Deputy Cosgrave asked that the Final Stage be left over until today in case he or his colleagues might have any observations to offer at this stage. I do not know whether they have or not.
Hire-Purchase (Amendment) Bill, 1957—Fifth Stage.
Question proposed: "That the Bill do now pass."
The only observation I want to make on it is this. I should like to interest the Minister when he comes to make regulations under this legislation in two problems which, I think, are beginning to manifest themselves in Dublin and elsewhere and which, I feel, require attention. The Minister's attention probably has been recently directed to a case in Cork where a woman was sued on foot of a hire-purchase contract. It transpired in the course of the proceedings that what actually happened was that she had been approached in her home by an agent and had been persuaded to purchase some article on hire-purchase, and although she had not the deposit and was not in a position to put it down, the agent put down the deposit. Subsequently, I think, it transpired the purchaser was unable to meet the instalments and some proceedings followed from that series of events.
Hire-purchase may be a very desirable economic development, but like everything else, although good in itself, it is open to abuse. I want to suggest to the Minister that where persons engage in the hire-purchase business and the prospective purchaser is not in a position to put down the deposit— and the agent puts down the deposit— presumably with the desire of collecting his commission on the sale—some steps should be taken either to render such a contract void under the regulations or to convert it into an ordinary credit sale transaction.
It does seem to be a clear abuse, if the Minister by authority of the Oireachtas varies from time to time the percentage of deposits, with a view to exercising some control over the creation of credit and the purchase and sale of consumer goods, that a device can be employed calculated to frustrate the whole purpose of the regulations if and when an agent believes the commission to be sufficiently attractive to induce him to pay the deposit himself and to take his commission, hoping some day to recover the deposit but conscious in certain circumstances that, even if he does not recover the deposit, his commission on the sale is greater than the deposit and that he will still have some profit margin. Quite apart from the credit creation aspect of this question, I think the propriety of this practice of pressing attractive merchandise on people who cannot afford the deposit is open to grave doubt. I suggest it is a practice which the Minister might profitably study before making the regulations envisaged by this Bill.
There is another practice to which I want to draw the Minister's attention. This practice is of so strange a character as to make it almost unbelievable, but I am reliably informed that it is in operation in the city of Dublin and is being operated at the expense of a very defenceless section of the community. Ordinarily, I think, the Oireachtas must allow free people to make their own bargains and to abide by the consequences of the bargains they freely make, but to every general rule some exception, I think, must be made.
I am told that in this city, particularly in certain new housing areas, a situation sometimes arises in which a family get into financial difficulties and possibly are threatened with eviction for that they are unable to find the rent and the arrears that have accumulated. That naturally creates an atmosphere of great mental distress and apprehension. Possibly, if they went the right way about it, means could be found to relieve that emergency without crippling the whole family finances, but, before appropriate means can be devised, an agent calls to the house and says: "Here is a catalogue. You can choose out of this catalogue goods to the value of £40. I shall give you a docket which will entitle you to approach the merchant who has issued this catalogue to me as an agent and you can get goods to that value on the docket which I shall issue to you. Sign this hire-purchase agreement now, undertaking to repay £40 in regular weekly instalments."
That hire-purchase agreement is completed, whereupon the agent says: "I understand you are a bit short of money here today." The distressed householder says: "I am very short of money.""Well," says the agent, "I will tell you what I am prepared to do. I will give you £20 for your docket." It seems incredible that such a transaction could be consummated but I am told those kinds of transactions are going on. The person who is in financial straits surrenders the £40 docket and takes £20 in cash, discharges the urgent debts that threaten immediate consequences, and commits himself to pay off £40 over a protracted period. The real truth is that in that case what is actually happening is that the hire-purchase machinery is being used for the purpose of conducting an illegitimate and an illegal money-lending activity.
It does not seem conceivable that people would undertake such an improvident contract but, on the other hand, where poor people are in urgent apprehension of eviction, or something of that kind, it is astonishing what they will do. I am not saying that eviction is the only apprehension they may have. Sometimes they may already be deeply committed in other transactions of a hire-purchase character, and are gravely apprehensive that somebody is going to call at their house and, in the presence of the neighbours, re-possess some article of furniture on which they are no longer able to pay the instalments. Thus, under one stress or another of that kind, they enter into these extravagantly improvident contracts.
I would urge on the Minister to inquire into these kinds of activities and, if necessary, by regulation, which of course must be laid before this House in due course, take steps to ensure that fraudulent hire-purchase contracts of that character will no longer be possible under our law, if the Minister has the same evidence as I have in respect of the first category of cases I have mentioned, that is, the proceedings to which I have referred which took place in the courts.
