Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 11 November 1914

Senator GARDINER (New South Wales) (Vice-President of the Executive Council) . - I can meet the honorable senator half way in this matter. If the honorable senator will let paragraph aa go by the board, I will accept paragraph aaa, as that follows the track laid down by the State law. The provision regarding property included in a bill of sale would open up a very dangerous prospect. A man may have given a bill of sale for a very small amount of cash and a very large amount of interest, and to accept the proposed

Amendment would simply be playing into the hands of those gentlemen who thrive on the enormous amount of interest that they are able to get from persons who are driven into a tight corner. I see great danger of their interfering with the unsecured creditors, many of whom will not be so shrewd and sharp. I have no objection to the second part of the amendment.

Senator Lt.-Colonel Sir ALBERTGOULD (New South Wales) [6.3].- The Minister has wisely accepted the second part of the amendment, because it only carries out the law as it stands. If the clause is passed without the first part of tlie amendment relating to bills of sale, stock mortgages, or liens on wool or crops, the difficulty is that the debtor, with the doubt that will exist as to the value of the security, will have to pay an enhanced rate of interest, and must also give the creditor the right to foreclose whenever he sees fit. The creditor may step in at any moment and demand payment of his money straight away, and this will make the terms of a bill of sale hard. A man who advances money on the class of security "mentioned in this amendment necessarily requires a higher rate of interest than a man who advances money on real estate, because in the latter case the security is good and valid, and will hold as against the official assignee and every one else. At the present time the difficulty under the law is that any property in possession of a bankrupt at the time of bankruptcy vests in the official assignee, but the creditor who has advanced the money has the power to demand payment immediately, and if such payment is not made he takes possession of the whole property, and often sacrifices it in order to recoup himself. The official assignee cannot follow it if the transaction has been bond fide and the security has been registered in accordance with the law of the State. It is necessary in the case of a bill of sale, not only to register at the time, but to register a renewal bill if the amount secured is not paid within twelve months, in order to protect the interests of the person who has advanced the money or holds the property by way of security. It is in the interest of the community and of the individual to recognise transactions which are entered into legitimately. If an attempt is made to give a creditor a fraudulent advantage by means of a bill of sale the official assignee has the power to apply to the Court to have the bill of sale set on one side, and so protect the ordinary unsecured creditors. All the balance of advantage is in favour of the amendment, which will have the effect of making the security just as good in the case of personal as in real estate, so far as the nature of the property will permit. A man who has only personal property ought surely to be entitled to the benefit of it, if he desires to raise a Small loan, just as much as another man is entitled to the benefit of his real estate.

Senator Bakhap - An amendment such as that suggested by Senator Keating appears to be a very proper one.

Senator Lt Colonel Sir ALBERT GOULD .- Clause 84 provides that all property which belongs to or is vested in the bankrupt at the date of sequestration, or is acquired by or devolves upon him before his discharge, shall be divisible among his creditors. Such a provision destroys the security of the man who has advanced money to the bankrupt.

Senator Bakhap - How is he secured?

Senator Lt Colonel Sir ALBERT GOULD - The moment he obtains a hint that there is a probability of the estate of the debtor being sequestrated he makes his demand and the demand not being met he enters into possession of the property.

Senator Senior - What is the position of the individual who makes an advance upon a growing crop?

Senator Lt Colonel Sir ALBERT GOULD - He must wait until the crop is available. Under the clause in its present form he would not be protected, and a farmer who wished to obtain an advance on a crop would experience great difficulty in doing so. When a man is compelled to borrow we wish to enable him to do so on such terms that he will have a prospect of redeeming his property within a reasonable period. If the security offered is a valuable one, and one which cannot be affected by extraneous considerations, the borrower usually obtains an advance upon more reasonable terms than he otherwise would do. This is clearly evidenced by contrasting the rate of interest upon real estate with that charged upon live stock, furniture, &c.

Suggest corrections