clr/1967/1967_1_24.pdf

(1)and

(3)—The Interest Law, Cap. 150, section 2—Cfr : The Civil Procedure Law, Cap.6, section 11 (nowrepealed by theaforesaid Courts of Justice Law, I960); The Usury (Farmers) Law, Cap.

1. Contract—Agreed interest—Interest on the first year's interest on the debt chargedat 9 percent perannum—Not recoverable—See above. The plaintiffs-respondent's claim in this case is based on a bond dated the 10thAugust, 1959, for the sum of£2,750— on which there wasadded interest at the rate of 9 per cent per annum for oneyear ending on the8lh August, I960, amounting to £247.500 mils. Thus, the total sum due under the bond is stated therein to be £2,997.500 mils payable on the9th August, 1960, with interest thereon at 9 per cent per annum after the date of expiry i.e. the 9th August,
2. The question which falls to be determined in this case is whether the creditor (plaintiff-respondent) was entitled to charge and recover interest at the rate of 9 per centum per annum on the interest of the first year, i.e.£247.500 mils, which represented interest for the first year at the rate of 9percentum per annum on the money lent to the debtor (appellant) as aforesaid i.e. on £2.
3. The Court, (Stavrinides J. dissenting) in allowing the appeal on the said point : 24 Held, (Stavrinides,J. dissenting) :

(1)The 3ΐ3ίμΙθΓγ provision applicable to this case is section 33 of the Courts of Justice Law, 1960 (Law of the Republic No. 14 of 1960), and it is really a matter of construction of that section (Note : The material parts of section 33 are set out in the judgment of the Court, post).

(2)Here we are concerned with the proviso to subsection

(1)of section 33 which provides that the rate of interest shall not exceed the maximum rate of interest allowed by,any law in force for the time being. The law in force for the time being is the Interest Law, Cap. 150 which by section 2 provides : "2. The rate of interest on any debt or obligation.... shall not exceed nine per centum per annum and no interest at a greater rate shall be recovered oh any such debt or obligation". So that, if the Court allows interest to be charged on the first year's interest on the debt,' the net result will be that the total amount to be recovered by the creditor will include interest on the debt at a rate exceeding 9 per cent per annum,which would exceed the maximum rate of interest allowed by law.

(3)On this construction of the law we are of the viewthat the sum of £44 which, as it was conceded, is interest at the rate of 9 per cent per annum on the first year's interest at 9 per :efit per annum,—is not recoverable. Appealpartly allowed. Judgment of theCourt below varied asabove. No orderas tocosts. Appeal. Appeal against thejudgment of the District Court of Nicosia (Attalides Ag. D.J.) dated the 26th November, 1966, (Action No. 2569/66) whereby the defendant was adjudged to pay to the plaintiff an amount of £275.-by virtue of a bond. A. Georghiades, for the appellant. Ch. Velaris, for the respondent. The following Judgments were delivered by : JOSEPHIDES, J. : The plaintiffs-respondent's claim in this case is based on a bond dated the 10th August, 1959, for 25 1967 Mar. 30 ELLI GEORGHIOU SAWA V. Nicos IOANNOU AMBIZA 1967 Mar. 30 ELLI GEORGHIOU SAVVA v. Nicos IOANNOU AMBIZA Josephides,J., the sum of £2,750.— on which there was added interest at the rate of 9 per cent per annum for one year ending on the 9th August, 1960, amounting to £247.500 mils. The total sum due under the bond is stated therein to be £2,997.500 mils, payable on the 9th August, 1960, with interest thereon at 9 per cent per annum after the date of expiry, and with a provision for compound interest. The defendant-appellant did not pay off the debt on the expiry date but he effected several payments as from the 2nd January, 1962onwards,whichareshown inanaccount, consisting of three-and-a-half pages, attached to the statement of claim and put in evidence by the plaintiff-respondent before the trial Court. Appellant's counsel to-day took a number of points before us, which we do not think are of any realsubstance except one which we propose considering. The account insupport of theclaim shows that to the principal debt of £2,750.-the sum of £247.500 mils was added asinterest at the rate of 9 per cent per annum for the first year, and this isshown in the account as "the capital of the bond".To that sum, namely, £2,997.500 mils, interest at 9 per cent per annum from the 9th August, 1960 to the 2nd January, 1962, which is stated to be £377.685 mils, is added, and then the first instalment which was paid on the 2nd January, 1962, i.e. £865.500, is deducted. The question which falls to be determined in this case is whether the creditor (respondent) was entitled to charge and recover interest at the rate of 9 per cent per annum on the interest of the first year, i.e. £247.500 mils, which represented interest for the first year at the rate of 9 per cent per annum on the money lent to the debtor (appellant). The statutory provision applicable to this case is section 33 of the Courts of Justice Law, 1960, and it is really a matter of construction of that-section. Section 33 reads as follows : "

