to have been drawn validly in £sd before Decimal Day. The problem raised is that some promissory notes may be difficult to get. I feel that the banks will be able to deal with matters of that kind.
It may not be a promissory note with which the bank is involved at all. This may be between two private citizens. What happens in that case? With all the good intentions in the world you cannot bring them in before the 10th February for some good reason. Somebody is malicious and has got at them or there is a fire or a burglary. The banker is not interested in this transaction. He is not a party to it. He is in no way involved in giving a certificate to help anybody in this transaction and some innocent person suffers because there is no provision for the case.
The onus is on the people concerned and this matter will be given publicity. I do not think we can do any more than that. Even during the days of closure there will be some restricted bank facilities given at that time. All these matters have been considered. I am satisfied that it will work out provided it is given the necessary publicity.
May I assume that, where a promissory note or cheque is overlooked until next May or June, if the bank are satisfied by the payee that this promissory note or cheque was drawn before D-Day, the banker's certificate given next May or June will be adequate?
They can give their certicate after Decimal Day?
There is no statutory provision for that.
No. That is the point.
Section 2 does not seem to me to prohibit it. Section 2 (3) reads:
A bill of exchange or promissory note for an amount wholly or partly in shillings or pence dated 15th day of February or later——
If it is dated earlier there is no provision——
——shall be deemed to have been drawn or made before the 15th February, 1971, if it bears a certificate in writing by a banker that it was so drawn or made.
What is worrying me is the following. Let us take a practical instance. A man transfers his farm to one son and the son to whom he transfers it is to pay a certain amount of money to another son who takes a number of promissory notes extending over two, three or four years. These promissory notes are made out in £sd. They are all dated even perhaps in the year 1968. Those promissory notes become invalid on D-Day by this Act. The promissory notes are lying in his solicitor's office. Unless his solicitor is prepared to go through every deed and paper in his strongroom and pick out all the promissory notes before Decimal Day there is going to be a terrible upset. The promissory notes become invalid and if they are sued for them the civil bill or the proceedings are dismissed for the asking by reason of an invalid promissory note. Supposing those are overlooked, can the payee of the promissory note or his solicitor take those promissory notes to his bank next May, June or July or whenever they are discovered?
I do not think he needs to.
Section 4 seems to cover such cases. If instruments are drawn before D-Day and expressed in sterling they are automatically, by virtue of section 4, converted into decimal currency.
And the same applies to cheques?
That is my reading of it.
I confirm that.
The only one that is invalid then, unless the bank comes to the rescue, is the cheque or bill of exchange which has not been certified by a banker.
It is the post-Decimal Day dated documents with which we are concerned and they could be certified at any time. There is nothing in the Bill that says they have to be certified before Decimal Day.
Is there anything in the Bill which requires them to be certified at all? I do not think there is. I may be misreading that. It would be clear in my mind if I knew precisely to what section 4 in the Cheques Act, 1959, applies. If that applies to an ordinary cheque then the position would seem to be under section 4 of the Bill—I know we have not come to it yet but it is relevant to this particular discussion—that:
On and after Decimal Day any reference to an amount of money in the old currency contained in an instrument to which this section applies shall in so far as it refers to a sum in shillings or pence be read as referring to the corresponding sum in the new currency calculated in accordance with the Schedule to the Act.
This section applies, under subsection (3), to cheques and other instruments to which section 4 of the Cheques Act, 1959, applies.
That is only interpretative. It does not render valid something that is rendered invalid by being dated after the relevant date.
Section 2 (1) would make the item in that matter invalid.
No. The Parliamentary Secretary is misreading it. Section 2 (1) refers to a bill of exchange or promissory note drawn or made after Decimal Day. We are talking about those which are drawn or made before Decimal Day.
If it is post-dated.
Yes, but it is actually drawn before Decimal Day.
I think the words to be used would be "prima facie invalid,” but the banks have given an assurance that they will deal with these matters satisfactorily.
The Parliamentary Secretary may very well be right but I would have put it the other way, that it is "prima facie valid,” because the Bill does not make it invalid. What the Bill proposes to do is to make invalid a bill of exchange or promissory note drawn or made on or after Decimal Day. If it is drawn or made before Decimal Day, even though drawn for presentation after Decimal Day, personally I cannot see how that is invalid. In the particular type of case to which Senator Nash referred there would be the proof that it was drawn before Decimal Day because the cheque would not merely have been drawn, it would, so to speak, have been delivered in that it would have been sent to someone else to hold until it became due for payment, so that there would be proof that it was drawn before Decimal Day.
The proof which the Act requires that a person has a post-dated document is that it should be certified.
I am sorry. The question relates to a very limited class and that is a bill of exchange or a promissory note dated 15th February, 1971, or a date later than 15th February, 1971. The certification refers only to that very limited class of bills of exchange or promissory notes; it does not refer to any which were dated before 15th February.
That is correct. The point is the date on the promissory note, cheque or other instrument. If it was dated after 15th February, 1971, that would make it prima facie invalid.
