CONCLUSION

6.1 The review of the Hire Purchase Act 1959 (Vic) occurs under the terms of reference relating to redundant and unclear legislation. The Committee is charged with the responsibility to inquire into, consider and make recommendations regarding Acts of Parliament which are unnecessary or without a modern application.

6.2 A major Commonwealth inquiry into financial systems in Australia is currently underway examining the results from the financial deregulation of the Australian financial system since the early 1980s. The Commonwealth will in due course, make recommendations on the nature of the regulatory arrangements that will best ensure an efficient, responsive, competitive and flexible financial system. Some of the matters arising under the review of the Hire Purchase Act 1959 (Vic) are also being considered under the Commonwealth review. These matters include--

the extension a deregulatory financial market,

uniform laws where regulation is required, and where regulation is not required,

the development of voluntary codes of practice where regulation is inappropriate to meet the needs of both the financier and their customer.

6.3 The Committee notes that the original purpose of the Hire Purchase Act 1959 was to provide protections to consumers. These protections are best summarized as--

provisions regulating the formation and content of hire-purchase agreements and associated disclosure requirements;

the right to have harsh or unconscionable hire-purchase agreements re-opened;

a twelve month moratorium on the repossession of goods of farmers;

the capping of penalty interest rate at 8%; and

warranties and conditions to be implied into every hire-purchase agreement.

6.4 The Act formed part of the first national scheme of uniform legislation in Australia. In 1972 and 1986 separate reviews of consumer credit and hire-purchase transactions recommended the repeal of the Hire Purchase Act 1959 . The introduction of the Credit Act 1984 (Vic) created a situation where personal hire-purchase, in many situations, was removed from the HPA. The introduction in November 1996 of the Consumer Credit Code now means that the Hire Purchase Act 1959 (Vic) only regulates business related hire-purchase transactions.

6.5 The Act is over prescriptive and outmoded as a means of regulating commercial financing transactions. However, if the Act were to be repealed the Committee notes that the existing protections provided under the Hire Purchase Act 1959 (Vic) relating to agreements for farm machinery and commercial vehicles would become deregulated.

6.6 The Committee is aware that there is overlap and inconsistency with the Goods Act 1958 (Vic), the Fair Trading Act 1985 (Vic) and the Trade Practices Act 1974 (Cth). A repeal of the HPA would result in the loss of the HPA's implied terms for business people entering hire-purchase contracts.

6.7 The majority of submissions regarding the status of the Hire Purchase Act 1959 note that the Act is redundant save for the possible exceptions of section 24, providing for the re-opening of hire-purchase transactions which are harsh and unconscionable and section 25 creating a twelve month moratorium on the repossession of farming equipment.

6.8 The Committee considered the view that the developments in the law of equity, as well as voluntary industry codes of practice have basically superseded the practical need for provisions such as section 24 and 25. However, the Committee noted the concerns raised during the course of its inquiries about the consequences of the loss of these protections incorporated in a statute. The Committee was mindful of these concerns despite the lack of any substantial evidence indicating a significant reliance on these statutory protections.

6.9 The re-enactment of these protection clauses regulating aspects of hire purchase transactions while ignoring commercial lease, chattel mortgage and other financial arrangements could be construed as anomalous.

6.10 The Committee examined the recent legislation by New South Wales and Queensland in respect of protections which recognise the special position of farmers in equipment financing and the prospect of their trading out of financial difficulties. The Committee also noted that over the next few years Tasmania will move to deregulate the commercial finance sector. The Committee recognises that recommendations regarding new legislation is a matter of Ministerial policy and is therefore outside the term of reference of this review.

6.11 In addition, the Committee noted the potential benefits of uniform laws relating to industry finance. The Committee is of the view that section 24 provided relief in certain areas prior to the more recent development in the law of equity, in particular, the Amadio case. These developments may well provide adequate protection and have overtaken the need for specific regulations like section 24. In the absence of industry self regulation providing suitable protection to commercial borrowers, the Committee is of the opinion that the protections provided for in section 25 would best be considered as part of a national code covering various forms of commercial finance.

RECOMMENDATIONS

The Committee recommends:

1. That the Hire Purchase Act 1959 (Vic) be repealed;

2. That the Minister for Fair Trading, the Minister for Agriculture and Natural Resources and the Minister for Small Business consider as a question of policy the development of new legislation to address requirements of the rural sector in regard to commercial finance as part of a model for a national code relating to protections for the business/farming sector.

3. That the Ministers consider referring these recommendations to the relevant ministerial council for the development of national uniform legislation.

Last update 12/8/99
ŠParliament of Victoria