INTEREST ON LOANS

Otago Daily Times, Issue 22063, 20 September 1933, Page 7

INTEREST ON LOANS

DOMINION POWER BOARD SUIT DISMISSED IN SYDNEY (United Frees Association.) (By Electric Telegraph—Copyright.) SYDNEY, September 19. (Received Sept. 19, at 10.15 p.m.) The court dismissed, with costs, the suit of the Wanganui-Rangitikei Power Board against the A.M.P. Society. Sir John Harvey’s judgment said it was clear that the parties intended the contract to be a New Zealand contract from first to last and that it was never intended that the obligation to pay interest at Sydney was to be subject to any law which the State of New South Wales might make. Sir John Harvey held that if a resident of New South Wales borrowed money in England, contracting to pay interest for it there, and returned to New South Wales before his creditor could sue him in England, it obviously could not be set up if the creditor followed him to New South Wales that he was discharged from obligation to pay the full interest by reason of the existence of the New South Wales Interest Reduction Act. It was too clear for words that ' these loans and security were to be interpreted and enforced according to New Zealand law. The fact that the debentures were made payable in Sydney was a mere accident and whether that was an obligation which was an inherent part of the contract and could not be varied except by the consent of both parties seemed to be unnecessary to consider.

The decision in the case to test the claim of New Zealand local authorities with loans domiciled in New South Wales to benefit by the New South Wales Act reducing interest by 22i per cent, was awaited with interest. A ruling that New Zealand local body debtors must take advantage of the Australian legislation was given 18 months ago by the Auditor-general, Mr G. F. 1 C. Campbell. Local bodies have since acted in that way, pending determination of the legal position by the court. The Auckland Electric Power Board, for instance, instructed the Bank of New Zealand in Sydney to pay interest to the. Australian Mutual Provident Society, less 22i per cent., and to hold the balance until the dispute was settled. Similarly, the Waitemata Electric Power Board adopted the procedure of paying the disputed portion of the interest into a suspense account. As far as the New South Wales position is concerned, it was arranged that the Wanganui-Rangitikei Electric Power Board should appear in the present teat case to determine the liability for payment of interest in full. As large sums arc involved, it has been suggested that the case will probably be taken to the Privy Council, and it may be several years before a final decision is given. The delay in taking the case to court apparently was due to doubt as to which side would take the initiative.