MONEYLENDING TRANSACTIONS.

Gisborne Times, Volume XLIX, Issue 5002, 17 October 1918, Page 2

MONEYLENDING TRANSACTIONS.

INTERESTING MAGTSTR ATE’S COURT CASE. An interesting money lending case wa!s heard by Mr J. S. Barton, S’.M., at tlip Magistrate’s Court yesterday morning when Howard and .Daisy Osborno husband and wife proceeded against Lazarus TV olfe Balkind, a money-lender, of Christchurch. Mr Barnard represented the plaintiffs and Mr Coleman tlio defendant. The plaintiffs, in their statement of claim, alleged (1) That on April 24 defendant lent them £29; (2) the plaintiffs paid to_ the defendant in respect of the said loan the sum of £33 16s by equal weekly instalments, the hrst of such instalments being paid on the first day of May, 191 V, and the last on October 22; (3) on November 13 defendant lent a further sum of £2O. Plaintiffs paid to tli c defendant in respect to the said loan the sum of £27 Bs. Defendant claimed £6 10s in respect to the loan. They claimed the rate of interest in respect to the loan was excessive and the transactions were harsh and unconscionable and entitled plaintiffs to relief. Plaintiffs claimed (a) the sum of £l9 10s; (b) that all the .securities given by the plaintiffs to the defendant be set aside; (c) such further or other relief as to .the Court seemed meet. Mr Barnard, for the plaintiff, said that a loan of £o wan made for which £1 19s 9d was charged for six weeks accommodation. The next transaction was on April 2-1, 1917, when £2O was borrowed immediately the other was paid, and £l3 16s was added to that amount. This was repaid by regular weekly instalments of 265. Furniture to the value of £BO was given as security, and was valued by tlio lender’s agent. The loan was completely paid by October 22. There were one or two occasions when it was allowed to lapse but not often. On November 20 a further sum of £2O was borrowed on the same Terms. On May 8 the sum of £6 10s was due. The defendant refused to forego any claim to the balance. The plaintiff claimed relief under sub section A of sec. 3 of the Money Lenders Act, which gave power to claim such relief. The Act was remedial in nature and was to be construed on a broad principle. The object of the Act was to relieve a party from a contract into which the Court assumed hg entered on an unknown .basis. The Money Lenders Act was analogous with the Workers Compensation Act which was at first interpreted narrowly, particularly by the Court of Appeal, but the primary provisions of which became gradually widened. 6he New Zealand Act was wider than the English Act as it provided for relief on the ground of excessive interest alone. The question was whether the interest was excessive and that was a question for the Court and not one of fact. It was held that it was for the money lender to give evidence as to the reaison for tho rate of interest and show that it was not excessive. In the particular case before the Court the rate worked out somewhere at 300 per cent, assuming that the payments wore made monthly instead of weekly and .a principal of £2O was paid off in tins way each month one sixth should be taken off in respect to interest. Undoubtedly a higher rate was required in a business sucli as that of a money lender, but there must be a limit. It was held by Mr W. A. Barton, S.M., that 30 per cent was a reasonable rate of interest in a case .in which £lO was borrowed, the security being valued at £IOO. If the bill. of sale were enforced the effect would be that tlie money-lender had the right to seize the furniture and the man’s home disappeared. That was very had for the country particularly when such high prices ruled in order to replace them. There was no doubt that some people were unable to pay owing to the high rate of interest. There was the feature in the present crCo that there had been previous loans.

The plaintiff, Howard Osborne, stated that he- was an engineer-fitter. On March 15, 1917, he borrowed £5 from the defendant and undertook to -repay £6 19s 9d by certain instalments which were not set out, but which he thought were £1 5s a week. On April 24 the final instalment was repaid and he borrowed £2O and nn■dertook to pay £33 16s by weekly instalments of 26 weeks. On October 22 the last instalment was paid. In the following month he borrowed a second loan of £2O. Mr ITill, Balkind’s agent said that probably Balkind would make a rebate. Eventually £6 10s was all that was. left owing. The security was a bill or sale the furniture and effects which Mr Miller, the auctioneer, valued it at £44 which could be realised at a forced sale. The longest he had any of the furniture for, which he paid about £BO, was just over three year's.

Plaintiff produced advertisements. Cross-examined by Mr Coleman, plaintiff said that the interest on the money was excessive. Balkind did not unduly press him because he had no reason to. "Witness did not think that Balkind would settle out of court. It was not due to Perry’s case that he launched the action. Re-examined by Mr Burnard witness said that he had to repay £47 12s for a £2O loan for a year. He was getting £3 12s in wages at the time he borrowed the money, and certainly did not intend to consolidate his debts by borrowing again. He was now earning £4 7s which included the war bonus. The defendant in a affidavit sworn in Wellington stated that the loan was issued on similar terms to. other loans in New Zealand. Mr Coleman for the defendant said that the facts disclosed did not show that the plaintiffs were under _ the misapprehension _ as to the position. Osborne seemed in a position to meet the payments as they became due. It was not like the case of a man who was being hounded down by _ a money lender and had bailiffs in every week threatening to take away the furniture. There was no suggestion that he was oppressed by Baikind. He seemed to have read tho case of Perry v. Balkind and thought he was trying to get off with the nonpayment of £6 10s. He had only put before the Court evidence that he had not been treated in an oppreslsive fashion. Tho value of the security was only £44 and the furniture was not insured. If Balkind had chosen to put Osborne to the additional expense of premiums lie could have forced him to insure. Balkind did not force him to incur the expense. Tho Magistrate: He took the personal element into consideration. Mr Coleman said he reliccLon a case of Balkind v. Ralph which wals really a test case in that class of security. There was a sum of £4 in arrears and Balkind issued a writ in the Supreme court to get a decision. The rate or interest worked out at a fairly high rate but the sum involved was small and a really high rate of interest on a small .sum was not unreasonable. judgment was reserved. Two other cases Were heard in tho afternoon when Lazarus Wolfe Balkind, money-lender, Christchurch, (Mr T. Alston Coleman) sued for £o in connection with a loan to Joseph O’Connell, master manner. Peel Street, Gisborne (Mr Burnard). lhe case was deferred for judgment by Mr J. S. Barton, S.M., tho defence being on tho ground that sufficient in the manner of interest had already been paid. . ... The other case was one in which Lazarus Wolfe Balkind (Mr Coleman) versus Percival Graham) rdicpnera, Eltham (Mr J. Wauchop). «• lamtift contended that defendant undertook by instrument by wav of security to pay to the plaintiff tlm sum of £33 16s, including interest, by equal monthly payments of £5 12s Bd. ana that he had made default m such payments, and there was still £.u 5s 4d owing, to which plaintiff claimed £9 as interest, making m all £2O 5s 4d. In the defence, Mr Wauchop approved of the argument put forward by Mr Burnard in his case and submitted that the defendant had paid in seven months loan money of £2O with interest at the rate of 20 per cent on simple interest calculation. Judgment was reserved.