MONEYLENDERS (AMENDMENT) BILL

Order for Second Reading read.

6.10 p.m.

The Minister for Labour and Law (Mr K. M. Byrne): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The purpose of this Bill is to close certain loopholes which have become apparent in the administration of the Moneylenders Ordinance, 1959.

The Bill seeks in clause 2 to prevent loans by moneylenders to persons under the age of twenty-one years.

Clause 3 of the Bill would have provided that a loan made by a moneylender whether before or after the coming into operation of the Ordinance shall not be enforceable by the moneylender unless he is licensed under the Ordinance. The intention was to make it clear that a moneylender should not be able to recover a loan made by him unless he is licensed under the Ordinance, but as this provision would have the effect of depriving him of his contractual rights acquired before the coming into operation of the Ordinance, it has been decided on reconsideration to withdraw this clause.

It is provided in clause 4 that the mere fact that a borrower has signed a note or memorandum in which the amount of the money lent to or received by the borrower is set out shall not raise any presumption that the amount of money so set out was actually lent to or received by the borrower. The onus of proving the actual money lent to or received by the borrower will therefore remain on the moneylender.

Clause 5 of the Bill provides in effect that no assignment of any debt in respect of money lent by a moneylender, whether before or after the coming into operation of the Ordinance, shall be valid unless the moneylender is licensed under the Ordinance.

The provisions of the Bill in clause 6 relating to the besetting of the residence or place of work of a debtor have been amended to make it an offence to harass or intimidate the debtor or any member of the debtor's family at, or to watch or beset, the residence or place of work of the debtor.

I should like to take this opportunity to make it clear that the Ordinance only affects loans by persons who carry on the business of moneylending. It is not meant, for example, to prevent persons from occasionally lending out money on mortgages, so long as they do not make it a business to lend out money on mortgages.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill.-[Mr Byrne].

Bill considered in Committee.

[Mr Speaker in the Chair]

6.14 p.m.

Clause 1 -

The Chairman: There is a typographical emendation - " 1959" should now read "1960".

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3 -

The following amendment stood in the name of Mr A. P. Rajah -

In page 2, line 1, to leave out "whether before or".

The Chairman: The Member for Farrer Park has an amendment standing in his name. But in view of the note*, does he wish to move?

• Note:- It is indicated that the question "That the clause stand part of the Bill" be negatived.

Mr Rajah: No.

Question, "That clause 3 stand part of the Bill," put, and negatived.

Clause 3 accordingly disagreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5 -

Mr Rajah: Mr Speaker, Sir, I beg to move,

In page 2, lines 25 and 26, to leave out "whether before or".

Mr Speaker, Sir, now that clause 3 is not part of the Bill, I would submit, with respect to the Minister, that perhaps the amendment I am seeking should be acceded to. So long as clause 3 became part of the Bill, then the new subsection (2) of section 29 (clause 5 of

'"No assignment of any debt in respect of the Bill) should read:

money lent by a moneylender whether before or after the coming into operation of this Ordinance shall be valid unless the moneylender is licensed under this Ordinance.";'

Now, in view of the fact that a moneylender who has lent money previous to the coming into force of this Ordinance is permitted to sue for that money provided that he does not now carry on a moneylending business, I would submit, with respect, that he should also be allowed to assign his debt without a licence; because if the basis for withdrawing clause 3 was that contractual rights should not be interfered with, here too, Mr Speaker, Sir, where a person is allowed to sue for it without a licence, is there any need why, before he can assign it, he should be called upon to take a licence?

