MONEYLENDER AND CLIENT.

Auckland Star, Volume XL, Issue 253, 23 October 1909, Page 5

MONEYLENDER AND CLIENT.

A LOAN- OF fIOO. COST £12 5/ FOR SEVEX MONTHS. A case which threw some light on a money-lending transaction was heard in the Magistrate's Court, before Mr C. C. Kettle, S-M-, to-day. The parties to the suit were (Mrs) Mette Maria Gungriffe, plaintiff, and William Ledingham, deiendant, and the amount involved was £6. Mr J. F. Pullen appeared for the plaintiff, and Mr. Olipkant for the defendant. In December last Mrs Gungriffe, an elderly widow, wished to pay off a second mortgage on her property at lit. Roskill, and she employed a commission agent named Millar to negotiate a loan of £100 to enable her to do it. For her property she paid in the first instance £372, and she claimed that she had spent £100 in improving it. She ha<l borrowed £250 on it on a first mortgage, and on a. second

mortgage which she was paving off at the rate of 5/ per week, she still owed £71. Mr Millar succeeded in persuading the second mortgagee to accept £60 cash in full satisfaction, and in order to negotiate the loan went to Messrs Oliphant and Batley, solicitors, wUo arranged with defendant, their client, that he should lend the money. Mr Millar got for his services £7 7/6 from Mrs Gungriffe, and 10/ from the firm of solicitors. About the terms on which the money was lent there was some conflict of testimony. Defendant said the money was lent at 10 per cent, but only on consideration that Mrs Gungriffe should pay him £5 by way of a bonus. Receipts and diary entries of his solicitors referred to the loan as being at 15 per cent, "mortgage to be registered at 10 per cent." When complainant actually received a cheque, it was for £95, the £5 having been deducted.

Plaintiff's story was that she knew nothing about this £5 bonus, and she thought the £5 deducted was for payment in advance ai sis months' interest. At the end of three months interest became due, but, thinking that it was already paid, she did not pay it. Defendant thereupon issued a summons against her for £3, a quarter's interest at the penal rate, 12 per cent., and 10/ for the cost of the summons. She went to see defendant's solicitors about it, and told them she had paid interest in advance, and they told her something about that being a bonus. The end of Lt all was tha* she paid the £3 10/ demanded. Subsequently she consulted Messrs. Pullen and Dawson, who advised her that she had been badly used. They found her £2 10/ with which to pay the next quarter's interest, and obtained a loan of £375 at 5 per cent, to repay both mortgages. Mr. Ledingham agreed to acct?p.t principal and interest to- date, the mortgage ftaving run for seven months, in full satisfaction, and the money was paid over to him. Altogether she paid to Mr. Ledingham £12 5/ for the loan of £ 100 for seven months, whereas according to her own account of the arrangement she should have paid only £6 5/. She therefore sued to recover the sum of £6.

OniS or two interesting points were made in the pro<rr«=s of the case. Solicitors' costs, Mr. Millar's fee, the £5 bomis. or interest in advance, and the interest, Le.. the total cast of this loan of £100 for seven months, amounted to a. few shillings short of £25. Defendants solicitor contended that the security was rieky. that he was making a very venturesome loan, and that, therefore, the practice of requiring a fore-gift, or bomis. was not at all unusual—in fact, quite an ordinary transaction in Auckland. Mr. Kettle's com ment on this was: "Then, the sooner we have legislation to deal with this kind of thing the better." About the alleged bonus and its bona fides, he said: "Call it bonus, fore-gift, anything you like, the fact remains that it was interest on that loan of £100 for 12 months. There are yonr own entries in your own diary, and there are your own documents to prove it.' .

Mr. Pudlen said that the transaction had all been carried on in Messrs. Oliphant and BatleVs office, a .place other than the registered office of the defendant, a money-lender. This being so, the Moneylenders Act made the whole transaction bad ab initio. Had he been aware of the facts in time, he would have advised his client that she was under no legal obligation to repay to Mr. Leding-ham either principle or interest. The Act was clear also that Mr. Ledingham could not have succeeded in recovering any money whatsoever from her under the contract. The Magistrate said that the case dealt with ma.ny points which were interesting- to him, and, he believed, to the public. He reserved judgment.