BORROWER SUES MONEY-LENDER

Evening Star, Issue 19325, 11 August 1926, Page 11

BORROWER SUES MONEY-LENDER

SEEKS TO RECOVER PART OF INTEREST [Per United Press Association.] AUCKLAND, August 10. The first caso in New Zealand in which action has been taken against a money-lender by a borrower was heard in the Magistrate’s Court before Air W. P. AlTvcan, S.M. It was stated in evidence that interest amounting to 127, 110.8, and 159 per cent, respectively had been charged on each of the three loans under dispute. '/Thomas Henry Jones, a journalist, and his wife, Annie Winifred Jones (Mr R.. N. White), proceeded against Whitfield Forster, a money-lender, of Palmerston North (Mr G. J. 1. M‘uregor), to secure the reopening of three loans and to obtain an account between plaintiffs and defendant with an order directing defendant to refund £1 costs. Plaintiff's also sought to recover the amount of interest above that which the court would fix as reasonable, while it was claimed that a promissory note given to defendant should bo set aside. Defendant counter-claimed for £lB 10s, the amount of a promissory note. Outlining the circumstances surrounding the claim, Mr White said that on August 21, 1924, plaintiffs borrowed £SU from defendant, and gave as security a bill of sale over their furniture and chattels. The bill of sale provided for the repayment of the loan and £22 interest by twelve monthly payments of £6.' The loan, with interest, was actually repaid in eleven months, as the final instalment was paid by a deduction from a new loan. The interest paid to defendant on this transaction, calculated upon aj periodical balance, was at the rate of 127 per cent. Plaintiffs borrowed a further £SO on July 21, 1925, on the _ same security, and repayable, with £lB Os 6d interest, in nine monthly payments of £7 11s 2d. From this was < deducted the final instalment of the first loan, and also £1 legal costs, although no solicitor was employed. The interest on this loan „ which was repaid on March 6, 1925, calculated upon the periodical balance, was at the rate of 110.8 per cent. On February 15 last the plaintiff (Jones) borrowed £3B 5s from defendant upon a promissory note, and agreed to pay hack £42 by weekly instalments of £7,. for which plaintiff gave an order on his wages. The first four instalments were made, leaving £l4, hut defendant demanded a further £4. 10s interest, making £lB 10s, which lie alleged was due. The interest claimed on the third loan amounted to 159 per cent. Plaintiffs borrowed a further £G6 on the same security as the first two loans on March 6, and this was repayable, with £ls interest, by wceklv payments of £3. Defendant charged 10s for legal costs for preparing the bill of sale, and deducted from tho fourth loan this amount and £ls 2s 4d, the balance duo on the second loan. This was repaid on June 19, and, under pressure, defendant allowed a rebate of £9.

V. Kirk, public accountant, called by counsel for plaintiff, said ho followed the method adopted by the banks in calculating interest on a daily balance, except that the banks compounded half-yearly, and be bad done so at the close of each loan period. The rates of interest bad worked out as stated in the claim.

Evidence was also given by plaintiffs regarding the loans and their transactions with defendant. Defendant gave lengthy . evidence concerning bis interest charges, and stated that, while the loans were in progress, no objections were made by plaintiffs concerning the high rates. In answer to Mr M'Gregor, be said ho had included more furniture in the security on the second loan because it was not completed as well as he had hoped. The Magistrate: You expect a lot, do you not? The payments were duly kept up to date and paid. What more could vou want? You naturally took all the security you could get, and I do not blame you, hut do not give a false reason for taking it. After hearing counsel on the legal aspect of the _casc, the magistrate reserved hia decision.