Mr Byrne: Mr Speaker, Sir, that point has been very carefully considered by Government. Mr Speaker, Sir, it is necessary to prevent unlicensed moneylenders from assigning their debts incurred before the coming into operation of the Ordinance, as otherwise they will assign their debts to the registered moneylenders and leave the country. In such cases, it will be difficult for the debtor to give evidence against the unlicensed moneylender. The moneylender who has made loans before the coming into force of the Moneylenders Ordinance, 1959, is at liberty to collect old debts even though he is not licensed. He may sue in respect of old debts even though he does not possess a licence. But we do not propose in any way to allow a further extension of that, because if we did that, nothing would prevent, say, an unregistered moneylender from assigning his debts to a moneylender registered under the provisions of this Ordinance and then leave the country. In such a situation, the debtor would be defenceless against the unlicensed moneylender.

Mr Rajah: Mr Speaker, Sir, while appreciating that there is a point in what the Minister has said, I do not see how an assignment of a debt in the circumstances set out by the Minister would render the person who has borrowed the money defenceless against the assignee. If the Minister could convince me that that would be so, Mr Speaker, Sir, I am quite ready to withdraw the amendment. But I cannot see how an assignment by an unlicensed moneylender to a licensed moneylender could operate to defeat the debtor, because the assignee would have' no greater rights in the matter than the assignor himself, and any defence available to the borrower against the assignor would be available to the debtor against the assignee, the present holder of the note.

Mr Byrne: Mr Speaker, Sir, as the Member for Farrer Park knows, the purpose of the Moneylenders Ordinance is to grant the debtors protection against unscrupulous moneylenders, and that protection takes many forms. One is the requirement that moneylenders should register. Hitherto they were never required to register. Even when they have registered, there is also the further protection to the debtor that in these money-lending transactions the debtor can raise issues that are referred to in our amendment to section 24 of the Ordinance in clause 4. Mr Speaker, Sir, it is always the bone of contention in moneylending transactions that the debtor has signed for much more than he has received. Hitherto, all that the moneylender has had to do was to produce the promissory note, and if the debtor had signed a promissory note for more, then his receipt would preclude him from raising such an issue as soon as the promissory note was produced. But today, it will be open to the debtor to raise that as a specific issue against the moneylender; in which case the moneylender will have to prove from evidence other than the evidence of the promissory note itself that he has given the debtor the amount that he claims to have done. If we allowed these assignments, then the debtor would never be able to raise these issues against the moneylender who has assigned his rights to the registered moneylender.

Mr Rajah: In other words, it is the Minister's intention that this clause should operate in this way then - that the moneylender should be available to the borrower for purposes of cross-examination in court when the debt is pursued. That is the point?

Mr Byrne: Yes.

Mr Rajah: And, perhaps, it is the lender himself who under cross-examination might reveal that the provisions of the law had not been complied with. Sir, in view of that explanation, I beg leave to withdraw.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

New Clause (A) - 'Amendment Section 2 of the Moneylenders of section 2. Ordinance, 1959, (hereinafter in this Ordinance referred to as the "principal Ordinance") is hereby amended-

(a) by inserting the word "or" at the end of the definition of "moneylender" appearing therein; and

(b) by inserting immediately after paragraph (e) of the definition of "moneylender" appearing therein the following new paragraph:-

"(f) any person by reason only of his lending money on mortgage of immovable property.".'-[Mr Rajah.]

Brought up, and read the First time.

Mr Rajah: Mr Speaker, Sir, may I move the Second Reading of the clause "Section 2 of the Moneylenders Ordinance, 1959, (hereinafter in this Ordinance referred to as the "principal Ordinance") is hereby amended-" -

The Chairman: Order. It is not necessary to read the new clause. It has in fact been given the First Reading. Hon. Members are supposed to have read this new clause beforehand.

Mr Rajah: Sir, may I go straight into my speech?

The Chairman: Yes.

