Scottish Court of Session Decisions

On 18th December 1902, the defender Mrs Philp, who was the managing directress of the Cockburn Hotel, Limited, Glasgow, with a considerable interest in the business, borrowed from the pursuers, a firm of money-lenders registered under the Money-Lenders Act 1900, the sum of £600, which she, by indenture of that date, bound herself to repay with the sum of £100 as bonus or interest by the following instalments, viz., £50 on the 18th of every month, commencing on 18th January 1903 until and including 18th July 1903, and the balance of £350 on 19th July. It was further agreed that in case any one or more of the instalments should not be paid on the day appointed for payment, and so long as such instalment or instalments should remain unpaid, she should pay interest thereon at the rate of 30 per cent. per annum. In security the defender assigned to the pursuers a policy of assurance on her life, originally for the sum of £1000 but subsequently reduced to £252, the surrender value as the time being £103, 4s. Towards repayment of the sum of £700 the defender paid three sums of £50 each, on 20th January, 20th March, and 21st May 1903 leaving a balance of £550. The defender paid interest on arrears only down to 18th May 1903, leaving a further balance due by her of £47, 10s. In the present action the pursuers sued her for these two sums. The defender having become bankrupt after the raising of the action her trustee sisted himself in her room.

The defender pleaded, inter alia—(1) The bonus or interest charged by the pursuers under the indenture libelled being excessive they are not entitled to decree. (2) The terms of the said indenture being harsh and unconscionable by reason of the bonus or interest charged against the defender being excessive, the pursuers are not entitled to decree. (3) The defender is entitled, in terms of section 1 of the Act of 63 and 64 Vict. cap. 51, to have the terms of said indenture, as regards the bonus or interest payable by her altered and modified.

The following cases were cited— Young v. Gordon, January 23, 1896, 23 R. 419; Wilton & Company v. Osborn (1901), 2 K.B. 110; Ex parte the Debtor (1903), 1 K.B. 705; Levene v. Greenwood, March 21, 1904, 20 T L.R. 389.

The Lord Ordinary after proof granted the pursuers decree, being unable to hold that in the circumstances the rate of interest was excessive or the transaction harsh or unconscionable.