EXCESSIVE INTEREST

Southland Times, Issue 18971, 19 June 1923, Page 5

EXCESSIVE INTEREST

BALKIND’S CLAIM. REDUCTION MADE BY COURT (Per United Press Association.) CHRISTCHURCH, June 18. Mr Justice Adams has reduced to £l5 the sum that L. W. Balkind may charge Mrs H. Kennedy, wife of a tramway employee, on a secured loan of £5O, and on some further advances. The parties agreed that £2B should be paid for interest on the £5O. Later other advances were made, and Mrs Kennedy and her husband agreed to pay £22 8s additional interest for the extension of time. When Balkind sued Mrs Kennedy in the Supreme Court last week for interest and capital, J. Patrick, accountant, sard if Balkind had been paid the sum he claimed, £72 15s 4d, he would receive the whole of his capital and interest at the rate of 150 per cent, per annum. Mr® Kennedy, when the case came up, applied uffiier the Moneylenders’ Act, to have the transaction opened and the account taken between Balkind and her, and that she should be relieved from payment of any sum in excess of a fair one. His Honour ordered that the transaction should be reopened and an account taken. He said plaintiff had been kept out of his money for more than four months since the demand for payment was first made. “I think £l5 is the full sum that should be allowed hiyi for interest, to which sum it will be reduced. Plaintiff will be given judgment for £2B 10s 4d. In coming to that decision, His Honour said “that in all cases under section 30 of the Act, which conferred jurisdiction on the Court, the Court had to consider the relative positions of the parties, the terms of contracts, the risk, security and all circumstances of each case. There was a broad distinction between unsecured loans, and loans fully secured. Where there was a security that might prove insufficient in the extent of protection it afforded to the lenders, it might be an important element in the expense of carrying on a lending business, and other questions of that nature also might arise. Ail the decisions upon the. Acts came back to this, that the Court had to take into consideration all the circumstances of each case.” “In the present case,” His Honour continued, “he had no doubt that the interest charged on the sums actually lent was excessive. Patrick’s calculation of 150 per cent, was on the commercial practice of calculating interest on daily balances, but Patrick said even if interest was calculated on the principle of yearly rents, it came to 100 per cent, per annum. That evidence was uncontradicted and stood the test of cross-examination. Plaintiff elected not to call any witnesses, and gave tne Court no such assistance as was given in Balkind v. Ralph. The instrument, by way of security, contained a default clause, under which plaintiff said that at any time default on a single instalment, or without any default if in his ‘sole opinion’ the exercise of power was necessary for the protection of the security he could enforce the immediate payment of the whole balance of the loan, and further advances, together with the whole of the sums, charged for interest to the end of the respective terms. Plaintiff might have done that within two months after the first advance was made, and in fact, when he made his claim in February and March 3 last, he included the whole interest to the end of the current term. The evidence showed he held sufficient security for his debt.”