EXCESSIVE INTEREST CHARGED

Dominion, Volume 12, Issue 234, 27 June 1919, Page 9

EXCESSIVE INTEREST CHARGED

MONEYLENDER'S TRANSACTION

REVIEWED

MAGISTRATE'S .COMMENT

"•'An action by a moneylender to recover 'arrears of instalments on-a loan revealed the fact that interest was charged at the rate of JO per.cont., audi-in delivering 'judgment-in the case in the' Magistrate's Court yesterday, Mr. W. G. Riddell, S.M.,held that this rate was excessive, and he accordingly reduced it under the provisions of the Moneylenders Act; 1908. The parties in the action/were Lazarus ■Wolfe Balkind,' moneylender, .Wellington, (plaintiff), and Cunningham 8r05.,, carriers, Lower rHutt' (defendants). Tho caso -was heard on Juno .12..' -

• The plaintiff claimed iOIOO,- arrears ot instalments down to May. 6,: 1919; on a 'loan .'<rf?'j>loßo (including- interest) made on April G, 1918, repayable by twentyfour; monthly instalments of- ;C45. -The defendants,'.who are general ..carriers carrying on business in the Lower Hutt, approached plaintiff for a loan- of ,£GOO in order to purchase a motor wagon from Messrs. 'Hatrick and Co.-. Defendants agreed to give aseeciirityan instrument over two motor lorries, "fourteen horses, and some-brakes, carts,.and harness. One of. the lorries included in the security .was that to ,be:purchased -front Hatrick and. Co. • As this. lorry' was held by defendants under.-ai.hire purchase agreement,- it could not bo-included in plaintiff's security until the balance of thV purchase money-was paid'to the vendor, and that being the case, the .value of defendants': security. was considerably reduced. The remaining lorry was valued at .£450, the fourteen horses at J!140, ana the brakes,'' carts,' and harness atabout £M. -Plaintiff told the defendants that interestwould be charged at the rate ot ~40 per .cent., and the loan. of. ,£6OO, which with interest, added made a total of • ~£IOBO, to repaid by twenty-four monthly installments The.defend- • ants later got-into-D.rrears with.their-pay- , nients, and* His Worship was satisfied =thflt they had mistaken their ability to carry out the terms of their agreement, a default olauso of' which :; made the .whole-.amount'.unpaid- due.and' ; recover--.able in the event of default in payment of oiie instalment. Plaintiff,- however, din • not desiroto enforce this condition, but jnercly asked for payment of. the- balance 'The -defendants did not, attempt! to obtain- the money , from .any other person, and they asked tho:.C'ourt that the transaction be reponedand that they be granted relief under the Moneylenders Act, 1908, on the ground that the ■interest■ charged w&s excessive' and .the .transaction was harsh, and unconscionable. '•'.'.' .-: ■.. f .'■ ' • . • Continuing »His Worship .said that in the case Balkind %■ Balpn, 19i8,' it was : held that under the Moneylenders Act, ■1908, it. was.; unnecessary,; where . the interest, was .shown'.'to-'-be excessive,;™ go further. 1 .-and.'Proyo'soine: collateral, circumiitances to show-that tho transaction was hnrsh'ahd unconscionable. /The question of risk appeared, to be; the,most important factor in determining, -what rate of interest should be charged,- and this factor incVaded; the amount of loan, the. security availajjle,-tho financial position generally of the borrower, and-'the. pros-. |.pect of repayment, .existing: -at; Hie date' of 4 the - Applying the principleslaid down in Balkind v.-Ralph to the present case, His ; Worship considered that the interest charged by the plaintilf -was-excessive.' .'l'h'e'..rate,Actuallyl'chargI cd was more than 40 per cent.', V.as .the. ' agleehieiil' provided that' the' principal should bo reduced .by monthly.'instalments,' which" if • paid ; would liave left at the.end of ;the year an .amquiit.' of i; 300 nriiicipiil and J2|o..f6r. interest to be 'paid within' 'the.v ensuing twelve •months;' : True,.'payniekls were hot kept 'iip ,l>y : _ the defendant: but the result ,ii\ :lustrated;' the..excessive miiouht 'charged ■for interest.after payment, of .halt the principal- sum;'.''. V;'-.''-. '.'.." ..... • • "I'-'tliifik'; tlie 'case is .one ;'w'here the transaction' shoul'd''.bo.".i'eyiewed'; and the' •defendants"' given, sonie. .relief. .Taking. iHto ; ':coiis'ider'ati6fj tli'S, VWiie"'.of.'the_d.o;' =fen'darifs'-'%eciiriljv. : 'fheir''finhiicial' : posi: tion at'thß'tiliie'-thiiloaii wits.granted,'as" well, as t\io ■''other factors necessarily to,' ■be considered in., such- cases,.. 1, iix .;tb.e : -su'm'of as a fair, 'amount..of interest >payable'oh■ the 'principal 'advancod 'for'a .■period of. two years. .This reduces the interest^cliarSed' by plaintiff 'from JL'4SO to JB180; and.-makes .the 'total amount owing by defendants £780, payablo by twenty-four equal monthly instalments of' £3£ : 10s.' Under stich an'afrangeinent'. defendants' should have paid in thirteen' ■'months tho sum Of i'l22 10s. They have paid ',£305, leaving a balance ofJJll7.lOs! for which '■'plaintiff is entitled for g'udgnieut!'-''"' 1 ' '.'■''.''." '■''' , 4 •'• Plaintiff: was allowed/costs amounting to. Jt9>.l2s-. ■.

' At",the', hearing Mr, J. Morriiou appeared for thi" plaintiff ninl Jlv; "E. V, Bunny ior'the\lefendailt.'■'..■: