Palgo Holdings V Gowans Essay

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INTRODUCTION

In Palgo Holdings v Gowans , the High Court considered the distinction between a security in the form of a pawn or pledge and a security in the form of a chattel mortgage. The question was whether section 6 of the Pawnbrokers and Second-hand Dealers Act 1996 (NSW) (‘the 1996 Pawnbrokers Act’) extended to a business that structured its loan agreements as chattel mortgages. In a four to one majority (Kirby J dissenting) the High Court found that chattel mortgages fell outside the ambit of section 6 of the 1996 Pawnbrokers Act. However, beyond the apparent simplicity of this decision, the reasoning of the majority raises a number of questions. Was it a “turning back to literalism” as Kirby J suggested, or was it simply a case …show more content…

Prima facie this constituted carrying on a business of lending money on the security of pawned goods in its natural and ordinary meaning. Furthermore, the second reading speech of the 1996 Pawnbrokers Act did not show an intention to reduce the ambit of the businesses subject to the obligations of licencing under the Act. It was designed to “prevent and remedy problems in the current marketplace’’ , ‘‘streamline’’ licensing of pawnbrokers and second- hand dealers who deal in ‘‘high-risk-of-theft goods’’, and provide for record keeping to assist in the return of such goods where it could be shown that they had been stolen from their true owner. A technical legal meaning of ‘‘pawned goods’’ would thwart the achievements of these objectives.
Kirby J finishes his judgment with yet another attack on the reasoning of the majority, and asks whether it can “seriously be suggested that it was the purpose and object of the New South Wales Parliament to exempt a person, such as the appellant, carrying on the business of lending money on deposited goods, from the obligation to secure and comply with a licence as a pawnbroker under the Act?” He concludes that the answer to this question is in the negative , and to the extent that the present decision represents a turning back to literalism, he disagrees with

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