The Acting Secretary, Postmaster-General's Department, has referred the following memorandum for advice:

These papers containing draft Regulations have just come under my notice. I do not think the draft Regulations should be submitted to the Governor-General in Council for approval.

2. As stated in the correspondence hereunder, it is a well-known practice for postal notes and money orders to be passed from one person to another for value received. For example, postal notes are used more than once. 'A' buys a postal note for £1 from the Post Office and remits it to 'B'; 'B' then remits it to 'C, who in turn remits it to some other person.
3. It has been pointed out that this practice indirectly deprives the Postal Department of some revenue in the shape of commission which would be collected if a fresh postal note were purchased for each remittance. That this is so, cannot of course be disputed, but, in my opinion, it would be futile to attempt by regulation to declare such a practice illegal.
4. The postal note, in the form in which it is issued by the Post Office, is a negotiable document payable to bearer, and under ordinary commercial law, the holder is entitled to transfer it or to cash it at his option. This is a recognised legal right, which applies to all negotiable instruments, such as bills of exchange, cheques, bank notes, etc.
5. The draft Regulations as approved on these papers do not deprive the holders of postal notes of this right. They purport to limit the 'issue' and 'sale' of postal notes and money orders to persons authorised in that behalf by the Postmaster-General, but the passing of a negotiable document such as a postal note, from one holder to another cannot reasonably be classed as an 'issue' or 'sale' by such person. One might as well term the passing of a bank note from one person to another in exchange for value as 'the issue or sale' of the bank note.
6. I consider that no further action should be taken in this matter. It might, however, be as well to refef the papers to the Attorney-General's Department so that they may be fully aware of what is intended, and advice might be sought whether the legal position is as stated by me in the preceding paragraphs.

The proposed regulations referred to are as follows:

275a Money orders shall be issued and sold only by persons authorized in that behalf by the Postmaster-General. Any person who without authority from the Postmaster-General (proof whereof shall lie upon that person) issues or sells a money order shall be liable upon conviction to a penalty not exceeding £50.

299a Postal notes shall be issued and sold only by persons authorized in that behalf by the Postmaster-General. Any person who without authority from the Postmaster-General (proof whereof shall lie upon that person) issues or sells a postal note shall be liable upon conviction to a penalty not exceeding £50.

Section 97 of the Post and Telegraph Act 1901-1916 authorises the making of regulations-

(k) Prescribing the persons by or through whom and the places where and the times when and the manner and form in which money orders shall be issued, and the persons in favour of whom and the places where and the time when and the manner and form in which money orders shall be paid and the length of time after which they shall become void, and the mode of forwarding messages or advices of transmitting moneys and of managing credits accounts and other matters and things necessary to be forwarded transmitted or managed in reference to money orders whereby the public may be enabled promptly and safely to remit sums of money through the Department. (1) Prescribing the conditions relating to the issue payment and cancellation of postal notes.

These paragraphs clearly authorise the making of the proposed regulations.

In the memorandum submitted for my advice it is, however, suggested that the regulations if made would be futile.

With regard to the comparison made in paragraph 5 of the memorandum, it may be pointed out that money orders and postal notes do not stand upon the same footing as Australian Notes, for the reason that Australian Notes are legal tender and money orders and postal notes are not. An Australian Note therefore passes freely from one person to another as part of the currency of the country without any question of 'issue' or 'sale' being raised, whereas the transfer or exchange of a postal note for its face value or other value, in money, may in certain circumstances be deemed to amount to a 'sale' of that postal note. I think, therefore, that while the words 'issues or sells' would have no meaning as applied to the transfer of an Australian Note from one person to another, the words 'issues or sells' in the proposed regulation 299A have a definite significance in regard to possible transactions by the public in relation to postal notes.

Now having regard to the nature of a money order, with its payee designated in a separate 'Letter of Advice', it follows that a money order is not a negotiable instrument. It may be possible to dispose of, or to pass a money order from one person to another, but it is clear that such transactions could only occur to a very limited extent, because of the fact that the name of the original payee remains unaltered. It would appear, therefore, that the scope of the proposed regulation 275A would in practice be restricted almost entirely to the unauthorised issue or sale of money orders from Post Offices, an offence which is already effectively provided for by section 123 of the Post and Telegraph Act 1901-1916, which reads as follows:

Any person who unlawfully issues a money order or postal note with a fraudulent intent shall be guilty of an indictable offence and shall be liable to imprisonment with or without hard labour for any term not exceeding seven years.

In view of section 123 of the Post and Telegraph Act 1901-1916-which section, however, I should point out does not apply to dealings by the public with money orders or postal notes which have been issued in a lawful manner by a Post Office-and bearing in mind the nature of a money order, it is a question for the consideration of the Postmaster-General's Department whether the trafficking by the public in money orders is carried on to an extent sufficient to call for the making of such a regulation as is proposed. If the regulation is brought into force its effect will be, in my opinion, to tend to discourage such trafficking as may exist amongst the public in regard to money orders.

A postal note differs from a money order in being payable to bearer or to order. It is thus either on the face of it negotiable or it can be made so by an endorsement. As the law stands at present the holder of a postal note can cash it or sell it to another person. The proposed regulation 299A relating to postal notes would, if brought into force, not prevent the transfer of a postal note from one person to another in the ordinary course of business for value received in the form of goods or services rendered-a practice with which of course it is not intended to interfere-but would, in my opinion, operate to discourage and restrict the practice of transferring postal notes for a consideration in the form of a sum of money, or, in other words, of selling or trafficking in postal notes by the public.⁽¹⁾

[Vol. 17, p. 154]

(1) Regulations 275A and 299A were inserted, in the form in which they appear in this opinion. in the Post and Telegraph Regulations by Statutory Rule 1921, No. 139, made on 21 July 1921.