Cyprus Supreme Court held compound interest on overdrawn accounts is recoverable if total does not exceed 9% per annum.

[*1198] 1972 February 29

(STAVRINAKIS, AG. P., PAPADOPOULLOS, D.J.)

IN THE DISTRICT COURT OF NICOSIA

The Turkish Bank of Nicosia Ltd.,

Plaintiffs,

and

1. Mehmet Muharrem Sitki,

2. Muharrem Sitki,

Defendants.

(Action No. 16/71).

Interest - Compound interest - Overdrawn banking account - Capitalization of interest - Whether capitalization permissible - Whether compound interest recoverable in excess of the rate of 9 per cent per annum - Historical evolution of the law governing interest - Section 33 of the Courts of Justice Law, 1960 (Law 14 of 1960) - It refers to the recovery of legal interest only.

Statutes - Interpretation - Section 33(3) of the Courts of Justice Law, 1960 (Law 14 of 1960) - Whether it impliedly repealed earlier enactments regarding interest and rate.

Compound interest - See under "Interest".

Courts of Justice Law, 1960 (Law 14 of 1960) - Section 33(3) - See under "Interest"; "Statutes",

Observations of the Court regarding the necessity for the amendment of the Interest Law, Cap. 150.

U. Suleyman, for the Plaintiffs.

E. Emilianides, for the Defendants.

JUDGMENT

The judgment of the Court was delivered by:-

STAVRINAKIS, AG. P.: The plaintiffs are a registered [*1199] company carrying on business as bankers under the firm name of the

Turkish Bank of Nicosia Limited.

On the 19th of March, 1963 the plaintiffs and defendant 1 entered into an agreement whereby a credit was opened in favour of defendant 1 in the sum of £3,000 with 8½ per cent interest thereon with twice yearly rest payable within three years thereof.

The defendant No.2 is the guarantor of the said agreement. It is the allegation of plaintiffs (paragraph 3 of the statement of claim) that by virtue of the said agreement the advances made by them to defendant No. 1 and/or the money drawn by defendant No.1 from them amounted to £5,970 including interest and/or commission up to the 31st December, 1970, plus 8½ per cent interest thereon as from the 31st December, 1970.

The defendants abandoned all their grounds of defence, except their allegation as to the legality of the interest charged, in particular, they argued that by the capitalization of the interest, the plaintiffs are asking for more than 9 per cent.

The agreement by which the account with the plaintiffs was opened, as well as a statement of the account, have been produced as exhibits.

The said agreement starts with a request on the part of the defendants to open a current account for the sum of £3,000.- for a period of three years on the following terms, the first one being – [*1200]

"any debit balance of the said current account will bear interest at the rate of 8½ per cent per annum chargeable at the end of June and at the end of December of each year".

The plaintiffs' argument is that the interest does not exceed the legal permissible rate of 9 per cent, even by capitalizing the interest, because in the total there is a large amount of commission and other banking expenses.

What we have to determine is not merely a question of calculation to find out whether the interest included in the total claimed by plaintiffs exceeds the 9 per cent interest after deducting the expenses and other banking commissions, but also to determine whether capitalization of interest or recovery of compound interest is recoverable in view of certain provisions of our Law.

History of the Law:-

The Law governing the rate of interest on debts and obligations, is the Interest Law, Cap. 150 and section 33 of the Courts of Justice Law 14/60. The Interest Law was enacted on the 16th November, 1944. Before its enactment, there were the following Laws governing the recovery and the rate of interest:-

A. The Usury (Farmers) Law, 1919.

B. The Civil Procedure Law, 1885-1939.

C. The Sale of Mortgaged Property Law, 1890. [*1201]

D. The Interest Law, 1882.(1)

In the Cyprus Gazette dated the 15th July, 1944, the following Draft Bills were published for general information:-

(a) A Bill entitled "A Law to make better provision for the rate of interest on debts and obligations."(1)

(b) A Bill entitled "A Law to amend the Law for the prevention of Usury."(2)

(c) A Bill entitled "A law to amend the Civil Procedure Law, 1885 and 1939"(3)

(d) A Bill entitled "A Law to amend the sale of mortgaged property, 1890."