(1)In any proceedings tried in any court for the recovery of any debt upon which interest is payble whether by virtue of any agreement or otherwise as by law provided the Court shall award interest at the rate agreed upon or otherwise as by law provided, for the period commencing on the date when such interest became payble until final payment : 26 Provided that such rate or interest shall not exceed the maximum rate of interest allowed by any law in force for the time being. 1967 Mar. 30 ELLI GEORGHIOU SAVVA

(2)v. Nicos IOANNOU

(3)Nothing in this section contained shall authorise the giving of interest upon interest". Here we are concerned with the proviso to sub-section

(1)of section 33, which provides that the rate of interest shall not exceed the maximum rate of interest allowed by any law in force for the time being. The law in force for the time being is the Interest Law, Cap.

1. Section 2 reads as' follows : "
2. The rate of interest on any debt or obligation shall not exceed nine per centum per annum and no interest at a greater rate shall be recovered on any such debt or obligation". It is conceded by the creditor that if interest at 9 per cent per annum is allowed to be charged on the first year's interest then the sum of £44.—would have been charged and recovered by the creditor in excess of the rate of 9 per cent per annum. Apart from this sum no other interest on interest is claimed. Section 2 of the Interest Law provides expressly that the rate of interest on any debt shall not exceed 9 per cent per annum, and that no interest at a greater rate shall be recovered on any such debt; so that, if the Court allows interest to be charged on the first year's interest on the debt the net result will be that the total amount recovered by the creditor will include interest on the debt at a rate exceeding 9 per cent per annum, which would exceed the maximum rate of interest allowed by law and the excess is not recoverable. On this construction of the Law, I am of the view that the sum of £44.—, which, as already stated, is interest at the rate of 9 per cent per annum on the first year's interest at 9 per cent per annum, is not recoverable and should be deducted from the judgment debt. I would accordingly allow the appeal to that extent and vary the Judgment of the Court below by the deduction of £44.— STAVRINIDES, J. : In my opinion neither s. 2 of the Interest Law,Cap. 150, nor s:33of the-Courts of Justice Law, 27 AMBIZA Josephides,J., 1967 Mar- 30 ELLI GEORGHIOU SAVVA v. Nicos IOANNOU 1960, prevents the recovery by action of compound interest, for any period down to the date of Judgment, up to a maximum of 9 per cent per annum on theprincipal amount as increasedby mterest already accrued. Section 2 of Cap. 150 reads as follows : AMBIZA Stavrinides, J., "
3. The rate of interest on any debt orobligation con­ tracted after the 16th day of November, 1944, shall not exceed nine per centum per annum and no interest at a greater rate shall be recovered on any such debt or obligation". Whether a particular amount of interest represents a rate of 9 per cent per annum or more or less depends on what the principal sumistakentobe;andspecifically,asregards compound interest, turns on whether the rate is arrived at on the basis of the amount of the original principal or on thatamount as increased by interest already accrued. But there is nothing in s. 2to make it unreasonable to construe"such debt or obligation" as meaning the original principal as so increased. Further, s. 3of theUsury (Farmers) Law, Cap. 101, which was enacted for the specific purpose οί preventing usury, only bars the charging of interest upon interest for one year from the time when the latter interest has become due; and it seems to me that had the intention of the legislature in enactings. 2of Cap. 150been to restrict the charging of compound interest as such, express mention of compound interest would have been made in it. Section 33 of the 1960 Law reads : "33.

