Premor Ltd v Shaw Brothers (A Firm)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE DANCKWERTS,LORD JUSTICE DIPLOCK |
| Judgment Date | 24 April 1964 |
| Judgment citation (vLex) | [1964] EWCA Civ J0424-2 |
| Court | Court of Appeal |
| Date | 24 April 1964 |
[1964] EWCA Civ J0424-2
In The Supreme Court of Judicature
Court of Appeal
From His Honour Judge Block Mayor's and City of London Court.
The Master of the Rolls
(Lord Denning)
Lord Justice Danckwerts and
Lord Justice Diplock
MR S. SHIELDS (instructed by Messrs Stitt & Co.) appeared as Counsel for the Appellants.
MR M. FINER, Q. C. and MR J. SOFER (instructed by Mr Thomas Boyd Whyte, Bexley Heath) appeared as Counsel for the Respondents.
Premor Ltd. are a hire purchase finance company. Shaw Brothers are motor car dealers. The finance company now sue the dealers for two sums of £300 and £200 as money lent, together with interest thereon. In the statement of claim they say that the £300 was lent on the 8th January, 1960, to finance the purchase of a Ford Consul 0YY451; and that the £200 was lent on the 7th April, 1960, to finance the purchase of a Standard Saloon 590AMF. In answer to that claim Shaw Brothers say that the finance company are moneylenders and are not entitled to recover because the provisions of the Moneylenders Act have not been complied with. It is common ground that if they are moneylenders, that is so; and they are not entitled to recover anything. The Judge has held that they are moneylenders. He has dismissed the claim and the finance company now appeal to this Court.
It is now settled law that a hire purchase finance company, when it carries on the normal business of financing hire purchase transactions, is not a moneylender within the Act. It would appear, to the unpractised eye, that a hire purchase finance company was nothing more nor less than a lender of money on the security of cars. But in point of law a hire purchase company carries on the trade of buying cars and letting them out on hire purchase. So it is not, in the eye of the law, a moneylender. That was decided in Olds Discount Co. v. John Playfair Ltd., 1938, 3 All England Reports, p. 281, followed by Transport & General Credit Corporation Ltd. v. Morgan 1939, 1 Chancery, p. 531, and it is referred to in Campbell Discount Co. v. Bridge, 1962 Appeal Cases, p. 637.
We were shown a schedule of dealings between Premor Ltd. and Shaw Brothers. Most of them were ordinary hire purchase transactions. Premor Ltd. bought cars from Shaw Brothers and let them out on hire purchase. No question arises as to those transactions. But there were a good many other transactions which are called "stocking transactions". It ison those transactions that the question arises: Were Premor Ltd. acting as moneylenders?
There were 57 of these "stocking transactions" between Premor Ltd. and Shaw Brothers. In all of them a loan was made by Premor Ltd. to Shaw Brothers. In 28 of them it purported to be a loan on the security of a motor car, the index number of which was given. In 29 of the transactions a loan was made by Premor Ltd. to Shaw Brothers but there was no vehicle mentioned. It is obvious that these 29 loans were not on the security of any specified cars at all. In each of the 57 stocking transactions the loan was made by means of the exchange of cheques. For example, the finance company would draw a cheque in favour of Shaws for £190; and in exchange Shaws would give the finance company a cheque for £200 postdated for a month; and that cheque would be honoured. That means that £10 interest was paid for a loan of £190 for one month. That is over 5 per cent, a month and over 60 per cent, a year. Furthermore there is internal evidence that these loans were renewed from month to month. The £200 was paid but at the same time another £190 was advanced with another exchange of cheques. And so on from month to month. Such was the nature of these "stocking transactions". They were loans, some of them being on the security of cars; and some of them not on the security of any cars at all; and all at an interest exceeding 60 per cent, per annum. It is two of these loans which are sued for in this action.
These two loans were made on the security of two cars. But the documents about them were entirely fictitious. They did not represent the true transactions at all. I am afraid in this Court we have got used to some hire purchase companies and dealers putting forward documents which bear no resemblance to the facts whatsoever. Such was indeed the case here. Take the loan of £300 which was made on the 8th January, 1960. The documents which were drawn up were these: therewas a printed form of invoice whereby Shaw Brothers purported to have sold to Premor Ltd. a Ford Consul registered number 0YY451 at the price of £350 less an initial payment of £50, making a balance due of £300, There was no such initial payment: no such price. It was simply a way of showing £300 due from Shaw Brothers to Premor Ltd. Then there was alongside it an undertaking by Shaw Brothers to Premor Ltd - Shaw Brothers were supposed to possess the car - that they would hold that Ford Consul to the order of Premor Ltd; and they would pay Premor Ltd. charges at the rate of 2 per cent, per month while the goods were in their custody. That document again does not represent the facts. There was no charge of 2 per cent, per month. It was over 5 per cent, per month. The undertaking was on the face of it an unregistered bill of sale.
