MONEY-LENDING CASE

Dominion, Volume 13, Issue 274, 13 August 1920, Page 3

MONEY-LENDING CASE

INTEREST 110 PER CENT.

REDUCED BY COURT TO 20 PERCENT.

An action to have a money-lending transaction reviewed under tho Money Lenders Act was brought on in the Supreme Court yesterday before His Honour Mr. Justice Kdwurds. The plaintir. wa6 Henry John .Simpson, of Kilbirnie,' fruiterer and confectioner, and the del}; fendant Lazarus Wolfe Balkind, registered money-lender. Mr. A. Dunn appeared for the plaintiff and Mr. J. C. Morrison for the defendant.

The statement ofidnim set out,that in

'April, 1918,'the.plAintiff- borrowed from defendant the sum of .£250, and covenanted to repay this amount, together witn .£227 for interest, making altogether a . total indebtedness of £H9. -The money was to be paid in the following instalments :—Under instrument "A" (securing *C32-t), M per month' from April 24, 1918. until April 24, 1919, and thereafter ,£2O por month; under instrument "B" (securing ,£155), i 3 per week, first payment on April 25, 1918. In opening, Mr. Dunn said that at the time of the transaction plaintiff was prosperous, ihis business showing! a.clear profit of about ,£ls a week. U.nfortunately,; he got Into debt through becoming involved in a betting transaction, and it was necessary for him to raise ' £200 Ho accordingly approached the defendant and obtained two loans of Jilflfl and ',£l5O respectively. He gave as security bills of sale over Ms household "furniture, mototcycle and side-car, and hes stock and fittings. As to interest, he covenanted to poy lump sums—,£ss on the loan of .£IOO . and ,£174 on .account, of the .£l5O loan. . Through stress of circumstances plaintiff fell. into arrears. The defendant recovered judgment in the Magistrate's Court for three monthly instalments, and subsequently plaintiff offered to redeem the loan at a fair rate of interest. This offer was not accepted. The. rate of interest charged by the defendant—having!, regard to the fact that the principal was reducible at short periods—worked out at about 110 per cent. This, it was urged, was exorbitant and extortionate,, considering the value of the. security.. Counsel submitted that the transaction was unconscionable, and should be reviewed. Value of the Security. Evidence was given by Andrew Gellatly, of Bethune and Co., auctioneers, that he estimated that the security given 'by plaintiff would realise ,£4OB at auction. .- .William Thompson, of Thompson, Brown and East, valued the security, at ■£532 17s. 6d., and stated that/considering the margin, of security offered, 10' per cent, would have been a fair rate of interest. •-.': Plaintiff, in his evidence, • said lie was prepared to repay the balance of unpaid principal, plus aerate of interest to be fixed by the Court. To Mr. Morrison: Had the interest been •' twice as much as it was he would have still made the contract, as he needed the money. For the defence it was set out that the plaintiff had. expressed himself as entirely satisfied with the rate of interest when the transaction was mnde.i He tad never-suggested any variations of the terms of payment. In all he had paid =6100, and he had not defended an action in the Magistrate's Court for recovery of n portion of.the balance owing..' The defendant was willing' to allow the balance of the loans to remain, arid to be repaid at the rate-'of ,£2O rier month. After further hearing .of the case the Court adjourned in order'to see if the parties could effect a settlement.

On the' Court resuming. Mr. Dunn announced that tihe plaintiff's offer to pay 20 per cent, interest.hnd been rejected by the defendant. Counsel submitted, that this was a fair and reasonable offer, and he computed the balance owing, at: 20 per cent:, calculated quarterly, to i>e .6161 03. lOd. • Mr. Morrison contended that unless the" Court was satisfied that the transaction should be reviewed, the contract must stand. It was purely, a matter between the borrower of the money and the lender, and it could not be ! submitted that, the'former had riot understood Hie'-franc-; action. The Court's Decision.' In giving judgment, His Honour' observed that Balkind was- not gambling. He had ample security; the piano, cas'i .register, and motor-eycle-not to'mention, the ■ other articles—were more ' than enough to secure the amount loaned. Tho security was good all. through, and it was quite evident that Balkind knew thin.' However, the Court-simply !had to -de-* cide. whether or not tlio interest 'cfrnrgert was excessive. In this connection it had to be borne in mind that tho pripo of money in 1918, when the loan was nego-. bated, was about 6 per cent., and evei. allowing that chattel securities were not considered to be as good as other securities, it could not be contended that i charge of ,£ss'for the Joan of ,£IOO foi one year—to mention only one of M>.-loans-was not excessive, judgment would be tor the plaintiff, and he would be relieved of the payment of.any sum in excess of <EIGI os, 10d., whicß amount was computed at 20 per cent, rate of interest. The defendant would be granted theco'?tt ot the proceedings in the Lower .Court, and the question of costs An respect of the present ( action would be reserved