Supreme Court Money-lender’s Charges Are Subject Of Action

Press, Volume CII, Issue 30190, 23 July 1963, Page 10

Supreme Court Money-lender’s Charges Are Subject Of Action

An action by a debtor for reduction in the rates of interest charged him by a money-lender was begun before Mr Justice Macarthur in the Supreme Court yesterday. The plaintiff, Basil Augustus Birch, was represented by Mr D. H. Hicks. The defendants, Herbert Cecil William Shaw and H.C.S. Holdings, Ltd., were represented by Mr J. G. Leggat. Mr Hicks said that the plaintiff was in business as a manufacturer of leather goods. In May, 1957, the plaintiff was introduced to Shaw, a registered money-lender, who agreed to advance £250, secured by a second mortgage on his home, with interest of £5 10s a month. This was an effective rate of interest of 26 2-5 per cent, a year. In September, 1958, the plaintiff and Shaw agreed on a further loan of £250 on the same terms, to be secured by a variation of the mortgage. In July, 1959, a further £3OO was advanced, with interest fixed at £l5, to be repaid in two monthly instalments of £157 10s, in default the loan to bear interest at the same rate as the previous loans. One repayment of £157 10s was made in the following month. In June, 1960, Mr Hicks said, Shaw transferred these loans to a company, the second defendant, by an agreement for sale and purchase, but no notice of the agreement or the assignment of the

loans was given to the plaintiff at that time.

At this time the company was not a registered moneylender, and did not obtain a money-lender’s licence until May 3, 1961. Shaw allowed his own money-lender's licence to expire on March 31, 1961.

In April, 1962. a further £5OO was advanced on the same terms.

The plaintiff stiU owed £ll5O, or the total of ths four Joans less the one repayment of £l5O, Mr Hicks said. Evidence would be given that the total amount of interest on these loans, including the interest which had been paid, was £ 1064. Mr Hicks submitted that bis Honour should declare that the loans were illegal and void, and sought relief for the plaintiff in the interest rates.

The grounds of complaint were:—

(1) Shaw’s licence expired before any notice of the

assignment of the loans was given to the plaintiff. (2) The securities and the loans were transferred to an unregistered moneylender. (3) The interest rate was excessive* or harsh and unconscionable. (4) Tlie loans themselves were not arranged through the registered address of the moneylender. (5) Section 8 of the Moneylenders’ Act (concerning the necessity for a note

or memorandum an respect of each loan) was not complied with. (6) Further acknowledgement cannot be secured under the mortgage, because the mortgage as varied does not provide for further advances. The plaintiff gave evidence along those lines. Owen Talbot Gratton, Registrar of the Magistrate’s Court, gave evidence that the register of money-lenders showed that Shaw's licence expired on March 31, 1961, and the company did not obtain its licence until May 3, 1961. Hugh Beattie, a public accountant, gave evidence on rates of interest currently being charged on loans in Christchurch. Shaw and his solicitor, Alan Kendrick Archer, gave evidence for the defendants. Counsel Will address his Honour this morning.