In respect of the second category of cases—the docket for £40 re-purchased by the agent for half of that sum in cash—I assume the Minister will be in a position to inquire into that and confirm or correct the information which has reached me. I am satisfied that there are taking place in the city transactions of that character, almost exclusively at the expense of poor people who are ill able to protect themselves from that type of activity, and I think it should not be beyond the skill of the Minister's advisers to devise machinery to prevent a continuance of these abuses.
There is just one matter to which I should like to refer, and I am speaking from personal experience of it, in regard to the execution of these hire-purchase agreements. Very often members of the legal profession find, when they are asked to defend civil bills where the claim is based on a hire-purchase agreement, that they are told by the hirers that they did not sign them. They say: "We signed an order form but we did not sign a hire-purchase agreement." Then, on demanding a copy of a hire-purchase agreement, a solicitor finds that a proper agreement has been entered into by the hirer, and that it is witnessed by the agent.
I would like the Minister to look into the law on this matter and see if it is possible to have an independent person witness the signature of the hirer on all hire-purchase agreements, because, though you may cod the hirer, who is possibly anxious to procure the articles being hired to him, you generally do not cod two people at the same time. The person who is asked to witness a signature will inquire further into the agreement, and possibly read it. If such agreements are entered into, it would be a good thing that the witness should not be an agent of the owner. He should be an independent witness, if necessary, a relation, and a relation of the hirer should not make an agreement void. A witness who is in the employment of the owner should not be a valid witness to such agreements.
The points made by both Deputy Dillon and Deputy O'Donnell strengthen the position I took up on the Second and Report Stages of the Bill in relation to Section 6, which empowers the Minister to make regulations to control hire-purchase transactions in different ways. Deputy McGilligan sought to limit these powers to Orders by the Minister prescribing minimum deposits and maximum periods of repayment, but, in order to ensure that the Minister would have adequate powers to deal with evasory practices which could spring up in hire-purchase transactions, I insisted on maintaining in the section powers to control the form of the agreement and the information to be given. The intention is to introduce regulations requiring minimum deposits only when national financial considerations require it, and not in ordinary circumstances.
It is difficult to see the case outlined in Deputy Dillon's first example arising at the present time, at any rate. Minimum deposits, certainly, are not required by law at the present time and will only be required by law if an appropriate order is made under Section 6 and in the national financial difficulties that I have just mentioned.
If such regulations are made I believe it will be possible to ensure that the payment of deposits by agents rather than by the hirer of the goods could be held to render the agreement void. That is a personal opinion, speaking without consultation, but I am sure it would be possible so to frame the regulations as to ensure that such a transaction would be void and would be unenforceable. Therefore, such agent would pay a deposit on behalf of the hirer at his own risk.
The second case to which the Deputy refers was mentioned in part by Deputy Larkin during the Second Stage and since then I have made inquiries. I was told that there was in existence, not only in Dublin, but in Cork, at any rate, a system whereby a person had some form of agency from a firm who supplied household or other goods and if that person approached a housewife who needed, say, £20 worth of goods, the agent would give the housewife an order form. The housewife would commit herself to repay to that agent maybe £25 or £30. I have not heard, however, of cases where that transaction was brought the other stage further, when the agent offered to buy that order form from the housewife at a much reduced price in circumstances in which the housewife was badly in need of ready cash.
Strictly speaking, I do not think that such a transaction is hire purchase but I can assure the Deputy that I shall watch the development of such transactions and, if they require the making of regulations and if I have power to control them, I shall not hesitate to take appropriate action.
I am advised, however, that with the development of hire purchase, the issue of order forms to housewives for the supply of goods on credit has diminished considerably. There may be, of course, as the Deputy has suggested, agents still acting and, perhaps by reason of their diminishing market, acting unscrupulously but I assure the Deputy that I shall keep an eye on the position.
As far as Deputy O'Donnell's point is concerned, I think, again, that that can be adequately covered by the regulations to be made under Section 6 which empowers the Minister to make an order requiring the agreement to be in a certain form and I take it that the practicability of having a witness to such an agreement could be ensured under the subsection dealing with the form of the agreement. However, I am not so sure that in most cases in which unthinking people enter into transactions for hire purchase the presence of a witness to the agreement would be any safeguard because most people who sign documents as witnesses really set out to ensure that they sign only as witnesses and are not concerned with the contents of the document. Their main purpose is to ensure that their signing of the document will not impose any legal obligation on them other than, perhaps, at some later stage to prove that they did witness the document.
However, as I said, the section which empowers the Minister to make regulations is wide enough, I think, to ensure that the form of the agreement will make provision for a witness signing the agreement if that proves to be necessary having regard to experience.
Has the Minister power to make a regulation prohibiting public representatives from becoming guarantors?
That is the least form of protection that the Minister should provide.
Question put and agreed to.