The Parliamentary Secretary is right there.
In line 36, in order to clarify the measure, would the Parliamentary Secretary agree to insert after the word "if": "if, subsequent to 15th February, 1971, there is a certificate in writing by a banker that it was so drawn or made"? That would get rid of all my worries.
I do not think it is necessary to do that.
That would clear up all the ambiguities that have arisen during this lengthy discussion because that was the doubt: when do you get the certification? You could get it on any date subsequent to 15th February, 1971, up to the date on the cheque.
My advice is that this section is watertight as it stands and it is unnecessary to be more explicit.
I cannot find anything in the Bill which provides for a conversion of a description in £sd into a decimalisation by reference to the Schedule to the Act in respect of any documents other than those set out in section 4. For example, what is to be the position of a description—the use of £sd—in documents which may be rendered valid by section 14? How do you construe them? How do you interpret? How do you convert? There is no automatic method to convert. Without this table there is a ludicrous position in which you are going to have conversion in many cases into recurring decimals—I think it is three cases in which you can have a recurring decimal—applied to a substantial sum of money. This will happen in numerous instances. Why do you not include in subsection (3) the documents referred to in section 14, so that you have a proper application to the £sd of the Schedule to this Bill?
Section 13 of the Bill provides how an £sd amount for payment can be paid after the end of the change-over period. It may be discharged by paying the corresponding amount in new currency calculated on the basis of the whole new penny table. This will apply whether a payment is by cash or by cheque.
Section 13 deals with the question of payment. It does not determine the question of what is to be paid.
In using section 13 the value has to be worked out in £sd and converted in accordance with the table. In the absence of the provisions in section 4 it would be necessary for the banks to check back to the original drawer and this would cause considerable inconvenience. That is the purpose of the section.
What sort of forms are in contemplation here? Are these forms which might be specified in a statute or a statutory instrument, as appropriate, to be used for whatever is the purpose under the statute?
Yes. It is for the modification of forms in enactments or statutory instruments so as to render them suitable for working in decimal terms. I think this has already been done by the Revenue Commissioners in relation to PAYE income tax.
A question on section 12. It arises in relation to the capital of companies. I know that the view has been taken under the equivalent statute in England that people with capital expressed in 4s or 5s units have got to pass resolutions to adopt the new unit. Is this to be done by whatever number of tens of thousands of companies we have got here? That would not apply to so many of them but, to such of them as we have, their capital denomination in these units would be a nuisance and expensive and law costing. Is it possible to introduce something into this section which would effect an automatic conversion in such a case such as is effected in relation to registered stock?
The majority of companies incorporated in this country have their nominal capital divided into £ shares. The expression of these share values is not affected by the change-over.
As regards the nominal share values which are not in whole £'s, expression in decimal currency terms will not be obligatory during the change-over period or after it. Most companies will however wish to refer to shares in terms of decimal currency from Decimal Day, 15th February, 1971, or soon after that date. If no change in nominal value is involved, there is no need for any formal steps to enable companies to refer to the nominal share value in terms of decimal currency as from Decimal Day or later in documents such as share certificates or annual returns to the Registrar of Companies. For example, such documents could refer to 25 new penny shares even though the company's memorandum and articles of association continue to express in their articles of association the value of 5s.
I am entirely satisfied with what the Parliamentary Secretary has just said. It was the view I had formed myself. I have been very surprised to notice that a number of very large companies, registered in England, have in fact sent out notices of meetings to convert their units into decimal units. I do not know if we have something dealing with this point which they have not got. I should have taken the view that the Parliamentary Secretary has expressed but I thought I would draw his adviser's attention to the fact that there is a different opinion on this matter and if it were possible to put something in it might save a good deal of inconvenience.
The Department of Trade in England, because of some confusion on this point, issued a statement recently to the effect that if a company wish to amend their memorandum or articles of association so as to express the nominal value of shares in decimal currency in those documents, they must follow the procedures prescribed in their Companies Act whether or not there is any change in the nominal value. Some companies in England may have been calling meetings merely for the purpose of expressing nominal share values in decimal terms. This is unnecessary and I hope that this assurance of mine will be sufficient for the House.
Subparagraph (b) of subsection (1) says:
In this subsection "instrument" includes wills, documents and all other writings of a formal legal kind.
Will writings of a formal legal kind include contracts or similar agreements? Where business firms make contracts to purchase goods say three to six months in advance they are not, strictly speaking, formal legal documents, they are contracts as such between one firm and another. They will be valid at a future date even though expressed in £sd?
I think the section is wide enough to cover this problem and I think contracts generally will be covered.
May I express some doubt about this. I think the words "of formal legal kind" have a particular meaning at law. Contracts can be made between two businessmen by letters which are only informal and they wish in fact to have them so, and of course there is the case mentioned by Senator O'Higgins of the holograph will drawn by the person himself, which is not a formal document in the ordinary sense, except that it takes a particular form.