Mr Rajah: Mr Speaker, Sir, the purpose of introducing this amendment - I will be quite frank with the Minister - is not to get it on to the statute book, but to initiate a discussion in order that the air might be cleared and that people in Singapore will know exactly what the position is with regard to a certain type of moneylender, who is not a moneylender in the accepted sense of the term, but who happens to lend money not because he wants to extract interest from somebody else but merely because he wants to invest in moneys which he might have received on retirement or by way of legacy or by any other way that a man receives money. As I understand it, after the new Moneylenders Ordinance came into force, which deleted this provision from section 2 of the old Moneylenders Ordinance, there has been considerable doubt as to whether any person lending money on the security of a mortgage is a moneylender or not. That doubt has been enhanced by the behaviour of the Stamp Office in these mortgages. It appears, Mr Speaker - and I have information on this which I have no reason to doubt - that when a person takes a mortgage deed to the Stamp Office to be stamped, the stamping officer asks, "Is this a moneylending transaction?" With great respect, I do not see what business it is of the stamping officer to ask that question. The business of the Stamp Office is to stamp a document presented to it according to the laws of the country and, if the person: presenting the document is late, to exact a penalty if that is necessary. But why any officer in the Stamp Office should want to find out whether a mortgage deed is a moneylending transaction or not, I am at a loss to understand. What is happening is this. The officer in charge of the Stamp Office has been saying, "If you cannot get a certificate from your solicitor, I must have a statutory declaration from you that you are not a moneylender." Mr Speaker, Sir, no solicitor would say that, in his opinion or to his knowledge, the lender is not a moneylender. He cannot give that certificate because he cannot say. So the person who lends the money, if he wishes to get the document stamped, must swear a declaration that he is not a moneylender. He must also say that that is not his second or third transaction because, if it is his second or third transaction, then apparently he becomes a moneylender, although in the eyes of the law, he might not be carrying on a moneylending business.

Mr Speaker, Sir, if a person retires from Government or Municipal or any other service, and if he receives, say, a gratuity or a provident fund payment of $20,000 or $30,000, what does that person do? He either invests some of his money on mortgages or he puts it in a business, or he deposits it with a bank, or he invests it with a pawnbroker.

The Chairman: Or he spends it!

Mr Rajah: Or he spends it! Some spend it too. But the more thrifty ones, who are worthy of support from the State, are those who wish to invest it. If you go to a pawnbroker and give your money to him on interest at 8 per cent or 9 per cent, apparently that is not a moneylending transaction. That is an investment, in the eyes of the law. If you take it to a bank and deposit it there at 6 per cent, as some banks do, I am told - others give 3 and 4 per cent - that is not a moneylending transaction. That is a laudable thing to do and it is called an investment. But if you would be so foolish as to put your money on an investment which secures you the return of that money by way of a mortgage on an immovable property, the Stamp Office immediately brands you as a moneylender and will not stamp the mortgage deed.

I was very pleased to hear the Minister make the statement that the Moneylenders Ordinance is intended to affect those persons whose business is moneylending. If I can have the assurance of the Minister that the sort of thing which I have mentioned just now will not happen again in the Stamp Office, that people who go there to have their documents stamped will not be harassed by stamping officers, and that stamping officers will merely look at the mortgage deed and stamp it according to what is laid down in the law, then I am quite prepared to withdraw this amendment, because, in my own view, persons who carry out such transactions are not moneylenders; they do not come within the ambit of the operation of this Ordinance. That is only a personal view. But if the Stamp Office is going to make it impossible for these people to have their documents stamped, then I think it is time the Minister looked into it.

6.30 p.m.

Mr Byrne: Mr Speaker, Sir, I am indeed obliged to the Member for Farrer Park for raising this matter this afternoon. I think there is a great distinction between moneylending, which is run as a business, and money which is given out on loan, however frequent the transactions may be. Mr Speaker, Sir, I think the Member for Farrer Park has overlooked the provisions of section 23, subsection (5) of the Ordinance which reads:

'No person who is neither a moneylender nor one of the persons referred to in paragraphs (a) to (e) inclusive of the definition of "moneylender" contained in section 2 of this Ordinance shall, in respect of money lent by him, in any case recover in excess of the money actually lent by him (whether the excess be claimed by way of interest or otherwise) any sum greater than an amount equal to simple interest at the rate of twenty per centum per annum on the money actually lent by him.'

