Monthly capitalisation of interest upheld where contract and conduct showed acceptance, and usury was not proved.

The court held that the borrower was liable for the watchman's salary debited by the bank because the watchman had been appointed from the inception of the loan arrangement to protect the pledged goods, monthly statements were regularly sent, and the borrower raised no timely objection. It further held that the agreement authorised compound interest with monthly rests, as the contractual wording, read with the parties' consistent conduct, supported monthly capitalisation. Relief under the Usurious Loans Act was refused because the debtor failed to prove that the interest was excessive or that the transaction was substantially unfair at the date of the loan. The decree was therefore left undisturbed.

---

---

Issues: (i) whether the defendants were liable to bear the watchman's salary debited by the bank, (ii) whether the agreement authorised charging of compound interest with monthly rests, and (iii) whether the interest charged was excessive or usurious so as to justify relief under the Usurious Loans Act.

Issue (i): whether the defendants were liable to bear the watchman's salary debited by the bank.

Analysis: The evidence showed that the bank had appointed a watchman from the inception of the loan arrangement to safeguard the pledged goods and that monthly statements reflecting the debits were regularly sent to the firm. No protest was made for a long period, and the course of dealing showed acceptance of the arrangement. The facility was granted on the basis of the factory-type loan, under which the watchman was part of the protective mechanism enabling the borrower to retain access to the goods.

Conclusion: The defendants were liable for the watchman's salary debited to the account.

Issue (ii): whether the agreement authorised charging of compound interest with monthly rests.

Analysis: The contractual clause provided for interest to be calculated on the daily balance and charged to the account on the last working day of each month. The surrounding conduct of the parties, including the repeated monthly statements and the absence of objections, supported the construction that the parties accepted interest being capitalised monthly. The contractual language was not confined to simple interest.

Conclusion: The agreement authorised compound interest with monthly rests.

Issue (iii): whether the interest charged was excessive or usurious so as to justify relief under the Usurious Loans Act.

Analysis: Relief under the Usurious Loans Act depends first on showing that the interest is excessive and that the transaction is substantially unfair. The burden lay on the debtor to establish those facts with reference to the circumstances existing at the date of the loan. On the record, the defendants failed to prove that the rate, when viewed with the security, the commercial nature of the borrowing, and the course of dealings, was excessive or unconscionable. The mere accumulation of interest over time did not by itself establish usury.

Conclusion: The interest was not proved to be excessive or usurious, and no relief was warranted under the Act.

Final Conclusion: The challenge to the decree failed on all substantive grounds, and the trial court's decree was left undisturbed.

Ratio Decidendi: Where the contractual terms and the parties' consistent course of dealing show acceptance of monthly capitalisation of interest, and the debtor fails to prove that the interest was excessive and the transaction substantially unfair, the court will not reopen the account or reduce the interest under the Usurious Loans Act.

---