Equally with the loan of £200 on the 7th April, 1960. There were similar documents there. There was an invoice for a Standard Saloon registered number 590AMF. It was said to be sold at the price of £250 less initial payment of £50, making a balance of £200. And there was an undertaking to hold to the order of Premor Ltd. and interest at 2 per cent, per month. As I have said, those documents were fictitious. The so-called undertaking was again a bill of sale unregistered.
If the only defects in the transactions were that these were unregistered bills of sale, the £300 and the £200 could be recovered as money had and received. But if the plaintiffs were really moneylenders all the time, they could not recover the sums at all, because the Moneylenders Acts were not complied with.
Now were they moneylenders? The definition in Section 6 of the Moneylenders Act 1900 says: "The expression 'moneylender' shall include every person whose business is that of money lending". I think prima facie this finance company falls within those opening words. The number and scaleof these transactions were such that part of their business at any rate was the business of money lending. But there is an exception in sub-paragraph (d) which says that the expression "moneylender" "shall not include any person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money". The question in this case is whether the finance company bring themselves within that exception (d) The first requirement is that they should carry on a business "not having for its primary object the lending of money". I think they satisfy that requirement. The primary object of this hire purchase finance company was to enter into ordinary hire purchase transactions. They bona fide carried on the business of a hire purchase finance company. So far so good. But the second requirement is that the lending of the money must be "in the course of" that business. And the third requirement is that it must be "for the purposes of" that business.
Take the requirement that the lending of the money must be "in the course of" the business, that is, of the primary business which the person carries on. It seems to me that, in order that it should be in the course of the primary business, it must be associated with a transaction of that business so as to be linked with it. A good illustration of such a link is found in the recent case in the Privy Council of Khoon's Official Assignee v. E. K. Liong Hin Ltd., 1960 Appeal Cases, p. 178. In that case a company carried on business as rubber merchants and shipowners and warehousemen. In the course of that business they took goods into store in a godown; and, as an ordinary commercial facility of that business, they advanced money to certain selected customers who stored goods in the godown. The lending of money was directly and immediately associated with the storage of parcels of goods inthe godown. It was held that it was "in the course of the business that the moneys were lent. Another illustration is when a solicitor in the course of his business lends money to a client who is in special need in regard to some particular transaction. It is a transaction which the solicitor is handling at the time as a solicitor and the loan is made so as to help the client...
To continue reading
Request your trial
- Kesang Leasing Sdn Bhd v Longwood Sdn Bhd and Others
-
United Dominions Trust Ltd v Kirkwood
...but are a separate and independent business, the finance house (unless it is a banker) becomes a moneylender within the Acts – see Premor v. Shaw, 1962, 1 Weekly law Reports, p. 978. The finance house must then either be registered under the Moneylenders Acts or obtain from the Board of Tra......
-
City Harvest Church v AMAC Capital Partners and another
...course of, and for the purposes of, the plaintiff’s business as a church. The defendants referred to Premor Ltd v Shaw Brothers (A Firm) [1964] 1 WLR 978 (“Premor”) and submitted that the plaintiff would not fall within para (f). In Premor, the plaintiff, a hire-purchase company, and the de......
-
Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and another
...corollary of and worded exactly the same as Exception (c)] but two older decisions are helpful. The first, Premor Ltd v Shaw Brothers [1964] 1 WLR 978, explains the test that must be satisfied. For a loan to be made “in the course of” a business, it must be associated with a transaction of ......
-
THE NEW MONEYLENDERS ACT 2008
...Playfair [1938] 3 All ER 275 is regarded as authority for this proposition, see dictum of Lord Denning MR in Premor Ltd v Shaw Brothers[1964] 1 WLR 978 at 980. 122 Goode: Consumer Credit Law and Practice vol 1 (R M Goode gen ed) (London, Butterworths, updated to 2000) at para 1.7. 123 Pawnb......