That would cover the case of persons who lend out money on mortgages as investments. I am aware, Mr Speaker. Sir, of the practice that has been obtaining in the Stamp Office. With regard to the stamping of promissory notes, it has been brought to my attention that the officers there have behaved in the way which the Member for Farrer Park has said that they have done. I have instructed the State Advocate-General to inform these officers that it does not follow that money lent on mortgages is necessarily a moneylending transaction, because the Ordinance itself requires a licence to be obtained only by a person who engages in the business of money-lending. I thought that the matter has since been put right, but in view of the representations which the Member for Farrer Park has just made in this Assembly, I shall ask the S.A.G. to issue further instructions to the officers concerned.

Mr Rajah: In view of the Minister's assurance, Mr Speaker, Sir, may I have leave to withdraw the new clause?

The Chairman: The motion to withdraw is really the motion, "That the clause be read a Second time." Is it the pleasure of honourable Members that the motion be withdrawn? No dissenting voice.

Motion, by leave, withdrawn.

New clause (B) - 'Amendment of Subsection (1) of section 30 of section 30. the principal Ordinance is hereby section amended by deleting the words "and the borrower is a person who does not understand the written language on such note" appearing in the second and third lines thereof.'.-[Mr Rajah.]

Brought up, and read the First time.

Mr Rajah: Mr Speaker, Sir, may I move, "That the clause be read a Second time."

Mr Speaker, Sir, the purpose of this amendment is, to some extent, tied up with the amendment moved by the Minister in clause 4. The fact that a borrower has signed a note or memorandum which complies with the provisions of section 16 of this Ordinance and in which the amount of the money lent to and received by the borrower is set out shall not of itself raise any presumption that the amount of money so set out is actually lent to or received by the borrower. Mr Speaker, Sir, by virtue of the provisions of section 30 of the Moneylenders Ordinance, which reads as follows:

"(1) Whenever a promissory note is taken as security for any loan and the borrower is a person who does not understand the English language on such note the note shall be attested by an advocate and solicitor, a Magistrate, Justice of the Peace, commissioner for oaths or such other person as may be appointed by the Minister generally for such purpose. The attestor shall explain the terms of the promissory note to the borrower, and shall certify thereon that the borrower appeared to understand the meaning of the same. The money borrowed shall be paid over by the lender to the borrower in the presence of the attestor who shall certify the fact upon the promissory note."

So that any note signed by a person who does not understand the English language or the language in which the note is written -

The Chairman: Order. My copy of the Ordinance has "written language" on it. I think the Member was saying the "English language".

Mr Rajah: I beg your pardon. It is "written language". Now, clause 4, Sir, takes in all notes, that is, notes which are understood by the person signing the note so far as the written language is concerned, and notes which are not understood. In so far as the notes the language of which is not understood by the borrower are concerned, the provisions of section 30 have to be complied with. In those circumstances, the whole of the transaction is done either before an advocate and solicitor, a Magistrate, a Justice of the Peace, or a commissioner for oaths, or such other person appointed by the Minister generally for such purpose. So that the provisions of section 30 see to it that everything that should be done for the borrower is done for him - the money must be given, certification must be made - in fact, there is absolutely no room for any slip-up in respect of a person who does not understand the written language on the note. Now clause 4 takes in such a transaction.

It seems to me, to put it my way, to be a mockery that, where the provisions of section 30 have come into operation in respect of a particular note, clause 4 should also come into operation again and say that that note in itself shall not be evidence and the borrower himself may try to upset it. Now, if that became the practice and the law, Mr Speaker, then transactions before a Justice of the Peace, a Magistrate, or a commissioner for oaths, would become quite meaningless, and the law would be a subject for ridicule. That is why I moved the amendment to the effect that a person "who does not understand the written language on such note" should be deleted. The effect of that, Mr Speaker, will be that all notes, whether their language is understood by the borrower or not, shall be treated under section 30 and they must either be signed before an advocate and solicitor, a Magistrate, a Justice of the Peace, or a commissioner for oaths.