All the above Bills were enacted into laws on the 16th November, 1944, but not in their original form. In particular -

(1) section 3 of the Bill for the Interest Law (which was similar at the time to section 3 of Cap. 101) was omitted. Later in 1945 the Interest Law. (No.37/44, as it was then known) was amended by Law 17/45 by the addition of a sub-section to section 3, the object of which was to place any proceedings taken under the provisions of the Sale of Mortgaged Property Law on the same footing as an action. Since then, no other amendments were effected. [*1202]

(2) The Usury (Farmers) Law 17/1919 originally had in all five sections. Section 3 provided that -

"The interest on loans made to farmers shall not exceed 12 per cent per annum".

By the Bill of 1944 it was proposed to add the following proviso to section 3 of the Law, as it then stood:-

"Provided that the interest on such loans made after shall not exceed 9 per cent per annum".

The Usury (Farmers) Law 17/1919 was amended on the 16th November, 1944 in accordance with the Bill. On the 17th October, 1957 section 3 of the Usury (Farmers) Law was repealed by section 2 of the Money Lenders (Amendment) Law, 1957 (25/57) and sections 4 and 5 were re-numbered as sections 3 and 4 respectively.

(3) The Civil Procedure (Amendment) Law, 1944 was again enacted on the 16th November, 1944 on the lines of the Bill and it remained in force unchanged since 11960 when it was repealed and substituted by section 73 of the Courts of Justice Law, 1960.

We need not deal with the amendments effected to the Sale of Mortgaged Property Law, as it has no bearing to the issue under consideration,

Objects and Reasons of the Amendments effected: -

The objects and reasons of all the aforementioned [*1203] Bills are appended to this judgment and we need not make any comment, as they are quite clear and unambiguous. We must only say that the Laws as eventually enacted, are not in substance different from the Bills.

The Law respecting interest before 1960, as it evolved through the years and the various amendments and enactments, may be summarized as follows:-

(i) No specific mention is. made regarding compound interest except in the case of farmers where such interest is not recoverable for the first year.1

(ii) The rate of interest on any debt or obligation contracted after the 16th November, 1944, was restricted to

9 per cent per annum.2

(iii) The aggregate of arrears of interest could not in any event exceed the principal debt.z3

(iv) The legal interest recoverable on any judgment was fixed at 4 per cent, provided that on a debt carrying interest, the legal interest was awarded on the principal or any balance remaining due and not on any accrued interest.4

In 1960 when Cyprus became a Republic, the need was felt for the re-organization of the Courts and the administration of justice. The long title of the Law reads:- [*1204]

"A Law to provide for the Constitution, jurisdiction _and powers of the Courts of the Republic and for other purposes relating to the Administration of Justice".

The Law was enacted on the 17th December, 1960 by the then newly constituted House of Representatives. As the Law stood before the enactment of the Courts of Justice Law 14/60, the Courts could award agreed interest not exceeding the legally permissible rate, up to judgment and thereafter only 4 per cent by way of legal interest, till final payment. This was unfair to the creditor whose position was worse after judgment, being thus deprived of his right under an agreement with the debtor to claim the agreed rate of interest till final payment.

Section 33(1) of the said Law, was enacted in order to cure this injustice by giving power to the Court to award interest at the agreed and within the permissible by Law rate from the date such interest became due till final payment. Section 11 of the Civil Procedure Law, Cap. 6 was repealed and substituted by section 33 of the Courts of Justice Law. By comparing the two sections it is apparent that in substance, section 11 was retained and appears as sub-section (2) of section 33 of the Courts of Justice Law, with the exception of the second proviso to section 11 of Cap . 6 which is substituted by sub-section (3) of section 33 of the Courts of Justice Law.

Section 33(3) reads – [*1205]

"Nothing in this section contained shall authorize the giving of interest upon interest".