(1)In any proceedings, tried in any Court for the recovery of any debt upon which interest is payable whether by virtue of any agreement or otherwise as by any law provided the Court shall award interest at the rate agreed upon or otherwise as by any Law provided, for the period commencing on the date when such interest became payable until final payment : Provided that such rate or interest shall not exceed the maximum rate of interest allowed by any Law in force for the time being.

(2)Every judgment shall, unless other provision is made in the judgment under sub-section

(1), carry interest at the rate of four per centum per annum from the date on which thejudgment is pronounced until the same shall be satisfied : 28 Provided that nothing in this sub-section contained shall apply to any judgment pronounced before the 16th day of November, 1944, and every such judgment shall carry such interest as may be specified therein and in accordance with the terms thereof.

(3)Nothing in this section contained shall authorise the giving of interest Upon interest". Clearly sub-s.

(2)is entirely irrelevant to the matter in hand. Going back to sub-s.(l), at the time of its enactment there was in force s. 11 of the CivilProcedureLaw,Cap.6,which read: "11. Every judgment debt shall carry interest at the rate of four per centum p^r~alin1JrrrfrohTtHellate~on" which thejudgment is pronounced until the same shall be satisfied and such interest may be levied under a writ of execution on such judgment : Provided that nothing in thissection contained shall apply to any judgment pronounced before the 16th day of November, 1944, and every such judgment shall carry such interest as may be specified therein and in accordance with the terms thereof : Provided also that where any judgment relates to a debt carrying interest, no interest shall be paid under the provisions of this section except on the principal debt or any balance thereof remaining due and unpaid". That section was repealed by the 1960 Law. Viewing s. 33

(1)of this Law in the light of the fact that it occurs in a Court of Justice Law, and infact in a part entitled "Powers of theCourts", and further in the lightof s. 11of Cap.6 and its repeal, it seems to me clear that it was simply intended to enable the courts, in giving judgment on a debt upon which interest was, whether by agreement or otherwise, payable, to award interest at the rate so payable, not exceeding the maximum rate of 9 per cent allowed by s.2 of Cap. 150, not only down to the date of the judgment, but until payment; it was not concerned with abolishing or restricting any right to recover compound interest which existed at the time of its enactment. 1 now come to sub-s.

(3)of s. 33. This actually refers to "interest upon interest". But in view of the words "Nothing in this section contained", allitmeans is that a power to award , such interest is not to be supposed to be given by s'ub-.s.

(1)29 ' 1967 Mar. 30 ELLI GEORGHIOU SAVVA v. Nicos IOANNOU AMBIZA Stavrinides, J-, 1967 Mar. 30 ELLI GEORGHIOU SAVVA v. Nicos IOANNOU of that section. It does not mean that any right of recovering compound interest which existed when the Law was enacted was to be taken away or restricted. In my view there is no merit in any of the grounds relied upon by the appellant and 1would entirely dismiss the appeal. AMBIZA Stavrinides, J., HADJIANASTASSIOU, J. : I agree with the Judgment of Mr. Justice Josephides. I would, also, allow partly the appeal and vary the Judgment of the Court below by deducting the amount of £ 4 4 . - from the judgment debt of the creditor (respondent) charged as interest over and above the amount of interest of 9 per cent per annum allowed by law. JOSEPHIDES, J. : In the result the appeal is partly allowed, the Judgment of the Court below is varied by having the judgment debt reduced by £44.—. In the circumstances of thiscase, there will be no order as to costs. Order accordingly. Appeal party allowed. Judgment of the Court below varied as above. No order as to costs. 30