INTEREST ON LOANS

Evening Post, Volume CXX, Issue 86, 8 October 1935, Page 10

INTEREST ON LOANS

VICTORIAN REDUCTIONS

DO THEY APPLY IN NEW

ZEALAND ?

Over' twenty municipal bodies throughout New Zealand are directly interested in a case between the Australian Temperance and General Mutual Life Assurance Society and the Mount Albert Borough Council, which is being heard by the Court of Appeal today. The case involves a question as to whether Victorian Financial Emergency Acts reducing the rates of interest on mortgages apply to New Zealand debentures on which the interest and principal are payable in Melbourne. The Court's decision will affect local body debenture holdings in excess of £1,000,000.

The Court comprises the Chief Justice (Sir Michael Myers), Mr. Justice Reed, Mr. Justice Smith, Mr. Justice Johnston, and Mr. Justice Fair.

Mr. A. H. Johnstone, K.C., Mr. C. H. Weston, K.C., and Mr. E. P. Bunny appear for the T. and G. Society, plaintiff in the action, and Mr, J. O'Shea, and Mr. A. E. Hurley for the defendant, the Mount Albert Borough Council.

Over d period of years the Mount Albert Borough Council borrowed £.130,000 from the T. and G. Society at the rate of £5 13s 9d per cent., and it now claims that by virtue of the Victorian legislation the interest rate is reduced to 5 per cent. It was provided that all payments of interest and principal should be made in Melbourne.

On March 1, 1935, the Mount Albert Borough Council paid the society £3250, being a half-yearly instalment on the loan at 5 per cent. Up to that time it had been paying at the rate of £5 13s 9d per cent. The amount due on March 1 at.£s 13s 9d per cent, was £3696 17s 6d, and the society is now claiming the balance of £446 17s ea. • ■•' ■

In a counter-claim the defendant council alleges that all interest paid from October 1, 1931 (when the Victorian legislation came into force) until September 1, 1934, was paid in ignorance of the Victorian legislation. The difference in the interest rates over that period amounted to £2610 ,4s lOd, and the council is endeavouring to recover that amount.

In a statement of defence to the counter-claim the society contends that the agreement between the parties under which the debentures were issued was made and executed in New Zealand and is subject to the laws of New Zealand and not the laws of Victoria. . - .., The questions for the Court's determination are:— > 1. Whether the Victorian financial emergency legislation has any application to the debentures for £130,000 issued to the plaintiff by the defendant? 2. Whether the interest under the debentures is reduced by the provisions of that legislation as from October 1, 1931? 3. If the reduction of interest by Victorian legislation does apply to the debentures, is the defendant council entitled to a refund of payments of interest made since October 1, 1931, in excess of the reduced rate, on the ground of' mistake? Legal argument is proceeding.