Before we proceed with the construction of section 33 and in particular of sub-section (3) thereof, we consider it pertinent to determine the following questions:-

A. What is compound interest and when permissible in general.

B. Whether it was permissible in Cyprus before the 17th December, 1960.

C. Whether it is permissible after the 17th December, 1960 and if so, subject to what limitations.

A. What is compound interest and when permissible in general: -

At a time when the Turkish Law was still applicable in Cyprus, "interest in general was not allowed, as it was denounced by the Prophet as a sin".(1) In modern times, however, there were certain breaches to this principle and interest was allowed by certain statutes. According to the English Law, the position was clearly established by the case of L. C. & D. Railway Company v. S. E. Railway Co. (2) By that case it was established that interest cannot be recovered by way of damages for the wrongful detention of a debt and the only cases in which interest on a debt may be allowed in ah action for the debt, are three:-

(1) Where a contract provides for it.

(2) Where there is a debt or a certain sum payable at a certain time by virtue of some written instrument. [*1206]

(3) Where a demand has been made in writing for the amount with notice that interest will be claimed. Compound interest is defined as -

"the interest upon interest where accrued interest is added to the principal sum and the whole treated as a new principal for the calculation of the interest for the next period".(1)

"In England there is no Common Law right to charge even simple interest on an overdraft, but the claim could be supported on the ground of universal custom of bankers, or on the basis of implied agreement. Where the customer has acquiesced in the system under which the interest is charged, that also would justify the claim. Such acquiescence will justify the charging compound interest or interest with periodical rests, so long as the relation of banker and customer exists, and the relationship is not changed into that of a mortgagee and mortgagor".(2)

There are a number of authorities, (Holder v. Inland Revenue Commissioners,(3) Re Jauncey, Bird v. Arnold (4) dealing with compound interest, but all these decisions are tax cases and not on the point whether compound interest can be charged by a banker. [*1207]

Under the Law Reform (Miscellaneous Provisions) Act, 1934, -

"The Court has a discretionary power to award interest in any proceedings for debt or damages; but the previous law is

still of importance to see when interest can be claimed as of right; not of discretion. Interest is recoverable as a debt in

cases where it is payable under a contract, express or implied or under a statute which fixes the rate at which it is payable". (See Bullen & Leak’s Precedents on Pleadings, 11th Edition, page 258).

Section 3 of the Law Reform (Miscellaneous Provisions) Act, 1934, reads as follows:-

"In any proceedings tried in any court of record for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action a rose and the, date of the judgment:”

“Provided that nothing in this section -

(a) shall authorize the giving of interest upon interest; or [*1208]

(b) shall apply in relation to any debt upon which interest is payable as of right whether toy virtue of any agreement or otherwise; or

(c) shall affect the damages recoverable for the dishonour of a bill of exchange."

In the notes of the aforesaid section in Halsbury’s Statutes of England, 3rd Edition, 18th Volume, at page 9 -

"interest is nothing tout the fruit of judgment and, therefore, if the judgment should become unenforceable, so, too, would the claim for interest.”

And further down, under the heading "Rate of Interest” we read:-

"The effect of a judgment or order is to merge the original contractual right in the judgment. Consequently, despite an original agreement for the payment of 6 per cent, or even a covenant on a mortgage for the payment of 5 per cent. Where, however, there were ancillary and independent covenants in a mortgage, deed, the mortgagees were, despite the merger, allowed to retain their security pending payment of the principal sum and interest at 5 per cent. Similarly, 6 per cent interest was allowed where there was agreement that the original debt should run on, judgment being signed by way of collateral security". [*1209]

According to section 17 of the Judgments Act, 1838, every judgment-debt shall carry interest at the rate of 4 per centum per annum from the time of entering up judgment until the same shall be satisfied and such interest may be levied under a writ of execution.

It is to be noted that the Law Reform (Miscellaneous Provisions) Act, 1934 gives the Court a discretionary power to award interest for the period between the date when the cause of action arose and the date of judgment. (See note in the Judgments Act, 1838, page 9 of the Halsbury’s Statutes of England, 3rd Edition, Vol. 18).

Our Contract Law is modelled to the Indian Contract Act, owing to the fact that our social and commercial conditions were at the time considered to be more closely resembling those prevailing in India rather than those prevailing in England.

In interpreting our Contract Law, we, very often, seek advice and guidance from books and authorities on the Contract Act.

