BORROWER SUES

Hokitika Guardian, 12 August 1926, Page 4

BORROWER SUES

- ■ MONEYLENDERS’ INTEREST. REDUCTION OF RATES SOUGHT. AUCKLAND, August 10. The first case in New Zealand in which action has been taken against a moneylender by a borrower was heard in the Magistrate’s Court before Mr W. R. McKean, S.M. It was stated in evidence that interest amouniung to 12i, 110.8 and 159 per cent, respectively had been charged on each of three loans under dispute. Thomas Henry Jones, journalist, and his wife, Annie Winifred Jones (Mr R. X. White), proceeded against Whitfield Forster, money lender, of Palmerston North .(Mr G. J. i. Alc.Gregorj. to secure the reopening of three loans and to obtain an account between plaintiffs and defendant, with an order directing defendant to refund £1 costs. Plaintiff’s also soght 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 defendant should be set aside. Defendant counter-claimed for £lB 10s, the amount of :v promissory note. Outlining the circumstances surrounding tlie claim, Mr White said that on August 21st. 1924. plaintiffs borrowed £SO from the defendant, and gave as security a hill of sale over their furniture and chattels. The bill of sale provided for repayment of the loan and £22 interest by 12 monthly payments of £(>. The loan with interest was actallv repaid in 11 months, as the final instalment was paid by a deduction from a new loan. The interest paid to defendant on this transaction, calculated upon periodical balance, was at the rate of 127 per cent. Plaintiffs borrowed a further £SO on July 21st, 1921, on the same security and repayable with £lB Os (id interest, in nine monthly payments of £7 11s 2d. From this was deducted the final instalment of the first loan, ami also £1 legal costs, although no solicitor was employed. RATES OF INTEREST.

The interest on this loan, which was repaid on March 6th. 1925, calculated upon periodical balance, was at the rate of 110.8 per cent. On February 15th last, the plaintiff, Jones, borrowed £3B 5s from defendant, upon a promissory note, and agreed to nay back £42 by weekly instalments of £7, for which plaintiff gave an order on his wages. The first four instalment were made, leaving £l4, hut defendant demanded a further £4 10s interest, making £lB 10s. which lie alleged was due. The interest claimed on the third loan amonted to 159 per cent. Plaintiffs borrowed a further £66 on the same security as for the first two loans on March 6th. and this was repayable with £ls interest by weekly payments of £3. Defendant charged 10s for legal costs for preparing the bill of sale, and deducted from the fourth loan this amount, disbursements and £ls 2s 4d, the balance due on the second ’ loan. This was repaid on .Tune 10th. and under pressure, defendant allowed a re hate of £O. “ EXPECTING A LOT.” V. Kirk, public accountant, called by counsel for plaintiff, said he followed the method adopted by the hanks in calculating interest on daily balance, except that the hanks compounded half-yearly, and he had done so at the close of each loan period. Tho rates of interest had worked out as stated ill the claim.

Evidence was also given by plaintiffs •egarding the loans and their transactions with defendant.

Defendant gave lengthy evidence concerning his interest charges and stated that while the loans were in progress no objections were made by plaintiffs concerning high rates. fn answer to Mr McGregor, ho said he had included more furniture in the security on tho second loan, because it was not completed as well ns ho had hoped. The Magistrate: You expect a. lot do you not? The payments were duly kept up to date, and paid; what more could syou want? You naturally took all the security you could get, and I do not blame you, but do not give a false reason for taking it. After hearing counsel on the legal aspect of the case, the Magistrate reserved his decision.