HIRE-PURCHASE BILL

Order for Second Reading read.

5.41 p.m.

The Minister for Law and National Development (Mr E. W. Barker): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, as a result of higher living standards and the compelling desire of more and more people in Singapore to acquire what may be called luxury consumer goods, such as motor-cars, refrigerators and television sets, there has been a tremendous growth in recent years of instalment credit transactions carried out by resort to hire-purchase agreements.

The Bill now before this House is principally designed to control the form and contents of hire-purchase agreements and to spell out the rights and duties of parties to such agreements. It is also designed to control instalments-sale financing to achieve certain objects, namely, to curb inflation by restricting credit facilities; to specify classes of goods for particular purposes, or to divert manufacturing activity and the lending of money to more productive purposes. The legislation provides for the exercise of this control by laying down minimum deposits on hire-purchase agreements or by restricting periods for which payments by instalment buyers may be spread.

Quite apart from this, a more pressing reason that prompts Government to introduce this proposed legislation is the urgent need to confer protection upon the less sophisticated members of the community who enter into hire-purchase agreements and often experience hardship because of the harsh and oppressive conditions which sometimes appear in these agreements.

The Bill takes, as it were, a middle course between, on the one hand, the policy adopted by the United Kingdom legislation (which limits the application of the legislation to hire-purchase agreements where the hire-purchase price does not exceed £2,000 sterling and applies to all classes of goods) and, on the other hand, the Australian and New Zealand legislation (which sets no financial limit to hire-purchase agreements and applies to all classes of goods). The policy in our Bill is that it should apply only to certain categories of goods which from their nature are normally purchased under hire-purchase agreements. No financial limit is specified.

It is with these broad principles in mind that the present legislation has been drafted and this Bill, like the Malaysian Hire-Purchase Act, 1967, incorporates many of the recent concepts that have been written into the existing hire-purchase legislation of the United Kingdom and Australia. The Bill has, as its foundation, three points fundamental to consumer protection of any kind. Part II provides adequate disclosure requirements in a written statement. Built-in terms in favour of the buyer as to the title to goods and their merchantable quality with implied warranties and conditions are found in Part III. Finally, the Bill in Part VII prohibits contractual provisions that are unconscionable in their purpose or operation.

The term "hire-purchase agreement" is defined in clause 2 of the Bill. The provisions of this Bill will cover all hire-purchase agreements relating to such goods as may be specified in the Schedule by the Minister. The goods to which this proposed legislation will apply are motor vehicles, radio sets, television sets, gramophone sets, tape recorders and any combination thereof, refrigerators, deep-freeze food preservers and any combination there of, air-conditioners, washing machines and sewing machines. The effect of this provision is, on the one hand, to limit the application of the legislation to certain specified goods, and, on the other hand, to enable Government to adapt this legislation to meet Singapore's changing economic and social needs.

I must stress, however, that, in the preparation of this legislation, the Government has not overlooked the consideration that protection should also be given to the unpaid seller's interest in the hired goods; he can re-possess the goods 21 days after serving a notice for non-payment of instalments due. Further, the rights of third parties who may acquire possession of goods that are the subject of a hire-purchase agreement have also been taken into account.

It will be observed that in the definitions of the terms "hire-purchase" and "contract of guarantee", transactions in which the hirer is a dealer of goods have been excluded. The reason for this is that, being engaged in the business of hiring, a dealer does not need the protection that this Bill is designed to give to the ordinary members of the public. Stocking arrangements that are entered into between a hire-purchase company and a dealer are accordingly outside the scope of this Bill.

It will also be noted that jurisdiction over transactions in respect of hire-purchase agreements is vested in the High Court except in some matters arising under clauses 10, 14 and 23 of the Bill. In so providing, this Bill follows the statutory provisions to be found in most Commonwealth countries that have legislated on this subject. The principal reason for this is that questions of law arising from hire-purchase agreements are invariably complex and are, it is considered, more suitably dealt with by the High Court.

A novel provision, which does not appear either in Australian or United Kingdom legislation, is clause 14 (5) of the Bill which confers protection upon the owner where the hirer terminates the hire-purchase agreement.

The Explanatory Statement to the Bill outlines in a general way the various provisions of the Bill. I would like to mention here that the Singapore Advocates and Solicitors Society has been consulted in the drafting of this Bill and many of its suggestions and recommendations have been incorporated in the Bill. In spite of this, it is the intention of Government to refer this Bill to a Select Committee so as to provide opportunities to other interested bodies and members of the public to present their views on the Bill which I commend to Members as a useful measure for coping with the social and commercial requirements of our developing nation.

Sir, I beg to move.

Question proposed.

5.50 p.m.

Mr Lim Soo Peng: Mr Speaker, Sir, for a long time our society and economy needed and received the boost that hire-purchase provides in financing what consumption and consumer need. But equally for a long time there was no referee, save a rather unsatisfactory one originating in the United Kingdom, and even then ill-tailored for the needs here. More often than not, the free play of forces between the borrower and the lender ended in the borrower losing to the lender. This must be so, for you cannot afford to quarrel with the man to whom you are in debt.

With this Bill, a new referee has come into the ring. The provisions in the Hire-Purchase Act, 1968, as intituled, seek to regulate the form and contents of hire-purchase agreements and the rights and duties of parties to such agreements and matters connected therewith. Whether the provisions contained in the Bill will make a good and impartial referee is something only time can tell. At this moment the provisions appear to be absolutely necessary. They also appear to have been carefully considered and drafted. Even forms are being prescribed and the terms and charges laid down.

Going through the provisions of the Bill, I feel that the future borrower will have his rights protected and the future lender will know precisely where his relief lies. The Courts are being given exact areas of jurisdiction, and I think everyone will be happy except the borrower who borrows with the intention to abscond, and the lender .who lends with the intention to squeeze the purchaser. But the regulation and control of hire-purchase is a field in which there is little experience in this country. It is true that the Bill has the benefit of experience in other countries. But the experience of the other countries is not necessarily the prescription for us. We are an emerging country. We are beginning to produce more and more goods for our own consumption. It is essential that while we try to curb abuses in hire-purchase financing, we do not kill such financing.

Mr Speaker, Sir, I support the Bill and I should like to ask the Minister charged with implementing it to consider representations carefully and to introduce any amendments whenever needed.

Question put, and agreed to.

Bill accordingly read a Second time.

Resolved, "That the Bill be committed to a Select Committee consisting of Mr Speaker as Chairman and the following Members:

Inche Abdul Aziz Karim

Mr E. W. Barker

Mr Hwang Soo Jin

Mr Lim Soo Peng

Mr Ng Kah Ting

Mr Sim Boon Woo

Mr Tang See Chim." - [Mr E. W. Barker].