Dutt on the Indian Contract Act, 4th edition, has this to say about compound interest:- (1)

"The Courts do not lean towards compound interest, they do not award it - in the absence of a stipulation, but where there is clear agreement for its payment, it is in the absence of disentitling circumstances allowed. In the absence of proof [*1 210] of undue influence exorbitant amount dealing with an ignorant person or the like a stipulation for payment of compound interest on failure to pay simple interest at the same rate is not a stipulation by way of penalty within the meaning of the present amended section. (1) Therefore, it cannot be relieved against".

From all the above we conclude that compound interest is permissible and recoverable -

(a) if it is not stiputated upon by way of penalty;

(b) if there is express agreement or implied based on acquiescence in a universal custom; and

(c) if it is not prohibited by law either altogether or in excess of a certain permissible rate.

B. Whether compound interest was recoverable before the 17th December, 19601 -

As we had already found there was no express prohibition of compound interest. On the contrary, it appears from a mere perusal of the Usury (Farmers) Law, Cap. 101 that it was permissible but not for the first year. It is clear that with the enactment of the Interest Law, the situation did not change. We do not think for a moment that the intention of the legislature was to place farmers, for whom there was a special law for their protection and relief, in a worse position than debtors in general. To say that by [*1211] enacting the Interest Law or section 11 of the Civil Procedure Law, Cap. 6 the

intention of the legislature was to repeal by implication the Usury (Farmers) Law, will be absurd. In the first place, the latter is specifically

mentioned in the Bill for the

Interest law which applies in general to the recovery and the rate of interest and in the second place section 11 of the Civil Procedure Law, Cap. 6 was dealing only

with the giving of legal interest on judgments. Such last-mentioned interest, was restricted to 4 per centum per annum from the date of judgment to

payment and according to the

second proviso this interest should be calculated on the principal debt and not on an amount including accrued interest. The legislature in enacting the

Interest Law had in mind all the earlier provisions regarding interest, considering the fact that all the aforesaid Bills were not published in the same Gazette one after another by mere coincidences In the case of Savva v. Ambiza(1) it was held by majority that -

"A creditor is not entitled to recover interest on the first year’s interest charged at 9 per cent per annum, as this would result in recovering interest on the debt at a rate exceeding the maximum legal rate of interest".

In that case, the original principal amount due under the bond, interest at 9 per cent per annum was added, and the bond was payable within one year. The bond was [*1212] carrying interest at 9 per cent per

annum. It was held that if interest at the rate of 9 per cent per annum is calculated on the amount of the bond which

included interest for the first year, the creditor would recover interest in excess of 9 per cent per annum. Justice Stavrinides, dissented holding the view that compound interest is recoverable. It is to be noted that Ambizaz' case related to a debt contracted before the enactment of the Courts of Justice Law 14/60 and may not be authoritative on debts and capitalization of interest after the enactment of the Courts of Justice Law, I960. In a nutshell, before the 17th December, 1960, there was no express prohibition against the recovery of compound interest. In fact, it was allowed on condition that the overall recovery of interest did not exceed 9 per cent per annum and the arrears of interest did not exceed the original amount of the debt. Legal interest at the rate of 4 per cent per annum was allowed on all judgments, provided that in the case of a debt carrying Interest, the legal interest was allowed on the amount of the original debt till final payment.

C. Whether compound interest is permissible after the 17th December, 1960.

The only ostensible amendment effected to the Law that might affect the recovery of compound interest and possibly the position existing before the 17th December, 1960, is sub-section

(3) of section 33 of the Courts of Justice Law, 1960. [*1213]

Before we decide the above issue, we have to determine the following questions:-

(1) Whether the recovery of compound interest was allowed under the second proviso to section 11 of the Civil Procedure Law, Cap.6 or under the provisions of other legislative acts.

(2) Whether by the substitution of the second proviso to section 11 of the Civil Procedure Law, Cap. 6 with section 33(3) of the Courts of Justice Law, the position changed and if so, to what extent.

(3) Whether section 33(3) of the Courts of Justice Law, repealed by implication the other legislative provisions regarding interest.

(1) The recovery of compound interest was allowed under the previous enactment, subject to the limitations set out in the Usury (Farmers) Law and the provisions of the Interest Law. Section 11 of Cap. 6 prohibited the recovery of legal interest accrued before action, but that did not affect the recovery of compound interest accrued as a separate part of the judgment.

