CLIENT AND MONEYLENDER.

Gisborne Times, Volume XLIX, Issue 4874, 21 May 1918, Page 6

CLIENT AND MONEYLENDER.

QUESTION OF INTEREST.

AN INTERESTING DISPUTE

The case in w'liicli James Perry, of Gisborne, engineer (Mr. Burnard) sued Lazarus Wolfe Balkind, moneylender, of Christchurch (Mr. Coleman) for a refund of interest alleged to be excessive on a loan, urns continued before Mr. W. A. Barton, S.M., at the Magistrate’s Court yesterday morning. James William Coleman, called by Mr. Burnard, said he had valued tlie articles in the bill of sale at £123, and considered they-would produce that at auction. He had included the piano. .The Magistrate: Who prepared the bill of sale? Mr. Coleman: Mr Balkind’s agent. The Magistrate: Should not something be allow'ed for that? Mr. Burnard said that when a solicitor was not engaged to do this work no charge at law' was allowed. Mr. Burnard put in a statement showing the amount .claimed to be overpaid. His Worship said he had had the interest worked out and it amounted to over 200 per cent. Mr. Coleman said he had no evidence to call n't the evidence before the Court was of a purely documentary nature. The plaintiff based his claim on (1) excessive rate of interest and ” (2) harshness. He would draw attention to a salient factor in plaintiff’s case. Plaintiff did not say that he had been deceived or ®iisled. He did everything voluntarily, and knew what he was doing. He understood that he was borrowing the money for three months and tlialf he was to pay a premium, bonus, interest or whatever they liked to call it. This was not a case of a moneylender trying to grind down an uiw fortunate man who had no other means of obtaining money. There had been no attempt to "extort money or to trade on the necessities of the borrower. Plaintiff himself admitted that he had not been oppressed and had Mr. Hill remained the agent for the vendin’ the whole amount, on plaintiff’s admission, .would have been paid! It was not till some six months after the due date" that Mr. Perry had any thought whatever of coming into court and saying that he had been oppressed. The evidence i of plaintiff showed that he had been fairly treated and had been given latitude. One could imagine cases in which the Court should exercise its powers to get some miserable mau out of the grip-of a moneylender, but this was not one. They had been asked to believe that the goods were of a certain value because of the amount of the insurance, and had the evidence given that morning by a furniture dealer been given in. a cose of fire a different construction might have been placed upon it. The goods were apparently over-in-sured. The lending of sums of £lO or £2O at 10 per cent, interest would, he submitted, mean financial ruin to the man w r ho made a business of it. There was a good deal of work in arranging a loan, tlie borrower had often to be chased for his instalments, and there was tlie possibility that lie or his security would disappear. Ten per cent, would not pay office rent. Mr. Coleman then quoted at length from an English Court decision in. a case similar to that before His Worship to show’ that it had been held that the conditions of a loan were reasonable when the borrower entered into the transaction voluntarily and fully understood what he was required to pay. He submitted that tlie principle laid down in that case applied to the one. before the Court. He pointed out that 10 per cent, was the minimum rate of interest and the maximum was not fixed by law. All depended upon whether the bargain was harsh or unconscionable. The judge, in the case he had quoted, was not pre- \ pared to say that 500 per cent, was unreasonable when the_ parties had bargained on equal terms and both clearly understood the nature of the bargain. Mr. Burnard said that the case quoted by Mr. Coleman did not apply. The English Act differed in construction from the New Zealand Act. In England the Court could not grant relief unless two conditions existed—namely, that the was excessive “and” that the'bargain was harsh and unconscionable. In the New Zealand Act the word “or” w’as substituted for “and,” so that the Court could grant relief w’hen the interest was excessive even though the bargain was not harsh or unconscionable. Further than that the case quoted was not in line w’ith the bulk of the English authorities. Counsel quoted cases w’here 50 per cent, interest had been held too high and a reduction had been made to 20 per cent. , The main question was, continued / Mr. Burnard: Was the rate of interest commensurate with the risk? If not, it was clearly excessive. The evidence of the furniture dealer showed that the chattels compiled in the security were worth £123 even as second-hand furniture and would yield that price in the auction rooins. They were insured for £l3O, which would be something under their actual value though- not their secondhand value. They were all included in the security to cover the trivial sum of £lO. " Even mortgagees of land and of chattels at normal rates, receiving only from 6 to 8 per cent, interest, took some degree of risk. In the present case the risk was no higher than in heaps of cases where 8 to 10 per cent, interest had been charged. He submitted that the rate oT 200 per cent, interest charged by the moneylender was obviously excesMr. Burnard further called the attention of the Court to the fact that the three instalments bv which the debt and interest were to he paid two had been paid on the due date. The plaintiff had borrowed £10; m two months’ time he had repaid £9 6s 4d. Allbwing for interest at 10 per cent., which would be 2s Bd, ho then owed only 16s 4d. Since that date he had paid the defendant a further sum of £4 5s 7d. and he was still alleged to owe an uncertain sum —apparently something over £4. Counsel submitted that interest was clearly excessive within the meaning of the Act. . . The Magistrate reserved Ins decision.