If this amendment is accepted, Mr Speaker, Sir, we will get away from this rather ridiculous position of the borrower every now and then, even though he had signed the note willingly and with full knowledge, setting up a defence that he did not know what he was signing and that he got less than what he signed for. Mr Speaker, Sir, you can protect a person up to a point, but beyond that he must fend for himself. I do not think the law should spoon-feed him too much. The purpose of my amendment to section 30, Sir, is that once the provisions of section 30 have been complied with and the note has been signed and attested either before an advocate and solicitor, a Justice of the Peace, a Magistrate, a commissioner for oaths, or such other person appointed by the Minister, there shall be a finality to the matter and the matter of "I did not sign it", "I did not receive the money" shall not be raised again; otherwise there shall be no end to litigation.

Mr Byrne: Mr Speaker, Sir, I would say at the outset that it is an attractive amendment as it would, I agree, strengthen the law considerably. But on the other hand, it would make it necessary for all promissory notes to be attested. That would certainly give more work to lawyers, and it would incur additional cost to the borrower. For that reason, Sir, the Government is not prepared to accept that amendment because this section 30 deals specifically with the attestation of promissory notes where the borrower does not understand the language of the note.

Mr Rajah: Mr Speaker, Sir, I would like to assure the Minister for Labour and Law that no lawyer would ever get himself mixed up under section 30; it would not pay him. Every time he puts his signature to such a note, it merely means that he will be called as a witness in all legal proceedings relating to that note. And no lawyer, who is worthy of his name, is going to get mixed up in these transactions. I can assure him that there will be only very few lawyers in town who will act under the provisions of section 30, unless he is a philanthropist.

Mr Speaker, Sir, I raise this amendment to show that clause 4, as it stands, will encourage just as many unscrupulous borrowers as there are unscrupulous moneylenders. There are sometimes unscrupulous borrowers. They borrow money knowing full well that they can take full advantage of the Moneylenders Ordinance and make things difficult for a genuine moneylender. I raise this matter on the basis that, if the Minister acceded to my suggested amendment, it would put the matter completely beyond doubt and the dignity of the law would be maintained, and we would not reach a position where something which had been executed under section 30 would be liable to be challenged again in Court. And the Judge would have to go seriously into the whole question when possibly a Magistrate, who is also an Officer of the Court, had certified it as being correct. It seems to be rather a ridiculous position for the law to get itself into.

Mr Byrne: Mr Speaker, Sir, the provisions of section 30 are normal provisions for the attestation of documents where a person who executes a document does not understand its language. Such attestations can be made bona fide and they can also be made mala fide. So it is always a question of fact as to whether there has been proper attestation; so that in our view, Mr Speaker, Sir, there is not necessarily any conflict between the provisions of section 30 of the Ordinance and the new subsection (2) to section 24 that we have introduced this afternoon.

Mr Rajah: I do not wish to pursue the matter any further, but it could well be that a person who gets his document executed under section 30 of the Ordinance stands a much better chance of defeating any objection raised by the borrower under section 24, as amended, after this Bill comes into operation. However, Sir, I have made my point and I wish to draw the attention of the Minister to it. I do not think there is much point in my pursuing the matter further since the Minister is not accepting the amendment. In view of that, Sir, may I be given leave to withdraw?

The Chairman: I should think the Member for Farrer Park knows that the convention is that an amendment or a motion is only withdrawn if the mover is satisfied.

Mr Rajah indicated assent.

The Chairman: That is the convention. But, of course, the Member knows what he wishes to do. He has asked leave to withdraw. Is it the pleasure of honour-able Members that the amendment be withdrawn? No dissenting voice. The amendment is withdrawn.

Amendment, by leave, withdrawn.

6.45 p.m.

Bill reported with amendments; read the Third time and passed.