(2) Section 33(3) of the Courts of Justice Law simply states that nothing in the section provided shall authorize the giving of interest upon interest without making any reference to the principal debt. In our opinion,

the provisions of section 33(3) of the Courts of Justice Law[*1214] were framed in such a way as to meet the liberal provisions of

sub-section (1) of the same section. This section deals with the recovery of legal interest and the interpretation should be confined to amendments effected to the recovery of

such interest, unless the intention of the legislature in enacting section 33(3) was to repeal by implication all previous provisions of the Law

not prohibiting expressly or by implication the recovery of compound interest.

According to Maxwell on Interpretation of Statutes, 12th Edition, page191.

"A later statute may repeal an earlier one either expressly or by implication, but repeal by implication is not favoured by the Courts. 'Forasmuch', said Coke, as Acts of Parliament are established with such gravity, wisdom and universal consent of the whole realm, for the advancement of the commonwealth, they ought not by any constrained construction out of the general and ambiguous words of a subsequent Act, to be abrogated. If, therefore, earlier and later statutes can reasonably be construed in such a way that both can be given effect to, this must be done. If, as with all modern statutes, the later Act contains a list of earlier enactments which it expressly repeals, an omission of a. particular statute from the list will be a strong indication of an intention not to repeal that statute". [*1215]

To find that an earlier enactment was repealed byimplication, the Court must be satisfied -

(i) that the provisions of the earlier and latest Acts cannot coincide.

(ii) Whether the maxim generalia specialibus not derogant applies.

(iii) That the construction should not be such as to produce unreasonable and inconvenient results.

(i) The provisions of the earlier enactments can, in our opinion, coincide with section 33(3) of the Courts of Justice Law. The only earlier enactment affected by the said subsection is section 11 of the Civil Procedure Law, Cap.6 which was expressly repealed by section 73 of the Courts of Justice Law, (14/1960). No mention is made therein of other statutory provisions regarding interest.

(ii) The rule as to the presumption against implied repeal, is, sometimes summed up in the phrase generalia specialibus not derogant. (1)

Lord Selborne in the case of Seward v. The Vera (2) Cruz said:-

"Where general words in a later Act are capable of reasonable and sensible application without [*1216] extending them to subjects specially dealt with by earlier legislation... that earlier and special legislation is not to he held indirectly repealed, altered or derogated from merely by force of such general words without an indication of a particular intention to do so”.

The words in sub-section (3) of section 33 of the Courts of Justice Law are specifically dealing with legal interest, whereas the provisions of the Interest Law are specifically dealing with legal rate of interest in general and the Usury (Farmers) Law deals with relief of farmers for excessive and oppressive interest. We hold the view that in the light of all the above, the maxim applies.

(iii) If we construe section 33(3) of the Courts of Justice Law as making illegal the agreement for the recovery of legal interest or prohibiting in general the recovery of compound interest, then unreasonable and inconvenient results will inevitably be produced. We do not think for a moment that the intention of the legislature in substituting section 11 of the Civil Procedure Law, Cap. 6 with section 33 of the Courts of Justice Law, was to bring about such a vast change in the Law regarding the recovery of interest that would inevitably affect radically the commercial and financial life of the Republic. There is nothing to show that this was the intention of the legislature. On the contrary, there are indications pointing to the opposite direction. We have no doubt that the

intention of the legislature in enacting section 33 of the Courts of Justice [*1217] Law, was not to affect the legal rights of the parties to contract.

In fact, its intention was to remove an injustice to the creditor who, although entitled under an agreement to interest at a rate higher than 4 per cent allowed by the Court by way of interest, yet, after judgment, the agreed interest was reduced to 4 per cent till final payment. It is our opinion that the proper interpretation to be given, in order to give effect to the real intention of the legislature, is that sub-section (3) of section 33 of the Courts of Justice Law, restricts the giving of legal interest upon interest accrued and made part of the capital. Such interest will only be given in order to bridge a gap between the unpaid balance of the original debt for the period for which interest was not paid or could not be recovered as a se parate judgment until the time of payment.

In the result, we find that the capitalization and the recovery of the compound interest is both legal and recoverable, subject to the following:-

(a) That the legal interest either at the rate of

4 per cent or at a higher rate, if such rate has been agreed between the parties is not payable on interest accrued under an agreement or other Law.

