INTEREST ON LOANS.

Hawera Star, Volume XLVI, 11 August 1926, Page 5

INTEREST ON LOANS.

QLAiI Al FOR! RE DUL 1J ON

ACTION AG AJNST MONEY-LENDER

(BY TELEGRAPH PRESS ASSOCIATION^ AUCKLAND, Aug. HV The first case in New Zealand rri which an action has been taken against a money-lender by a borrower uas heard in the Magistrate’s Court to-day before Afr. AY. R-. McKean, S.AI. It va,s stated in evidence that interest amount, ing to 127, 110 and 159 per cent, respectively had been charged, on each of the three loans under dispute. Thomas Henry Jones, journalist, and his wife ,Annie Winifred Jones (Mr. RN. White) proceeded against Whitfield Forster a money-lender, of Palmerston North (Mr. O. I. McGregor) to secure the re-opening of three loans and, to obtain an acocunt between the plaintiffs and the defendant with an order directing the defendant to refund £ L costs. The plaintiffs- 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 the defendant should be set aside. Defendant counter-claimed iY>i- £l9 l()s, the amount of the promissory note. Outlining the circumstances .surrounding the claim. Air. White .said that on August 21, 1924, the plaintiffs borrowed £SO from. the defendant and gave as security a hill of sale over their furniture and chattels. The hill of sale provided for the repayment of the loan and £22 interest by 12 monthly payments of £6. The loan, with interest, was actually repaid in U months, as the. final instalment was paid bv deduction from a' new loan. The interest paid by the defedant on this transaction, calculated upon the periodical balance, was at the rate of 127 per cent. The plaintiff®'borrowed a further £SO on July 21, 1924, on the same security and repayable with £lB Os 6d interest in nine monthly paymets of £7 llsi 2d. Front 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 1,10.8 per cent. On February 15 last the plaintiff Jone r borrowed £3B 5s from the defendant upon a promissory note, and agreed to pay back £42 by weekly instalments of £7, for which the plaintiff gave an order on his wages. The first four instalments were made, leaving £l4. h the defendant demanded ai further £4 10s interest, making £lB 10s which, lie alleged, was due. The interest claimed on the third loan amounted to 159 per cent. The plaintiffs borrowed a farther £36 on the same security as for the first two loans on March 0, and this was repayable with £ls interest by weekly payments of £3. The defendant charged 10s for legal .costs for preparing the bill of sale a,nd deducted from the fourth loan this amount, disbursements amd £ls 2s 4d, the balance line 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 the plaintiff said he followed the method adopted by the banks in calculating the interest of the daily balance except that the banks compounded half-yearly and he had done so at the close of each loan period. The rates of interest had worked out as, stated in the claim.

Defendant gave lengthy evidence concerning his interest charges," and stated that while the loans were in progres-s, no objections were made by the plaintiffs concerning the, high rates. In answer to Mr. McGregor lie said he had included more furniture in the. security on the second loan because it was not completed as well ns lie had hoped.

The magistrate : You expect a lot, do you not? The payments were duly kept up to date and paid. What more could you want? You naturally took all the security you could get. and I do not blame, you, but do not give n false repson for taking it. After hearing counsel on the legal aspect of the case the magistrate- reserved his decision.