JUDGMENT

Buttrose J:

This was an action for money lent.

In view of the argument addressed to us on the hearing of the appeal, I propose to deal firstly with the pleadings. The case as presented by the pleadings was this. The plaintiff in his statement of claim alleged that the sum of $15,000 in all was lent in varying amounts to the defendants between 9 March and 22 July 1961, and that $5,060 had been repaid by instalments between 10 May and 28 August 1961, leaving a balance due to him of $9,940 which he claimed.

The defence was a somewhat curious and confused document. The defendants first of all denied being indebted to the plaintiff either in the sum claimed or at all. They further alleged that on 1 March 1961 the plaintiff and the defendants entered into a written agreement, which was produced at the trial, whereby the plaintiff agreed to finance the defendants in their business from time to time with friendly loans free of interest. The defendants alleged that after the execution of this agreement the plaintiff failed to perform his obligations thereunder and they threatened him with civil proceedings for damages for breach thereof. As a result, according to the defendants, the plaintiff agreed to lend money to the defendants not on the terms stipulated in the written agreement but upon payment of interest at 24 per centum per annum and on condition that the nominal borrower should be a government servant who must be prepared to execute IOU's for the money lent. The defendants agreed to this and offered one Kesar Singh, a government servant who was accepted by the plaintiff. The defendants alleged that pursuant to this agreement, the plaintiff lent to Kesar Singh over a period of six months from 7 March to 28 August 1961, various sums amounting in all to $22,500 which he, in turn, paid to the defendants.

The defendants further alleged that they paid interest to the plaintiff from April to October 1961, amounting to $2,000. The defendants also said that they have repaid to Kesar Singh the sum of $15,500 out of the sum of $22,500 by instalments between 14 April and 7 October 1961. The defence makes no mention of and is silent as to repayment of the balance outstanding of $7,000.

Notwithstanding their earlier pleading that the loan was in reality to them the defendants go on to allege further that there was no legal nexus between the plaintiff and the defendants and the action against them is misconceived. The defendants counterclaimed the return of the sum of $2,000 paid to the plaintiff as interest.

In his reply and defence to the counterclaim the plaintiff admitted entering into the written agreement with the defendants on 1 March 1961, whereby he agreed to make interest free loans to the defendants and averred that the subject matter of his claim is money lent pursuant to that agreement. The plaintiff denied he was in breach of the agreement or that he lent monies to the defendants through Kesar Singh or that he demanded or received payment of any interest.

So much for the pleadings. Before leaving them however I think I should add that taking the defence as a whole I have arrived at the conclusion that it constitutes an admission on the pleadings by the defendants that the money was lent to them. The real transaction was, in my view, between the plaintiff and the defendants. Kesar Singh is referred to as the nominal borrower, in other words, as agent for the real borrower.

The inference I draw from the pleadings is that the plaintiff required a government servant to sign IOU's for the money lent to the defendants as further security for his loans to them. The defendants offered Kesar Singh, a government servant who was accepted by the plaintiff because he knew him and they had been friends for a number of years according to the evidence. Furthermore the defendants pleaded that they paid interest direct to the plaintiff and not to or through Kesar Singh. The averment by the defendants in para. 4 of their defence t