(b) That the aggregate of the interest accrued at any rate permissible by law should not exceed 9 per cent on the date of the judgment.

(c) That the interest accrued should not exceed the amount of the original debt, without prejudice to the [*1218] recovery of legal interest either at 4 per cent or at a higher rate on the amount of the original debt, irrespective of whether the interest accrued up to the date of the judgment is equal to the amount of the original debt, the date of the judgment is considered, for purposes of legal interest, as the first and final capitalization.

According to the facts of the particular case, banking charges and commissions are included in the amount due. This, to our opinion, must not be taken into consideration in the calculation of interest and should be deducted from the capitalized amount. Although the definition of interest given under the Usury (Farmers) Law, includes such charges and commission, we do not think that the definition of interest under that particular law is applicable in cases where the debtor is not a farmer.

Bearing in mind the above, we have made the following calculations:-

The total amount withdrawn is

£3,206.331

The total interest at the rate of 8½ per cent amounts to

£2,169.304

Total

£5,375 .635

By the capitalization with the limitations hereinabove stated, the interest on the above amount of £3,206.331. at 9 per cent amounts to

£2,996.902. [*1219]

The balance at the Bank on 31.12. 1971 was

£6,224.281

The difference between the aggregate interest at 9 per cent and the interest shown in the hank statement including the charges is

£721.048

This amount is not recoverable and should be deducted from the total balance claimed by the plaintiff

Deducting the amount of £721.048 from £6,224.281, we find a balance of

£5,503.283.

On this amount we add £11.800 mils commission and other expenses of plaintiff.

£5,51.5.033

In making the above calculations we had the invaluable services of the office of the Official Receiver, to which we are grateful.

In the result, we give judgment in

favour of plaintiff for £5,515.033 with legal interest at the rate of 8½ per cent on the amount originally advanced, to wit, as from the 1st January, 1972 till final payment.

Owing to the fact that this case was almost tried together with case No. 15/71, the Registrar in making the necessary assessment of the costs, to allow for the hearing 50 per cent only.[*1220]

Considering the developments during the recent years in the commercial and economic fields, we believe that the time has come for the revision and amendment of the Law governing the recovery of interest and the rate thereof, with special provision about compound interest, whatever form it takes, whether by way of capitalization of interest or charging of flat rates and the like. The Interest Law has been enacted in 1944 and since then the economic and commercial activities in Cyprus have made tremendous strides forward. As the law stands, may have been good in 1944, but does not meet effectively or justify the present-day requirements. The law should be moulded to fit the new conditions of our changing society and this should be done without delay to protect not only the debtor, but the creditor alike.

Judgment and order as to costs

as above.

[*1221]

INTEREST

7 OF 1882.

TO REDUCE THE LEGAL RATE OP INTEREST

WHEREAS it is expedient to reduce the rate of interest recoverable by Law on debts and obligations:

Be it therefore enacted :-

1. The interest recoverable by Law on all debts and obligations shall be computed at the rate of nine per centum, per annum, except when it is otherwise provided by express contract between the parties.

2. This Law shall not apply to debts or obligations contracted before the passing hereof, and nothing herein contained shall be deemed to give validity to any contract whereby a higher rate of interest is receivable in respect of any debt or obligation that might legally have been received if this Law had not been passed.

3. This Law may be cited as the Interest Law, 1882.

A BILL

ENTITLED

A LAW TO MAKE BETTER PROVISION FOR THE RATE OP INTEREST

ON DEBTS AND OBLIGATIONS

BE it enacted by His Excellency the Governor and Commander - in - Chief of the Colony of Cyprus as follows:-

1. This Law may be cited as the Interest Law, 1944. [*1222]

2. The rate of interest on any debt or obligation contracted after the shall not exceed nine per centum per annum and no interest at a greater rate shall be recovered on any such debt or obligation.

3. No interest shall become payable on interest due on any debt or obligation until one year after such interest has become due.

4. The amount which may be recovered as interest on any debt or obligation shall in no case exceed in the aggregate the amount of the principal sum in respect of which such interest is payable.