Particularly in relation to contracts, I wonder whether the language here should not be: "in all other writings which have a legal consequence"? I am not proposing those particular words but something of that kind.
I believe the word "instrument" has a very wide expression.
It would not include two letters between two businessmen. That is not an instrument.
All payments under £sd contracts and other legal documents will fall to be made in decimal currency under section 13 of the Bill after the changeover period, and the £sd contracts are still valid.
There may be reference to money in a document without that money ever being payable. There are all sorts of situations in which one could conceive a reference to a fund to be the basis of a formula, for example, for determination of the value itself to be paid not by reference to the sum itself. I wonder would the Parliamentary Secretary consider a clarifying amendment on that?
The point which Senator Alexis FitzGerald is making is a good one. It is just a question of having a look at this closely. As I understand it, what Senator FitzGerald is suggesting is that the definition should be tied to the legal consequence of the act rather than that we should tie it to a definition of an instrument by reference to the phrase "formal legal kind". Some people might believe that the fact that it is put this way weakens other things that could be included in it whereas it includes wills, documents and all other writings of a formal legal kind. Quite frequently contracts of one sort or another are made by an exchange of letters which are documents or writings but they are not documents or writings which are considered in the ordinary sense as being of a formal legal kind. The consequence of the exchange of letters is to create legal obligations and obviously it is intended by this section that when there is an exchange of letters or notes creating a legal obligation that is intended to be covered by this. Like Senator FitzGerald I fear that that particular example he gave, which is a good one, might accidentally be excluded from the section.
I think the answer is no. This section is very broad and it has been put in to protect the validity of formal documents and of all documents containing £sd except those specified in subsection (1) of section 2 of the Bill. It includes wills, documents and all writings of a formal and legal nature. Sections 13 and 14 would cover letters between people in a very small way of business even if these were not well worded. The draftsman is satisfied that the section as it stands is adequate.
All other documents creating rights or obligations.
Let us hear what he has to say when he reads the report of this debate.
I sympathise with the Parliamentary Secretary in dealing with this. There are so many possibilities and we are dealing with something in futura.“Documents of a formal legal kind”—I think that has a specific meaning in law. It means documents which are formally drawn in strict phraseology. Informal letters would not come within the phraseology of it. Informal letters, even two, three or four, may create rights or obligations and if, in regard to the reference to the rights or obligations which have become involved in £sd, these are letters written by people who have not a legal training, who will never read this Bill, the obligations or rights which they purport to create would be, in my opinion, frustrated under this section as it stands. Formal legal documents are very strict and I should like to have added to that subsection the following words.
In this subsection "instrument" includes wills, documents and all other writings of a formal legal kind or which create rights or obligations between parties.
If those words were added I think they would cover everything.
I appreciate very much the graciousness and patience which the Parliamentary Secretary has shown towards us and I do hope that in the various questions raised by us he will understand that we are trying to be helpful and to ensure that this Bill will be as sound as possible and will not frustrate the creation of the rights or obligations which it is intended to create.
I think there has been too close concentration on the actual wording of the Bill here. Subsection (b), as I see it, lays out some types of documents included in the word "instrument," but it does not purport to be an exhaustive definition of that word "instrument". The fact that the word "instrument" is included in subsection (1) (a) and the way this section generally is worded would cover a very wide field. No one should find himself in difficulties as a result of this further explanation which was inserted into subsection (2). Even if subsection (2) were not there at all it would probably still be satisfactory.
It might be wiser.
One question please. When he was replying to a point I made during the earlier Stage of this Bill, the Parliamentary Secretary mentioned two tables—one which is contained in this Bill and another one which will be circulated to the public and to traders. Is there any significant difference between the two conversion tables and if so is there likely to be any confusion arising through any charges against shopkeepers for overcharging? Will this table in the Schedule be a defence against a charge under the other tables?
This Schedule is put into the Bill mainly for banking and accounting purposes. The other table will not be statutory. It is a recommended table brought out by the Decimal Currency Board for conversion of shop prices generally and will be included in the booklet to be sent out in the near future to all households. It is for the convenience of shopkeepers and people going shopping. This, however, is chiefly for banking and accounting.
We have gone a good deal wider than banking in our discussion today. We brought in trade and commerce. Is that not so?
Yes. It would refer also to payments calculated under £sd contracts. This is the table that would be used in matters of that kind. I said the other table is exclusively for the convenience of retail traders, housewives and other people going shopping.
I think I follow the Parliamentary Secretary but I mentioned specifically on section 14 or 15 the question of trade contracts between the buyer and the seller. The buyer will be buying and in reference to this Schedule he will then sell, say, to a retailer who will be reselling the goods under the second conversion table.
No, payable amounts calculated in £sd under contracts will be converted by this conversion table. The table is not of course applied to cases like industrial assurance policies where the payments are very small; these would present difficulty in applying this conversion table as the changes could be substantial. This table applies in relation to banking and accountancy in general.