Mills J:

On 9 August 1934 the defendant promised to pay to the plaintiff a sum of $4,000 lent to the defendant, and also interest on the said sum at the rate of $24 by the $100 in the year, by equal payments of $80.

He charged his land to secure repayment.

The defendant having made default in payment, the plaintiff applies to the Court under s. 68(ii) of the Land Enactment to order the sale of the land unless the defendant show, adequate cause why the land should not be sold.

The present application has been consolidated with No. 25 of 1936 in which the defendant's wife is the borrower and charger as it is clear that the defendant's wife acted on the direction and advice of her husband, the same considerations apply in both cases.

The defendant seeks to show cause as follows: he says:

(a) the contract is voidable under s. 19A of the Contract Enactment because it was procured by undue influence;

(b) the transaction was usurious within the meaning of the Usurious Loans Enactment, and he seeks release from his promise to re-pay.

At the start I warn myself that I must not be influenced by false sentiment to arrive at an incorrect conclusion of law or fact in a desire to assist the borrower; that I must guard against being unconsciously biased by the use of the word "Chetty" or "moneylender"; and that the same law must be applied to every borrower and lender whether the lender be the Bank of England or an Asiatic shop-keeper, and whether the borrower be an Asiatic labourer or an English nobleman.

I consider first the question of undue influence. This is defined in s. 16(1) of the Contract Enactment. After examining the facts, I can find no evidence that the plaintiff was in a position to dominate the will of the defendant or that the plaintiff used that position to obtain an unfair advantage over the defendant.

I hold therefore that the contract between the plaintiff and defendant was not induced by undue influence, and, hence, is not voidable on that ground. I now consider whether the transaction was usurious.

The material words of s. 3(i) of the Usurious Loans Enactment are as follows:-

Where...... the Court has reason to believe

(a) ) that the interest is excessive, and

(b) ) that the transaction was, as between the parties thereto substantially un fair.

The Court may......

(i) ) re-open the transaction......

First I must consider what is "the transaction."

From an examination of the Enactment as a whole and particularly of the explanation to s. 3(i), I hold that "the transaction" is the contract on which the proceeding is brought; that is, the contract of charge dated 9 August 1934, and I hold that that transaction is the only transaction with regard to which the Court is permitted to consider whether the interest is excessive and whether the transaction is substantially unfair.

I must now enquire whether the interest is excessive. The interest is, by definition "the return to be made over and above what was actually lent."

In the present case, what was "actually lent"?

I hold that the word "lent" must be interpreted by reference to the definition of "Loan"; that definition is very wide, and includes any transaction which is in the opinion of the Court, in substance a loan.

In the present case, the borrower was under obligation to re-pay a loan of $4,000 to the lender; the lender discharged the borrower from that obligation; if the lender had discharged the borrower's obligation to pay a third party that discharge would, I hold, have amounted to a transaction which was in substance a loan; it cannot, in my view, make any difference whether the borrower's obligation was to pay the lender or a third party. I therefore, hold that "what was actually lent" was $4,000, as alleged by the borrower in the charge.

I hold that the interest is that specified in the charge; i.e 150 per annum, to be paid by equal payments of $80 each month. Is this excessive? i.e. is it in excess of what the Court deems reasona