5. The Interest Law, 1882, is hereby repealed.

Objects and Reasons

1. This Bill provides that the rate of interest on all debts and obligations contracted after the date of its publication shall not exceed nine per centum per annum.

2. Provision is also made that no interest shall become payable on any interest due under any debt or obligation until one year after such interest has become due; in this respect the Bill follows section 4 of the Usury (Farmers) Law, 1919, the operation of which, however, is restricted to dealings with farmers.

3. The Bill further provides that in no case the aggregate amount paid as interest shall exceed the principal sum originally advanced. [*1223]

4. The Interest Law, 1882, which dealt with the legal rate of interest is repealed; judgment debts shall carry interest at the rate of four per centum under the provisions of the Bill amending the Civil Procedure Law, 1885 to 1939.

A BILL

ENTITLED

A LAW TO AMEND THE LAW FOR THE PREVENTION OF USURY

BE it enacted by His Excellency the Governor and Commander-in-Chief of the Colony of Cyprus as follows

1. This Law may be cited as the Usury (Farmers) (Amendment) Law, 1944, and shall be read as one with the Usury (Farmers) Law, 1919, (hereinafter referred to as "the principal Law”), and the principal Law and this Law may together be cited as the Usury (Farmers) Laws, 1919 and 1944.

2. Section 3 of the principal Law is hereby amended by the insertion therein at the end thereof of the following proviso:-

"Provided that the interest on such loans made after the shall not exceed 9 per centum per annum."

Objects and Reasons

The object of this Bill is to reduce the maximum rate of interest on loans made to farmers after the date of its publication, from 12 per centum to 9 per centum. [*1224]

It may be noted that "interest" is defined in the principal Law as including money paid by way of interest and any sum charged for expenses, enquiries, fines, bonus, premiums, or renewals, or any other charge or payment made whether in cash or in kind in respect of any loan.

A BILL

ENTITLED

A LAW TO AMEND THE CIVIL PROCEDURE LAWS, 1885 to 1939

BE it enacted by His Excellency the Governor and Commander-in-Chief of the Colony of Cyprus as follows:-

1. This Law may be cited as the Civil Procedure (Amendment) Law, 1944, and shall be read as one with the Civil Procedure Laws, 1885 to 1939, (hereinafter referred to as "the principal Law”), and the principal Law and this Law may together be cited as the Civil Procedure Law, 1885 to 1944.

2. The Principal Law is hereby amended by the insertion immediately after section 9 of the following section:-

9A. Every judgment debt shall carry interest at the rate of four per centum per annum from the date: on which the judgment is pronounced until the same shall be satisfied and such interest may be levied under a writ of execution of such judgment:

Provided that nothing in this section contained shall apply to any judgment pronounced before the and every such judgment shall carry such interest as may [*1225] be specified therein and in accordance with the terms thereof:

Provided always 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 or any balance thereof remaining due and unpaid."

Objects and Reasons

The object of this Bill is to restrict the rate of interest on judgment debts to 4 per centum, safeguarding judgments pronounced before the Bill is enacted into Law.

The second proviso makes it clear that where a judgment relates to a debt payable under an agreement providing for repayment with interest, interest is payable on the principal debt only or on any balance thereof remaining due and unpaid.

(1) The full text of this Law is appended to this judgment.

(1) The full text of this Law is appended to this judgment.

(2) The full text is appended to this judgment.

(3) The full text is appended to this judgment.

1 Usury (Farmers) Law, Cap. 101.

2 Section 2 of the Interest Law, Cap. 150

3 Section 3 of the Interest Law, Cap. 1:50.

4 Section 11 of the Civil Procedure Law, Cap. 6.

(1) Dianellos & others v. The King’s advocate, C.L.R. Vol.IX. page 97

(2) (1893) A.C. 429

(1) Black's Law Dictionary, 2nd Edition.

(2) Paget’s Law of Banking, Seventh Edition, page 122.

(3) (1932) All E.R. (Reprint), 265.

(4) (1926) Ch. 471.

(1) Page 710.

(1) (1967) 1 C.L.R. 24.

(1) Odgers Construction of Deeds and Statutes, 5th Ed. p. 362.

(2) (1864) 10.

A. C. 59 at p. 68.